ATCO - Earnings call transcript Q1 2022

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Operator

Welcome to the Atlas Corp.

First Quarter 2022 Earnings Conference Call. I would like to remind everyone that this conference call is being recorded today, May 12, 2022. I would now like to turn the call over to Will Kostlivy, Head of Investor Relations at Atlas Corp.

Will Kostlivy

Thank you. thank first joining quarter and discuss today everyone Corp.'s Atlas XXXX morning, you us for to Good earnings report. earnings our issued release after evening We market yesterday close.

and earnings supplemental refer you which conference, that I to website, accompanying be Investors draw accompanying Slide our non-GAAP our non-GAAP discussion pertaining financial tables performance presentation. your comparable atlascorporation.com. our of and appendices most also the of to will and the can our clearer workbook quarterly the our on of measures. We statements, earnings in today to we closely on the all presentation, call forward-looking may quarterly understanding definitions the GAAP in Slide remind which of tab provide that on These report, U.S. can presentation, contains of discussion, to and to X the earnings found our note at and this I back financial supplemental includes today measures to and and definitions like measures, turn release, our we the be such reconciliations be businesses. we earnings contains The refer Please disclaimer of measures release earnings #X. to non-GAAP Please investors attention report believe earnings found in would a information which may website. found the earnings

Corp. President me Chen, Chief Corp are and with Officer Graham call Bing Financial of the Atlas CEO Talbot, On and of Atlas

and the Pedersen. Officer, Seaspan's Commercial the Seaspan's Peter Joining Curtis, Chief Torsten during call is Operational session, on us Q&A Chief Officer,

CEO, to the call that, session. to am our now turn Corp.'s remarks, I up over floor a to question-and-answer will Bing With Following prepared we pleased the Atlas Chen. open

Bing Chen

joining turn continue Today, Talbot quarter, to over is XX% and to a and Please at long-term customers. our I based market to Leveraging rates with a our benefit we customer, partnerships you, as fleet would financial and to creative comments for present we end. over the XX like to and focus contributing on $XXX Slide reviewing gross Thank X. and our developments in floating no wrote start continued $XX.X with our developments quarter APR strategic as to contracted hand to good results million morning, we my in only updates. XXXX from Graham Seaspan offs by of flow key leads will to develop call. In forwarded vessels on Will, XXXX index QX the billion. XXXX cash then major our in our XX our you customer liner solutions, of eight global Seaspan. to I up Thank XXXX, of robust everyone. This at charter fixed our will and

newbuild execute With We program April, newbuild have program. delivered vessel schedule. In track XX vessels the continue been diligently budget with the all which our ahead of unprecedented to of we on challenges. our delivered early the fourth our record of logistic on our are in possibilities of in confident we XXX newbuilds delivering schedule this all since successfully delivering of some program despite IPO deliveries and XXXX,

the We stages the the markets vessel capital of of non-strategic in to taking of sales and divestment vessel current additional of continued quarter also are recycle divestment three assets. sale advance end. as We advantage through one QX completed in

to will more optimize about and seek continue will later. forward, our capital, Going we fleet Graham which to recycle share opportunities

minor was three below off-hire rate XX.X%, utilization historical vessels. on COVID one vessel This due our slightly quarter, our first is rates. of average plan and to the the During on vessel cases

of lost focus our on to the safety low We time achieved injury people. as of continue historical X.XX frequency also we

containershipping strong together with model, and quarter. a seamless strong in Please business turn performance team’s execution, Slide our Our to consistent excellence X. fundamentals differentiated drove our this operational

three entered turbines turbines review APR for Now a which at deployed. new first market the XX for turbines new megawatts, the renewal of IID Brazil three key a MW turbines some contract In megawatts quarter, APR. for developments let’s includes total in for deployments, eight in of five XX APRs XXX a for contract XXX leasing into California of and of

months development by strengthening successful cash of strategy long-term of execution contract transform XX to APR’s continued to Brazil evidences the The We long-term on the migrate recent its months to focus business APR’s to flow extension business XX from contracts. the contracts.

January and As five completed. in year in of mentioned plant at Day, demobilization contract Argentina our today Zappalorto materially completed as its at its APR Investor is

other in late upon commence May. will its Matheu demobilization in finishing Our plant contract

of Argentina X.XX. all time this strong expect historically half redeployment of And Seaspan’s similar by APR demobilization achieved and culture, year. the of a lost safety injury rate second turbines We successful frequency low to

with potential would demand evaluating in multiple With time and increasing its opportunities Graham. Thank turnkey the turn the your base continues enhance disciplined now of its APR long-term industrial expanding over remain grid customer to CFO, platform I geographies today. our across and call solutions by for sectors. stability, you power to

Graham Talbot

good everyone. joining thank Slide And and you to morning, turn us X. for please you Bing, today. Thanks, Could

following our XXXX. So, in on QX XXXX, continued deliver in record we from to results strong year

following achieved the relative During the Atlas to performance XXXX. QX quarter,

to of growth to X.X% $XXX.X million. per XX.X% EPS the was share. of growth XX% of had of growth million, $X.XX to FFO we At and FFO adjusted million, XX.X% EBITDA share of of per the XX.X% end $XXX quarter, million, $XXX.X $X.XX growth per to growth to $XXX.X revenue adjusted Our share liquidity

for fully the demonstrate by strong both Our alongside ongoing presented disruptions these with supply the By impact. Thanks challenges our efforts chain operational the diligent the of operation and continued model. and minimal to chain ongoing the supply pandemic our we disruption. performance to our the results, continues integrated navigate seafarers, delivering of resilience business team

the XX.X% to Please service at X. Our our remained with customers at turn efficiency in to quarter. and Slide level asset operational high utilization a

throughout on of terms both in balance composition focus our optimizing to quarter and the continue asset capital we structure. So strengthening our sheet our and

As align strategy. how with to positioned, enhance is industry long-term our our and fleet monitor we fleet our we the to composition look

we As recycling non-core our and the predicted are actively Day, sale XXXX. X,XXX and demand. sold QX our through sold vessels due one we capital Investor age, TEU communicated design of We long-term the in to another XXXX, future we to vessels. strategy in are one These QX vessel at

contracted In in forecasted addition, $XX of vessels XXXX. close to at QX, an three to are the approximately pending scheduled had handover we four proceeds. end These vessels QX generate additional in million and

QX close six subject but We XXXX. contracts vessels closing we in conditions, of have QX, further to which under expect a to

to As into continue and look we’ll higher to opportunities for opportunities. optimize our market evolve, return continues fleet the risk-adjusted to recycle capital

from and QX, structure. amount fixed capital unsecured As previously are continually in we a communicated, over $XXX million unsecured to fixed from debt. of cost we includes in locked and profile to upsized aligning continually term exposure. the improving the The optimize significant About $XXX new facility our in credit monitor years. significant and locked last of greater year and two liquidity, rate driven aim closed million of its of three improvements and interest our million alone. working and longer we $XXX Seaspan’s by facility. tenor This year We our revenue seven have notes revolving of our extended of in debt capital. debt billion In fixed fixed $X.X improving a maintenance rate by interest credit was parallel, course long-term exposure amount rate spread with XXXX secured contracts rate We quality,

at and the rates, in inflationary floating of acceleration an $XXX we pressure of the end additional January long-term million Given rate entered interest XXXX. swap into fixed

addition, we’ll proactively are fixed our In position manage rate monitoring continually exposures. residual our we closely floating and

and million, shareholder, Financial XX to who million Atlas from exercised to financial our repay outstanding corporate our and quality our continued of resulted shares strengthening their capital will importance used which in be strategic to in the purposes. proceeds debt see This April. in high We our a strategy. Fairfax our and We common purchase allocation warrants confidence are growth yet commitment vote over growth pleased demonstration long-term of is This of profile. platform another shareholders’ on confidence perhaps strong to of place $XXX general

as execute we continue to XX to contracted program deliver sheet newbuild remain we’ve cash to terms the our turn $XX.X to three, capital key schedule. achieving strong summarize to credit structures target you flows. balance vessels vessels an balance our to of and across construction our continuing financed optimize with innovative vessels financial strengthen investment-grade metrics results gross in our we and Please program, delivery two, four with have and we delivered planned crediting Number we and one, rating like the our I’d scheduled by high improving our fully past the pandemic quarter, and in actively quarterly quality newbuild progressing strong congestion. for four diligently of our and The To-date, despite X. cost all takeaways. strong customers. favorable remaining Number growth of operational will long-term continued presented rating. billion with on through further number all Slide businesses goal challenges Atlas with manage more our ahead four, are capital. XXXX. quality, by supply investment-grade our excellence of seven We chain delivered And consistently of across under are is of our deliveries performance with sheet structure leading with line as continue to Number focused achieving our performance

today like the once questions. for So, again thank you your to now line we’d to operator, open Thank you. and interest

Operator

Burke the [Operator line from of first with comes Liam Instructions] Your B. question Riley.

now Your open. is line

Liam Burke

Thank today? are you. you Bing, Graham, how

Bing Chen

Thank you, Burke. Mr.

Graham Talbot

you. Thank

Liam Burke

of asset XX is go. XX This particular What announced to for to not sale have vessel is that you demand a vessel classes, XX, in roughly market? the strategic more TEU you the The anymore. the

Bing Chen

of as charter I question. the general, what looking people answer it, we Liam, at in demand with think the remaining expect vessel. contract is, Yeah, this that the I are The

we going that vessels want So, we contract this, that to are is we to all or have to long-term selling one they thing sell, all are it. attached highlight the

And as that are at looking sell are not the able their will So vessels meet to provide with those kind to be requirements. vessel. our service who future these opportunistically spot to owners these customer of we that a secondly,

vessels about process. concluded currently process to terms in XX have the the of sale We be in

basis. case-by-case at For a looking on them the we remaining were

what we historical under to continued cycles base why have all line and on situation at Seaspan the XX% one evaluated deploy rate we all utilization key be actually able the of of of will that’s looking vessels, vessels these always – a to that operating. these that through average continue to our if on we circumstances, is to in operate ability strength have which We continue because the happen are the is market terms based

market I less is the same value. I that current the think that make interest the before I side, than slight, think is a are selective the demand but slight is But in overall to roughly freight the rate On we maximize sure there we still about demand, with which think in general. very correlated

Liam Burke

on Thank deployments. the and existing to APR, trying projects do longer, new Are are or the those type of line – those in Great. terms you arrangements? you. announced contracts? of with of some And they what the more Are more

Bing Chen

of to what Yeah, year, with for demand, customer repeat have one done IID. we is relationships is requirement past secured built months trusts with and repeat last over is meet their the strong APR, said the because we that that is we we this their IID of as contract deployment have which quarter been three the a have

For new our as team market and was longer able initially a XX the and contract, actually this for is of our this service. to of our demanded and turnkey and months XX a demonstrate ability is signed solution, customer our months our result Brazil the we for

other result started this now. contract which extended a to the the year, of for at contract the months. five And those are beginning the has months as XX So, been months XX XX turbines, that

Liam Burke

Bing. Great. Thank you,

Bing Chen

welcome. are You

Operator

And your from question Wetherbee next comes Chris with Citi. the of line

open. is Your line

Unidentified Analyst

This is [Indiscernible] Hey. on Chris. Thanks for guys.

that. missed get this the containership side, clarification deliveries me you a any quarter? So, Maybe let did I on have

Just that there. quickly clarify

Bing Chen

the cycle... are talking You about

Unidentified Analyst

delivery one cycle. The

Bing Chen

You right? are newbuild talking about a delivery,

Unidentified Analyst

Yeah, yeah.

Bing Chen

but – delivered. in newbuild one in three, one the might a we was is – be of month of delivery some have there and vessel one be early two the supposed June, actually or There will Okay. April to

have three be delivered XXXX remaining the So, for delivered June. three year, we And throughout in to year. then to the be that this

Unidentified Analyst

bit? obviously, years beyond, deliveries, it. Got and Okay. everything of to but out between the so, where that look gets then, And early little cadence it’s as into forward extend a well can pushed the XXXX just harder out

Bing Chen

so is, April. this taken last good is to like far would until This What a question. year highlight four we deliveries since

months between All four of of these vessels schedule. has the to ahead been two

we as vessels say for from of rest of just possible example, delivered to for initially June Looking still supposed and this delivery at our team be October one will the year and cooperation we I to potentially early – now, ranging expect advance this deliveries the this was that and year, advance them there were be May. further able them in to we because yards to see the

as this have allocate are that with to deliveries, future, program that’s where team, answer we said on down question, able track the rest delivery. the the it earlier. and to we very – we do To where anticipate their we the the to of question. your the at possible early these and have deliver the so if If also looking is before, will expertise the able we So into confident and that your we XXXX that experience maybe be far target our and will for record newbuild later delivery, ability be on XXXX, schedule the not shipyard are resources they I early prioritize the and are of the partnership not

Unidentified Analyst

that think you normalization, And some it. said some curious but before, you am just your are for your the I you is there for the business? Graham, this about not change of guys Bing. and right maybe market out, I how the when environment? way important talked does as you Got the Atlas rate maybe Thanks, in about but competitors, as environment And now if that look is rate seeing normalization you

Peter Curtis

part in about which in to down rates, this trickle sort I high, talking Eli, can here, rates, fall first chime of I look, of trade Hi, they if Graham Maybe, Peter. it’s am in charter. year very with volatility then the

that almost high employed that again, something anything. the and through to saw the and are right Until and tonnage. So, and again said, level, in of year. will are very also rest not now. it this happen of continued anything lockdowns unlock it’s volatility, helping it high deployment unlock not moving we’ve remaining I chain helping that coming but anything into we these some carry seen on floats can a demand I unlocked see is tonnage going we’ll probably China from COVID The the strong China we orders That supply start getting back for see think is maybe we are expect and seeing XXXX. The

Unidentified Analyst

me. be extra what like Got plans, being have, any liquidity cash it. mixing of Thank million, Liquidity any still should way that you. on $XXX value that One look opportunistic thinking it we here more cash why does that right from from That’s other now? asset side? about

Graham Talbot

We activity in are The newbuild high think Eli, be a carry mean, don’t always fairly think, respond. got their to the able customers there be one-off newer this. to we to but XX modern going touched quite terms have is I in program we the wonder. meeting compliance fleets and agile that also But sort I requirements. of market development to a on bit market of liquidity still still both and in wasn’t the be of vessels, I transitioning scale. challenges doing to upcoming the more

given comfortable the certainly well. required still think financial markets opportunities that there carrying the than on together with in management, rather more in lot a is So, marketplace than liquidity lot remain and I of volatility more this this,

able should position present think opportunities to to So themselves. lot and a move like to a be us just prudent I’d in faster I it’s be of

Unidentified Analyst

course. Of you all. Thank

Operator

from of America. next of the Hoexter Your line Ken Bank question with comes Instructions] [Operator

Your line is open.

Ken Hoexter

Graham. and Bing Good morning,

year hit up it on could saying excess are three – question up their So, to newbuild Or build within if I I what scale? or given you just are at understand, the doesn’t looking schedule, are brand we pressure backdrop could here? we is want and there, you getting all it terms terms that on your in of I than that just in yards put about have following how know think see coming just moving market a rates just do just expect you book process least are be a in but more rate, to capacity? faster affect bit the we you the that of now at order asked am and market water supplied And they wondering

Peter Curtis

I’ll chime in hope again. doing Ken, here are you well.

not design specification one So, we have may a is as of with you that outline look, the done Seaspan and the or essentially slot mature yards. in shipyards, when the with machine, ultimately may but a we yard, very is do break contract the things

don’t of yards times they tough to it the other actually in for happens of What equal everything during we volatility, these things somewhat see to being changes. to many would speculative So, is, accelerate opportunity production, ahead. our we a jump but us have subject is and lot changes few presents be what actually that orders are

Also that yards So, us. lay opportunities therefore ability before. where to a you essentially you them our design generally That slots with in move typically, them Ken? accelerate at lot to look to advantageous and how are for is done , our speaking out. gives to building that’s color, work some And slots to again would we find we’ve earlier with that

Ken Hoexter

fixed if want moving if No, for of terms thoughts see is to throw – that line? contracts know, Atlas ahead what just am we I means wondering or it I on does faster market? jumping of And and your supply really you means then, a little that it Graham, the just your bring in on again, the of

Bing Chen

that, is anticipation us allows the are partnership work also work as we such of aware that confidence. this every of the the with quality experience the that what far, shipyard able effectively, of and I it’s this to Peter efficiently that’s as be explained the to we work have the that machine all think, why experience, so because Atlas, what and

terms is of TEU, roughly XXXX and about in XXXX. implication looking in we million TEU at the the it newbuild about million X the these delivery million are in and X.X in In to X.X newbuild total market, million roughly million X XXXX, the X.X is if TEU XXXX, of TEU

that So, alleviate these these the of for supply coming be into with some to balance. sure able market, demand and newbuilds of will

would should anticipate will rate return charter of fixed for be you actually if newbuilds that as have more is the we I to XX pointed out, and of our looking which fleets, more you likely XXXX. be of charter all earlier, our Also, the our high. terms the charter – expire are at correctly see, our it is to will it a I is as as wrote XXXX, So consequences the XXXX said existing And model rate in rate think the rate we we in in current had into for existing in we versus different. and long-term terms business Seaspan, why, importantly are normalized very eight recharter historically off zero only

is market delivery. what existing is avoiding vessels are peak is fixing forward been yet anticipate gradually market we our a going evolve forward So, able exact a of from our have normalizes. the exactly fleet and the And why such vessels think what we see of that rate the we well and how that’s XXX from this anticipate market perspective, XX we demand of is the development of to and are and supply a going in to positioned we to the I in

Ken Hoexter

insight great was Bing, appreciate follow-up. that the and Peter, Great.

me, two kind or just, then, the swap, target Graham. for the and at reset there long-term get of about utilization. maybe currency a once is And the a for it should Argentina from in is the that powergen? just the expense one my about a think one of year? on think your period of target just from we over was interest What’s activities business for maybe should more about time? how throw talk utilization then a I’ll guess, I is rest it’s XXX% we second just gain which There So, hedging a you

Graham Talbot

start certain Ken obviously Maybe terms have exposure bit positions our was, in the got we’ve a that of maintain fix if mix charter fixed rate market our in sort revenue We I of agreements first of at the gets which XX% around interest within conditions. try and range of generally XX% continually range we fixed some depending variable debt. piece, of and the to that income fixed on we a monitor to

think market a feel January action and in the fact early the sort and rates. the a inflation some probably get I started that Fed be about would of bit to So, of everyone taking on

on of to around moment. manage on that positions in unrealized million we the probably have would saying mark-to-market fairly earnings get this, release early So and at in we the our hedge worth is $XX

don’t But in hold true We overhedged. Investor on in on we the to we financials I still was The a we in that period all I good it here holds given ago, as it manage our guidance going not our are short will true. the gave think it that terms EBITDA. terms of of and is. we Day and that’s to hit making don’t very that exposures does only get sure continue outcomes, to back want – that Board mean, is to a focused gross balance

with is indemnified don’t including under in presented holding. very had a that’s FX. on rates are through guidance with much we We We have our still Argentina really and what there and they all the So, structure line exposure. currency

currency us of So, we and Argentina winding forward. as up exit impact an are issues done there, they on going course

with year XX then those. earlier Bing remobilization of and coming APR portfolio the demob out touched a that’s XX big is it’s the really think, we And Argentina. Investor turbines big on transition in through mentioned Day, going a of turbines, I this and

we currently. There we it’s rate contracts lumpy you’ve the around that’s touched schedule when as detailed higher, recall to but still, demob might demonstrated material that downtime. We portfolio, we’ve fairly of get that’s the the But opportunities to provided might structure. that’s the what we Investor expect and back utilization few accelerate on Once XXXX. some But Day, in holding does XX% are that clearly, running starting a fairly which would means forecast you’ve at firm. deployment to you be So, in a change in times, that. chart, for and a again, business still have mob Ken, contract got got some short-term

Ken Hoexter

Great the Yes. as Thanks. Graham. Appreciate always. stuff, insight

Graham Talbot

Just that the point make now means new our want all in notes [Indiscernible] issued under the at next release this one policy. other terms this which It converted I to earnings just shares. beginning before we convertible so of for the caller, a to accounting in that our year, policy applies of these we that accounting account and adopted

So you $X.XX previous are there calculation clear the shares dilution. per when equates take and against an That share to result also the XX.X and EPS calculation. people, build that in lower just you million as consideration. It’s benchmarking consensus but that FFO share it our models, see for a want that and to a conservative up approximately make additional I to EPS need to you’ll is your approach, into of

Operator

no [Operator turn the I now the conference Instructions] like back at to this company. I showing question to would time. am further

Will Kostlivy

thank for call, of Well, all joining those the for you good you our questions. particularly asked

very mean please you great time, healthy our to Graham Thank you forward safe free look QX and IR stay a in out questions, further all the day. any to much. team We or call please also myself. have For reach to and and and feel our

Bing Chen

Thank you, everyone.

Operator

for and concludes have Ladies day. gentlemen, conference. you this a your participation wonderful today's and Thank

may You disconnect. all

Will Kostlivy	Head of Investor Relations
Bing Chen	President and Chief Executive Officer
Graham Talbot	Chief Financial Officer
Torsten Pedersen	Chief Operational Officer of Seaspan
Peter Curtis	Chief Commercial Officer of Seaspan
David Sokol	Chairman
Liam Burke	B. Riley
Ken Hoexter	Bank of America Merrill Lynch

Atlas (ATCOL) 12 May 222022 Q1 Earnings call transcript