ATCO - Earnings call transcript Q2 2022

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Operator

Welcome to the Atlas Corp.

Second Quarter 2022 Earnings Conference Call. I would like to remind everyone that this conference call is being recorded today, August 10, 2022. I’d now like to turn the call over to Ashton King, Manager of Investor Relations.

Ashton King

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

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

Corp. President me Chen, Chief Corp.; are and with Officer Graham On Bing Financial of call Atlas CEO Talbot, the 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 To comment We on Board private proposal. the our on received you, and I for X, that like to Thank XXXX. cover cannot proposal August our of good morning, begin, Directors tape quickly would call. Ashton, was you Thank everyone. by the

information more concerning refer the to filings. please our proposal public For

the developments provide As stated the proposed comments and in on our over transaction represent until strategy. major filings, to I start quarter. the Seaspan. execute the to Then at my meantime, Seaspan and on to QX will developments to APR provide at to would or during business I hand absolutely as Please In slide key focus a second update. continuing company XXXX appropriate Talbot management our is Today, reviewing it financial will results on focused not updates, the intend and usual successfully does our to four. Graham turn by like required.

delivering strong continued partnerships. quarterly further industry We strategic healthy by long-term developments and results of our fundamentals driven

newbuilds, continue were nearly but a XXXX not current vessel with global Panamax executing completed, This newbuilds continue strategic We our customer’s customers. commence fleet vessels longer XX newbuilds our demand, of build that divestments. leading we customer liner four of and the by advantage meet has long-term LNG to in now flows. contribute agreements If the quarter, three of billion dual contracted creative vessels TEU XX.X% quality quarter sold third our conditions dual to another no market the on take In $X.X These recycling cash second I vessels liners. fleet XXXX, solutions we quarter, to TEU seeking portfolio. vessels, with including portfolio nine of aligned cash global XX and four $X forward-fixed our vessels forward-fixtures strategy remainder through optimize continue gross second to the the needs of our Seaspan our balance capital opportunities billion to conditions. charter future mentioned. leveraged in to X,XXX fully to driving with total a previously XXX% these the to our XXXX four integrated fleet platform In we contributing response growth, billion, basis. fuel these XX-year over our to forward-fixed subject closing Leveraging we flow Including to for gross leading contracted contracted leads in current being XX.X% this $XX.X LNG for fuel the will

full which vessels, of of We delivery. with TEU XX,XXX fourth XX-year In also materially liner TEU five leading five-year June, upon derisking running fifth TEU the our IPO vessels, leading completing in received vessels, liner XXXX, continue we diligent also execution. XXX total and XX,XXX execution charter with first in These from delivery, the second mark our XXXX. second a Seaspan late In customer upon XX,XXX of newbuilds another quarter, and another newbuilds. global delivered global charter a commenced four newbuild commenced which the we order newbuild delivered deliveries which with our since

time We on program by are the to working presented diligently on our and the pandemic. newbuild deliver budget, challenges despite

vessel strong XX.X%. rate quarter, utilization second the During of maintained a we

frequency and drove lost a X.XX, to to Please performance. turn quarterly operational injury people. focus five. strong also our of commitment the highly our continued consistent these of continue business historically time differentiated we excellence, achieve model We with on low to our safety slide as Together successes

IID a May, a developments Now counterparty contract In providing XXX four let’s of capacity Brazil dry-lease the of on migrate new review the APR’s with second of flow. in contracted evidence contract megawatts. long-term turbines followed strategy our is The cash of APR. quarter, contracts with expansion some Brazil by a the commenced, to key to business APR XX-month In to contract XX-month the into XX-month at entered June. a Mexico-based APR’s

completed As Argentina mentioned five-year year. its earlier this quarter, contract in APR last

the the were in strong indemnification Upon remaining Similar out purchase lost redeploy achieved we The plant, to set on customer solutions Matheu today, APR we turbine of long-term a the focused flows. turbines. over perfect and for Talbot. for complete. power full for in I stability, remaining Alongside APR’s safety of dry-lease zero development previously agreement. receive to will your CFO, company you successful new to business time the continue contract conditions grid remaining at transitioning creative demobilization with months. predictable developing proceeds by to business today. of plant turbines deployed size strong APR transform the APR’s rate Seaspan’s XX to strengthening is working call team, the we market the of last culture, substantially injury our Thank are diligently our and turn demobilization cash Graham Matheu Zappalorto As will now the opportunities the time

Graham Talbot

Good us morning, Please Bing. for you everyone, six. to slide thank today. Thanks, turn and joining

reflecting and So in QX operational strong our continued high our we results, XXXX, performance. financial team’s maintained

XXXX. billion. to $XXX.X growth chain to of million, million liquidity during of million. At the relative of and X.X% the growth disruptions. team’s the adjusted end During challenges X.X% of caused operational pandemic performance I’m of we Revenue the of quarter, growth X.X% to the quarter, COVID EBITDA proud performance Atlas the QX $XXX.X supply achieved by ongoing following FFO had $XXX.X to and $X.X the

through-cycle we presentation. all is our can this Our leading issued consistently and expense interest strong Investor during performance of industry utilization to demonstrates our in maintains that XX.X% the rate the returns EBITDA and resilience the we tracking guidance time, Day well platform revenue, to At of confirm stakeholders our provides our quarter.

presentation. of vessels However, in guidance for of a had shown net as on earnings, we in $XX sale million approximately of our included the profit that footnotes

was year, to conditions. Please composition the Panamax resulted than have divested due slide of since seven. XX of turn loss portfolio originally the beginning to cumulative the approximately divestments in the of we different $XX investment have vessels a Year-to-date, that Although, planned market book million.

predicted focus in future gross our the strengthening to we continued on X,XXX Year-to-date, balance sold quarter, vessels quarter, vessels During of in of we the million demand, the second we’ve second proceeds. completed XX Due sheet. optimizing design our $XXX cash age, sale approximately $XXX and nine million. for proceeds and generating TEU the

our vessel recycle continue for Going opportunities divestment. optimize and through to forward, we’ll look fleet to capital

structure a pay private an interest of closed continued XX.X-year purchase of weighted Our and to transaction develop of relationships shareholders capital average U.S. other weighted sustainability XX placement with our strategic warrants of a $XXX a to key outstanding average of demonstration another debt resulted element our in maturity million fixed our is of advancement in rate. linked and over regard, repay This base this debt In the common investors. is notes purposes. global we non-amortizing find of opportunities. to Fairfax institutional shares be $XXX shareholder X.X% will growth which directed April. with This continuing Proceeds A be the yet used quality competence general million cash in million, proceeds for down to Atlas in and will platform. existing corporate exercise

fixed inflationary amount on and swap rate fund of million aligning proactively and floating interest in to manage first our to approximately a quarter rate interest exposures continuing XX% long-term $XXX as the in fixed fixed $XXX in the rate interest of quarter XXXX, well-positioned into Seaspan also current Seaspan monitor debt environment, million in long-dated aim our the rate exposure. rates and will is locking exposure. second in of of fixed rate revenue with debt We’re to significant rising entering the quarter additional securing continue our of our debt a newbuilds end. Alongside with

and addition diligently customers. cash and newbuild environment. across its for development of as four, I’d Number like we’ve remain allocation newbuilds, to to orders. solid leaving assess Number strengthen sheet, quarter, of our strengthening delivered balance Please credit summarize execute we on on our credit rating, vessels that interest investment its your sheet our by with remainder Argentina metrics Going generate quality the The growth balance investments focusing Number proactively we deliver long-term second results billion to for an contracted open long-term with continuing on you interest to five managing planned today. normalizing redeploying grade enriching vessel strong in-demand delivery through-cycle are goal and XXXX. to gross our seven to two, ensuring with of performance now the towards to flows. Thank cash continue schedule. team, opportunities you line contracted remaining to out construction rate we’re Today, power investment forward, optimizing in an Atlas by securing a the strategic strong the Operator, to ahead line of capital continue opportunities strengthen turn of Number performance our all to in disciplined position. amid we takeaways. progress progressing predictable through continued four high performance achieving of questions. newbuild our we’ll target grade Thank and three, financial business our simplify assets of we through is Number would our vessels as in industry platform portfolio rating. one, deliveries quarterly by and our five, $XX.X you. all APR scheduled with for eight. focused like key slide quality flows,

Operator

[Operator first Riley. Instructions] B. question comes Burke Our Liam from with

line Your open. is now

Liam Burke

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

Graham Talbot

Good. Thanks, Liam.

Bing Chen

Good Good. morning.

Liam Burke

morning, Good Bing.

your release, in and benefited to as on a few recharters the then in vis-à-vis us give You or rate four you’ve current and highlighted quarter. press color quarter both? the vessels recharters, Could the or you charters whether quite in some the third duration second

Peter Curtis

Hey, Peter Hope you well. Liam. It’s here. are doing

Liam Burke

you doing Hope you. too. Thank are Peter. well Hi,

Peter Curtis

I Good customer’s the Look, program, -- question. vessels design do only our our also customer integrated through not to ensure our of of just point fully and in existing relevance newbuild what we vessels everybody for of operating customers to within but fleet. their to Thanks. suitability terms platform,

to part mixture also, parcel our a either existing not And So, a combined for By customers and or from both operating modifications to the vessels by are with these the some moving the small, been an other. with some and fund large, and of funding large, have customer with program modifications, small. they which of agreement is into and forward-fixings share so of of one ethos. modifications, customer the the a for

answer… we is such and So, view Hope we and with we them transactions them, a as partner that what how with longer this. realized term -- this take is this

Graham Talbot

Liam.

scheduled broadly speaking, to Sorry, to cut mean just post to that charters I were add XXXX wanted these to XXXX. the But and these And I to finish that, off. between XXXX XXXX. Peter, pushes you Liam, forward-fixing didn’t out

got extending where moment also keep sure our market term So our that as the charters bit is into charters flows coming given capacity we into market. this make and quite life cash period longer we’ve previously, discussed and of out we’ve to our forward-fixing is the of through a a program to push contracts new when the

Liam Burke

Great. Thank you, you, Peter. Thank Graham.

at class, in. that steadily. are want fleet to class invest is X,XXX the I If been vessel your in lower about smaller or the been renewal to that On divesting? something program, very at that the owning pretty vessels look specific at you’ve been end, as fleet look TEU them you’re you’ve you’d comfortable classes what to continue have you one so divesting How the

Graham Talbot

to But can else Liam. happy I’m that jump question, anyone take in.

it’s it model. how about more I the relates not so size, think about much our think it’s business I to

mind definition, contracts. aware, don’t owning in demand those shorter vessels on model smaller And we as our business had normally But by you’re there. category, we term geared very much So term because vessels longer well that some customer is contracts. towards are

of normally enter with end we of are vessels those our smaller them, into focus. we the we there shorter customer the opportunities where not dominant But So it’s but core area fleet area identify the is demand, not focus. do and that if

Bing Chen

Yeah.

the… add to Just what

Liam Burke

Thanks.

Bing Chen

it’s also efficiency. customer driven vessel the in itself … really Graham by the terms our saying, of side, and is needs from

for So strategy. our determine main fleet to overall those are the criteria’s us two

Graham Talbot

to years out, cash And our flow, to high that earlier were XX I’m the some here years fleet over to more the of just and exiting both as Liam, than referring discussing longer those but grade selectively, we Yeah. clear, smaller of sort be to you importantly, we’re point term. generate to very XX

Liam Burke

Thank understood. you. Right. That’s

Operator

[Operator Ken Instructions] Our Hoexter next Bank with America. question comes from of

open. is now line Your

Adam Czakanski

what you could your Hi. mentioned, seeing schedule, that just Maybe, This they Bing, my in of and to on Hoexter. capacity that end? you Czakanski coming ahead to question. be on Ken the maybe for you’re for speak is seem Thank -- Adam could you newbuilds you taking

Bing Chen

Yeah. to, of the key it team, we have very the to the the -- that’s shipyard this The of have think, XX,XXX to working I challenges seven, mentioned and kinds we able with outcome. down. strengths were earlier, far, people XX,XXX. our total these overcoming do the five was closely is the as we able we those we I so what given one platform is These the are newbuilds And that knowhow, two is is -- Seaspan think vessels, delivered shipyard able logistics locked actually are other able achieve to I have of the

that currently vessel-by-vessel in received to to diligently, that delivering deliveries. for ways are hand, rejected our and ensure have working on newbuilds budget the those time I very lockdown. forward or -- on is our to mitigate are at And improve said -- this that of working earlier or able majeure potential one this impacts and for on that help shipyard we we Going those have I China But we intention. we think any and force to to what we in Chinese notice to is reasons the are majeure from the team are continue force diligently presentation yard-by-yard, these finding

Adam Czakanski

market Got you or on of the where exceeding pacing, in it’s in the it maybe then still you of it. your trending, on pricing a now, right And Thank sense just buy front? of is following under mentioned you you. maybe maybe the if will, up maybe some just that expectations get vessel quarter, vessel sales, kind

Bing Chen

the Yeah. correlated Generally is think, it’s as, timing. a prices, the pricing I also freight matter SMP vessel of just to

So as was XXXX. freight has that decreasing peak, we know started from all rate it its October

far, of the However, than decrease I the pre-COVID level. far think, that in gradual still and more higher magnitude steel,

with ships in, gradually -- liner the market, and general, and coming think the our So, the including customer. which including our I own in newbuild broadly that’s also

the congestions, supply congestion terms with alleviation I of part there’s port demand that large -- logistics of demand the port is side. coming some of are improvement the side, helps the the think, world From believe side that started level So side, there and also on in the on from a the actually newbuild -- in. I a in the

versus months in So vessels and think, in the speed about trading, has market, terms down. talking I therefore, before. maybe months of broader That’s now slowing pace coming six newbuild the nine second-hand I’m with or the the

into vessels. we those earlier, sell have at as sale, those that Graham regard vessels make the to has we nine with pointed vessel-by-vessel, Specifically out really decisions our situation-by-situation, looking

-- attached The is the future know the the As can it’s value of the expected the itself you plus you charter value and charter rates. vessel value vessel, not itself. the the plus vessel of as vessel that,

So of did the them. initial so that, we’re forecast the a for earlier, as mentioned only an total we total Graham us, of we forecast, today actually basis, XX vessels that at divested on far, what have number looking

that we in -- So whatever that have reported. been numbers that the is we have has why

Adam Czakanski

Got it. you. Thank it along. I’ll pass

Bing Chen

you. Thank

Graham Talbot

Adam. Thanks,

Operator

Our Nolan next question Ben from with Stifel. comes

open. is now Your line

Ben Nolan

guys. had Hey, a I couple.

to can sort terms about what the just the thinking for about was motivation that of was transaction. you of or anything private, sort respect the just it? First catalyst what or what’s appreciating of limited in say else, not now, with where timelines on you’re of is asking thinking going I curious about why sort you’re

Bing Chen

Hey. Good is morning, This Ben. Bing.

press release that The has of received the committee As a Board processes committee proper and independent special so committee and that is ensure by company, a financial formed. procedures. that the follow legal special appointed they advisors the unsolicited within offer an been directors by our the supported to special

is of we As committee’s that management for process. company, team offers very on that special usual. much understand we any that as focused cannot on hope What our business discuss this point nor the can that the our I speculate or you at is are can managing the really do

point. share the So with is can I standpoint at management what you the think this from that’s this we what

Ben Nolan

Okay. That’s helpful.

gain the a million small and could then, some it, guidance assets, -- I the at those if of assets like now if those So to a it, expect it of Is in of you -- going it’s I just getting is thought you higher? that seems you’re $XX of the loss. anything, would of then assets going As to normal terms thing? of on alluded that those if business the the course be anything sale twice look but you just that it, of it what it Graham value value market would accounting an would for just roughly game

Graham Talbot

Ben. Hi, Yeah.

So fairly a of year sale relates the marketing had for it sale. vessels we’re ended There’s an the negotiating the transacted and the two that one it loss. actually on the that book back portfolio. a both is we others actually in high transaction did going values was we’ve three to really portfolio the do up that were and to working in profit compiling that but accounting we’re quite the actually vessel on specific when actually mature that and vessels we stage, not were of book and forecast still through transaction issue carries And a that that sell, weren’t which originally at there

books. as aware these depreciated in carried we So accounting values losses you’re that book our the against written-down had

long-term flow to transparent time. way -- cash the I everything still But is, still and we’re included generated of to where go. as assessment. be But position point works obviously, this people just the in economic in about got that midyear, a is the were to aware want we the the are So else what assumptions were make in what wanted footnotes tracking and the terms guidance I fully to of at just

Ben Nolan

or and X,XXX or expect Okay. be not finalized. there that little you when four charter in appreciate exactly what that the of was you you I the That hoping that is to through helpful. that somehow build recently sort where it. could if last agreed is TEU and color maybe happening formalized it’s and just to to ships footnote is that situation? then the it have for stands And walk I caveat me,

Peter Curtis

in for protect that the bit Peter contract for It’s guarantees one, to the that Ben. refund is the thing atypical installments refund here. little which of is Hi, furnishing it the an valid. to be provision of subject contract On guarantees, of the

not So yet valid. the is until such time contract

that a such wait provide on on Korean the entity would these we both. refund So guarantee

Ben Nolan

it. I helpful. Thank Peter. appreciate That you, is Okay.

Operator

closing That remarks. back to concludes turn the question-and-answer Bing I’d session. Chen for today’s to like call

Bing Chen

Will please And Investor as usual. continues is -- you, any as we day-to-day follow Well, there’s the said, call. on I team up business follow-up joining the our with if for thank with conducting questions Relations our questions, the your and Ashton. everyone, appreciate both again, focusing time. business We and

So day. thanks great have a again and

Graham Talbot

Thank you, everyone.

Bing Chen

you. Thank

Operator

participating. concludes This Thank today’s call. conference you for

disconnect. now may You

Atlas (ATCOL) 10 Aug 222022 Q2 Earnings call transcript