The Hong Kong-based containership lessor reported a net profit of $67 million for the quarter as revenues rose 11.7 percent to $244 million compared with the same 2017 period.
Seaspan Corp., the world’s-largest containership lessor, saw its net earnings in the first quarter of 2018 surge 69.2 percent to $67 million compared with the same three-month period a year prior, according to the company’s latest financial statements.
The Hong Kong-based firm posted diluted earnings per share of $0.37 for the quarter, up from $0.22 per share in Q1 2017, as revenues climbed 11.7 percent to $244 million.
Normalized EPS (adjusted for interest expense and excluding amortization of deferred financing fees, expenses related to customer bankruptcy, change in fair value of financial instruments, acquisition-related gain on contract settlement, and interest expense at the hedged rate, among other items) stood at $0.13 in the first quarter, down from $0.15 per share the previous year and $0.06 shy of consensus analyst expectations.
Seaspan attributed the revenue growth primarily to the March acquisition of the remaining 89 percent of Greater China Intermodal Investments it did not already own from affiliates of The Carlyle Group and several minority owners of GCI. The $1.6 billion deal included 16 operating vessels, boosting the size of Seaspan’s existing fleet by 29 percent, as well as increasing its average vessel size and lowering the average age of ships in its fleet.
The firm’s first-quarter results also benefited from additional interest income from leasing five bareboat charter vessels to ocean carrier Mediterranean Shipping Co. (MSC) and the full-year impact of the delivery of one 14,000-TEU vessel in 2017. These factors were partially offset by a decrease in revenue due to the sale of four 4,250-TEU vessels in 2017, Seaspan said.
As of March 31, 2018, the firm sported a total containership fleet of 108 vessels, including 12 currently not in operation, as well as four newbuilds scheduled for delivery by mid-2018.
Meanwhile, Seaspan also saw a major shakeup in its executive management team during the quarter.
Following the installation of new President and CEO Bing Chen in January, Chief Financial Officer David Spivak and General Counsel and Chief Operating Officer Mark Chu in April each announced they would be leaving the company before the end of the third quarter.
A successor for Chu has yet to be named, but Spivak will be succeeded by 29-year-old Ryan Courson, who joined Seaspan in March as senior vice president of corporate development and played a significant role in the GCI acquisition. Courson’s appointment was especially interesting given that he is just 29 years old, much younger than most executives in an industry that tends to value prior experience above all else when looking for candidates for its most coveted senior management roles.
Chen replaced Gerry Wang, the longtime CEO, co-chairman and co-founder who retired last October to focus on family business investments and his ongoing charitable efforts.
“The completion of the GCI acquisition during the first quarter solidified our industry-leading position and achieved a number of important strategic objectives for the company while being accretive to earnings per share,” Chen said of the results. “On the strategic side, the acquisition of GCI improved our fleet composition as we increased our exposure to larger, more modern containerships that are in demand by our customers.
“In addition, we expanded our relationships with our customers, significantly increasing our contracted future revenue and EBITDA,” he said. “Finally, the GCI acquisition provided an opportunity for Seaspan to expand its partnership with Fairfax and other financing partners, reinforcing the strength of our integrated platform.”
GCI acquisition boosts Seaspan’s earnings
