UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
Commission File Number 001-39237
ATLAS CORP.
(Exact name of Registrant as specified in its Charter)
23 Berkeley Square
London, United Kingdom
W1J 6HE
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒
Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101 (b)(1). Yes ☐ No
☒
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101 (b)(7). Yes ☐ No
☒
Item 1 — Information Contained in this Form 6-K Report
This report on Form 6-K of Atlas Corp., or this Report, is hereby
incorporated by reference into: the Registration Statement of Atlas
Corp. filed with the Securities and Exchange Commission, (the
“SEC”), on May 30, 2008 on Form F-3D (Registration No. 333-151329),
as amended on February 28, 2020, the Registration Statement of
Atlas Corp. filed with the SEC on March 31, 2011 on Form S-8
(Registration No. 333-173207), as amended on February 28, 2020, the
Registration Statement of Atlas Corp. filed with the SEC on June
20, 2013 on Form S-8 (Registration No. 333-189493), as amended on
February 28, 2020, the Registration Statement of Atlas Corp. filed
with the SEC on April 24, 2012 on Form F-3 (Registration No.
333-180895), as amended on March 22, 2013 and February 28, 2020,
the Registration Statement of Atlas Corp. filed with the SEC on
April 29, 2014 on Form F-3 (Registration No. 333-195571), as
amended on March 6, 2017, April 19, 2017 and February 28, 2020, the
Registration Statement of Atlas Corp. filed with the SEC on
November 28, 2014 on Form F-3 (Registration No. 333-200639), as
amended on March 6, 2017, April 19, 2017 and February 28, 2020, the
Registration Statement of Atlas Corp. filed with the SEC on
November 28, 2014 on Form S-8 (Registration No. 333-200640), as
amended on February 28, 2020, the Registration Statement of Atlas
Corp. filed with the SEC on March 12, 2015 on Form F-3D
(Registration No. 333-202698), as amended on February 28, 2020, the
Registration Statement of Atlas Corp. filed with the SEC on June
24, 2016 on Form S-8 (Registration No. 333-212230), as amended on
February 28, 2020, the Registration Statement of Atlas Corp. filed
with the SEC on August 25, 2017 on Form F-3 (Registration No.
333-220176), as amended on February 28, 2020, the Registration
Statement of Atlas Corp. filed with the SEC on December 21, 2017 on
Form S-8 (Registration No. 333-222216), as amended on February 28,
2020, the Registration Statement of Atlas Corp. filed with the SEC
on April 13, 2018 on Form F-3D (Registration No. 333-224291), as
amended on February 28, 2020, the Registration Statement of Atlas
Corp. filed with the SEC on April 13, 2018 on Form F-3
(Registration No. 333-224288), as amended on May 3, 2018, May 7,
2018 and February 28, 2020, the Registration Statement of Atlas
Corp. filed with the SEC on September 28, 2018 on Form F-3
(Registration No. 333-227597), as amended on February 28, 2020, the
Registration Statement of Atlas Corp. filed with the SEC on January
18, 2019 on Form F-3 (Registration No. 333-229312), as amended on
February 28, 2020, the Registration Statement of Atlas Corp. filed
with the SEC on March 27, 2019 on Form F-3 (Registration No.
333-230524), as amended on February 28, 2020, the Registration
Statement of Atlas Corp. filed with the SEC on May 11, 2020 on Form
F-3 (Registration No. 333-238178), as supplemented on December 7,
2020, the Registration Statement of Atlas Corp. filed with the SEC
on June 30, 2020 on Form S-8 (Registration No. 333-239578), the
Registration Statement of Atlas Corp filed with the SEC on March
19, 2021 on Form F-3 (Registration No. 333-254536), the
Registration Statement of Atlas Corp filed with the SEC on July 16,
2021 on Form F-3 (Registration No. 333-257967) and the Registration
Statement of Atlas Corp. filed with the SEC on March 25, 2022 on
From S-8 (Registration No. 333-263872).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly
authorized.
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ATLAS CORP. |
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Date: May 13, 2022 |
By: |
/s/ Graham Talbot |
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Graham Talbot |
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Chief Financial Officer |
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(Principal Financial and Accounting Officer) |
EXHIBIT I
ATLAS CORP.
REPORT ON FORM 6-K FOR THE QUARTER ENDED MARCH 31,
2022
INDEX
Unless we otherwise specify, when used in this Report, (i) the
terms “Atlas”, the “Company”, “we”, “our” and “us” refer to Atlas
Corp. and its subsidiaries, (ii) the term “Seaspan” refers to
Seaspan Corporation and its subsidiaries and (iii) the term “APR
Energy” refers to Apple Bidco Limited, its subsidiary APR Energy
Ltd., and APR Energy Ltd.’s subsidiaries.
ATLAS CORP.
PART I — FINANCIAL INFORMATION
ITEM 1 — INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
ATLAS CORP.
Interim Consolidated Balance Sheets
(Unaudited)
(Expressed in millions of United States dollars, except number of
shares and par value amounts)
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March 31, 2022 |
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December 31, 2021 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
251.3 |
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$ |
288.6 |
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Accounts receivable |
66.5 |
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56.2 |
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Inventories |
49.6 |
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46.4 |
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Prepaid expenses and other |
43.2 |
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35.7 |
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Net investment in lease (note 5) |
17.1 |
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16.8 |
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Assets held for sale (note 6) |
48.2 |
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— |
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Acquisition related assets |
96.4 |
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104.0 |
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572.3 |
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547.7 |
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Property, plant and equipment (note 6) |
6,809.7 |
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6,952.2 |
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Vessels under construction (note 7) |
1,213.7 |
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1,095.6 |
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Right-of-use assets (note 8) |
728.3 |
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724.9 |
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Net investment in lease (note 5) |
736.8 |
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741.5 |
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Goodwill |
75.3 |
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75.3 |
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Deferred tax assets |
0.5 |
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1.9 |
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Derivative instruments (note 20(c)) |
39.0 |
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6.1 |
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Other assets (note 9) |
421.1 |
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424.4 |
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$ |
10,596.7 |
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$ |
10,569.6 |
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Liabilities and shareholders' equity |
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Current liabilities: |
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Accounts payable and accrued liabilities |
$ |
166.2 |
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$ |
183.4 |
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Deferred revenue |
29.5 |
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46.6 |
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Income tax payable |
94.3 |
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96.9 |
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Long-term debt - current (note 10) |
651.9 |
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551.0 |
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Operating lease liabilities - current (note 11) |
145.3 |
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155.1 |
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Finance lease liabilities - current (note 12) |
59.3 |
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— |
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Other financing arrangements - current (note 13) |
100.8 |
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100.5 |
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Other liabilities - current (note 14) |
62.9 |
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42.0 |
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1,310.2 |
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1,175.5 |
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Long-term debt (note 10) |
3,592.0 |
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3,731.8 |
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Operating lease liabilities (note 11) |
515.6 |
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562.3 |
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Other financing arrangements (note 13) |
1,212.2 |
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1,239.3 |
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Derivative instruments (note 20(c)) |
14.6 |
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28.5 |
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Other liabilities (note 14) |
15.6 |
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17.7 |
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Total liabilities |
6,660.2 |
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6,755.1 |
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Cumulative redeemable preferred shares, $0.01 par value; 12,000,000
issued and outstanding (2021 – 12,000,000) (note 16
(c)) |
296.9 |
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296.9 |
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Shareholders’ equity: |
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Share capital (note 16): |
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Preferred shares; $0.01 par value; 150,000,000 shares authorized
(2021 – 150,000,000);
20,118,833 shares issued and outstanding (2021 –
20,118,833)
Common shares; $0.01 par value; 400,000,000 shares authorized (2021
– 400,000,000);
251,875,620 shares issued and outstanding (2021 –
247,024,699);
727,351 shares held in treasury (2021 –
727,351) |
2.5 |
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2.4 |
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Additional paid in capital |
3,531.4 |
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3,526.8 |
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Retained earnings |
124.6 |
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7.5 |
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Accumulated other comprehensive loss |
(18.9) |
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(19.1) |
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3,639.6 |
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3,517.6 |
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$ |
10,596.7 |
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$ |
10,569.6 |
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Commitments and contingencies (note 19)
Subsequent events (note 21)
See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Interim Consolidated Statements of Operations
(Unaudited)
(Expressed in millions of United States dollars, except per share
amounts)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Revenue (note 3) |
$ |
408.1 |
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$ |
372.6 |
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Operating expenses: |
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Operating expenses |
86.6 |
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80.6 |
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Depreciation and amortization |
88.1 |
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87.3 |
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General and administrative |
27.9 |
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19.1 |
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Indemnity claim under acquisition agreement (note 9) |
(13.5) |
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— |
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Operating leases (note 11) |
33.6 |
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36.1 |
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Loss (Gain) on sale (note 6) |
2.4 |
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(0.5) |
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225.1 |
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222.6 |
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Operating earnings |
183.0 |
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150.0 |
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Other expenses (income): |
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Interest expense |
45.8 |
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46.8 |
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Interest income |
(0.2) |
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(0.5) |
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Equity income on investment |
(0.7) |
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— |
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Gain on derivative instruments (note 20(c)) |
(40.7) |
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(8.7) |
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Other expenses |
9.1 |
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8.1 |
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13.3 |
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45.7 |
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Net earnings before income tax |
169.7 |
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104.3 |
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Income tax expense (note 15) |
0.3 |
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6.7 |
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Net earnings |
$ |
169.4 |
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$ |
97.6 |
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Earnings per share (note 17): |
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Common share, basic |
$ |
0.62 |
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$ |
0.33 |
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Common share, diluted |
$ |
0.56 |
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$ |
0.31 |
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See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Interim Consolidated Statements of Comprehensive
Income
(Unaudited)
(Expressed in millions of United States dollars)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Net earnings |
$ |
169.4 |
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$ |
97.6 |
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Other comprehensive income: |
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Amounts reclassified to net earnings during the period
relating to cash flow hedging instruments (note
20(c)) |
0.2 |
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0.3 |
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Comprehensive income |
$ |
169.6 |
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$ |
97.9 |
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See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Interim Consolidated Statements of Shareholders’ Equity and
Cumulative Redeemable Preferred Shares
(Unaudited)
(Expressed in millions of United States dollars, except number of
shares and per share amounts)
Three months ended March 31, 2022
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Series J cumulative redeemable
preferred shares |
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Number of
common
shares |
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Number of
preferred
shares |
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Common
shares |
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Preferred
shares |
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Additional
paid-in
capital |
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Retained earnings |
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Accumulated other
comprehensive
loss |
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Total
shareholders’
equity |
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Shares |
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Amount |
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Balance, December 31, 2021, carried forward |
12,000,000 |
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$ |
296.9 |
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247,024,699 |
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20,118,833 |
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$ |
2.1 |
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$ |
0.3 |
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$ |
3,526.8 |
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$ |
7.5 |
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$ |
(19.1) |
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$ |
3,517.6 |
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Impact of accounting policy change (note 1(b)) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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(5.1) |
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— |
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(5.1) |
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Adjusted balance, December 31, 2021 |
12,000,000 |
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296.9 |
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247,024,699 |
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20,118,833 |
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2.1 |
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0.3 |
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3,526.8 |
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2.4 |
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(19.1) |
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3,512.5 |
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Net earnings |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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169.4 |
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— |
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169.4 |
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Other comprehensive income |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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0.2 |
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0.2 |
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Issuance of common shares from unissued acquisition related equity
consideration |
— |
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— |
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48,985 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Dividends on common shares
($0.125 per share) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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(31.6) |
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— |
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(31.6) |
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Dividends on preferred shares
(Series D - $0.50 per share;
Series H - $0.49 per share;
Series I - $0.50 per share;
Series J - $0.44 per share;) |
— |
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— |
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— |
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— |
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— |
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— |
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— |
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(15.2) |
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— |
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(15.2) |
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Shares issued through dividend reinvestment program |
— |
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— |
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6,262 |
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— |
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— |
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— |
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0.1 |
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(0.1) |
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— |
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— |
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Share-based compensation expense (note 16 (d) and 16
(e)) |
— |
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— |
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4,795,674 |
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— |
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0.1 |
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— |
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4.5 |
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(0.3) |
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— |
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4.3 |
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Balance, March 31, 2022 |
12,000,000 |
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$ |
296.9 |
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251,875,620 |
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20,118,833 |
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$ |
2.2 |
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$ |
0.3 |
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$ |
3,531.4 |
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$ |
124.6 |
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$ |
(18.9) |
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$ |
3,639.6 |
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See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Interim Consolidated Statements of Shareholders’
Equity
(Unaudited)
(Expressed in millions of United States dollars, except number of
shares and per share amounts)
Three months ended March 31, 2021
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Number of
common
shares |
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Number of
preferred
shares |
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Common
shares |
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Preferred
shares |
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Additional
paid-in
capital |
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Deficit |
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Accumulated other
comprehensive
loss |
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Total
shareholders'
equity |
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Balance, December 31, 2020, carried forward |
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246,277,338 |
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33,335,570 |
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$ |
2.1 |
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$ |
0.3 |
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$ |
3,842.7 |
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$ |
(199.2) |
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$ |
(20.3) |
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$ |
3,625.6 |
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Net earnings |
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— |
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— |
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— |
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— |
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— |
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97.6 |
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— |
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97.6 |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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0.3 |
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0.3 |
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Issuance of common shares from unissued acquisition related equity
consideration |
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173,819 |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Dividends on common shares
($0.125 per share) |
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— |
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— |
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— |
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— |
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— |
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(31.5) |
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— |
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(31.5) |
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Dividends on preferred shares
(Series D - $0.50 per share;
Series E - $0.52 per share;
Series G - $0.51 per share;
Series H - $0.49 per share;
Series I - $0.50 per share) |
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— |
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— |
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— |
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— |
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— |
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(16.8) |
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— |
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(16.8) |
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Shares issued through dividend reinvestment program |
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7,042 |
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— |
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— |
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— |
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0.1 |
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(0.1) |
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— |
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— |
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Share-based compensation expense |
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353,177 |
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— |
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— |
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— |
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3.4 |
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(0.3) |
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— |
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3.1 |
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Balance, March 31, 2021 |
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246,811,376 |
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33,335,570 |
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$ |
2.1 |
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$ |
0.3 |
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$ |
3,846.2 |
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$ |
(150.3) |
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$ |
(20.0) |
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$ |
3,678.3 |
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See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Interim Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in millions of United States dollars)
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Three Months Ended March 31, |
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2022 |
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2021 |
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Cash from (used in): |
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Operating activities: |
|
|
|
|
Net earnings |
$ |
169.4 |
|
|
$ |
97.6 |
|
|
Items not involving cash: |
|
|
|
|
Depreciation and amortization |
88.1 |
|
|
87.3 |
|
|
Change in right-of-use asset |
29.6 |
|
|
30.8 |
|
|
Non-cash interest expense and accretion |
5.6 |
|
|
11.9 |
|
|
Unrealized change in derivative instruments |
(46.8) |
|
|
(15.5) |
|
|
Amortization of acquired revenue contracts |
3.2 |
|
|
4.2 |
|
|
Equity income on investment |
(0.7) |
|
|
— |
|
|
Loss (Gain) on sale |
2.4 |
|
|
(0.5) |
|
|
Other |
4.5 |
|
|
8.3 |
|
|
Change in other operating assets and liabilities (note
18) |
(80.4) |
|
|
(42.6) |
|
|
Cash from operating activities |
174.9 |
|
|
181.5 |
|
|
|
|
|
|
|
Investing activities: |
|
|
|
|
Expenditures for property, plant and equipment and vessels under
construction |
(123.2) |
|
|
(199.9) |
|
|
Payment on settlement of interest swap agreements |
(5.0) |
|
|
(5.3) |
|
|
Loss on foreign currency repatriation |
(3.2) |
|
|
(6.0) |
|
|
Receipt from contingent consideration asset |
6.2 |
|
|
6.9 |
|
|
Other assets and liabilities |
45.3 |
|
|
3.0 |
|
|
Capitalized interest relating to newbuilds |
(9.3) |
|
|
(0.7) |
|
|
Cash used in investing activities |
(89.2) |
|
|
(202.0) |
|
|
|
|
|
|
Financing activities: |
|
|
|
|
Repayments of long-term debt and other financing
arrangements |
(71.5) |
|
|
(430.4) |
|
|
Issuance of long-term debt and other financing
arrangements |
— |
|
|
534.5 |
|
|
Financing fees |
(5.1) |
|
|
(2.5) |
|
|
Dividends on common shares |
(31.2) |
|
|
(31.1) |
|
|
Dividends on preferred shares |
(15.2) |
|
|
(16.8) |
|
|
Cash (used in) from financing activities |
(123.0) |
|
|
53.7 |
|
|
(Decrease) Increase in cash and cash equivalents |
(37.3) |
|
|
33.2 |
|
|
Cash and cash equivalents and restricted cash, beginning of
period |
326.8 |
|
|
342.5 |
|
|
Cash and cash equivalents and restricted cash, end of
period |
$ |
289.5 |
|
|
$ |
375.7 |
|
Supplemental cash flow information (note 18)
See accompanying notes to interim consolidated financial
statements.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
1.Significant
accounting policies:
(a)Basis
of presentation:
Except for the changes described in note 1(b), the accompanying
interim financial information of Atlas Corp. (the “Company” or
“Atlas”) has been prepared in accordance with accounting principles
generally accepted in the United States of America (“U.S. GAAP”),
on a basis consistent with those followed in the December 31, 2021
audited annual consolidated financial statements of Atlas. The
accompanying interim financial information is unaudited and
reflects all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for
a fair presentation of results for the interim periods presented.
The unaudited interim consolidated financial statements do not
include all the disclosures required under U.S. GAAP for annual
financial statements and should be read in conjunction with the
December 31, 2021 annual consolidated financial statements of Atlas
filed with the U.S. Securities and Exchange Commission in the
Company’s 2021 Annual Report on Form 20-F.
(b)Recent
accounting pronouncements
Discontinuation of LIBOR
In 2021, the Company adopted ASU 2020-04, “Reference Rate Reform
(Topic 848)”, prospectively to contract modifications. The guidance
provides optional relief for the discontinuation of LIBOR resulting
from rate reform. Contract terms that are modified due to the
replacement of a reference rate are not required to be remeasured
or reassessed under FASB’s relevant U.S. GAAP Topic. The election
is available by Topic. The Company has elected to apply the
optional relief for contracts under ASC 470, “Debt”, ASC 840 and
842, “Leases”, and ASC 815, “Derivatives and Hedging”. There was no
impact to the Company's financial statements upon initial adoption.
The LIBOR replacement modifications for Debt contracts will be
accounted for by prospectively adjusting the effective interest
rate in the agreements. Existing lease and derivative contracts
will require no reassessments. The ASU has not and is currently not
expected to have a material impact on our consolidated financial
statements.
Debt with conversion and other options
Effective January 1, 2022, the Company adopted ASU 2020-06, “Debt –
Debt with Conversion and Other Options (Subtopic 470-20)” (“ASU
2020-06”), using the modified retrospective method, whereby the
cumulative effect adjustment was made as of the date of the initial
application. Accordingly, financial information and disclosures in
the comparative period were not restated. The impact of the
adoption of ASU 2020-06 resulted in an adjustment of $5,073,000 to
opening retained earnings at January 1, 2022 related to the
unamortized debt discount that was initially recorded when the
convertible notes were issued. Under ASU 2020-06, the accounting
for convertible debt instruments is simplified by reducing the
number of accounting models and circumstances when embedded
conversion features are separately recognized. This update also
revises the method in which diluted earnings per share is
calculated related to certain instruments with conversion features,
among other clarifications. As a result of the adoption, the
Company recognizes the maximum potential dilutive effect of its
exchangeable notes in diluted EPS using the if-converted method
effective January 1, 2022.
(c)Comparative
information:
Certain prior period information has been reclassified to conform
with current financial statement presentation.
2.Segment
reporting:
For management purposes, the Company is organized based on its two
leasing businesses and has two reportable segments, containership
leasing and mobile power generation. The Company’s containership
leasing segment owns and operates a fleet of containerships which
are chartered primarily pursuant to long-term, fixed-rate time
charters. The Company’s mobile power generation segment owns and
operates a fleet of power generation assets, including
aero-derivative gas turbines and other equipment, and provides
power solutions to customers.
The Company’s chief operating decision makers monitor the operating
results of the leasing businesses separately for the purpose of
making decisions about resource allocation and performance
assessment based on adjusted EBITDA, which is computed as net
earnings before interest expense, income tax expense, depreciation
and amortization expense, impairments, write-down and gains/losses
on sale, gains/losses on derivative instruments, loss on foreign
currency repatriation, change in contingent consideration asset,
loss on debt extinguishment, other expenses and certain other items
that the Company believes are not representative of its operating
performance.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
2.Segment
reporting (continued):
The following tables include the Company’s selected financial
information by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2022 |
Containership Leasing |
|
Mobile Power Generation |
|
Elimination and Other |
|
Total |
|
Revenue |
$ |
384.6 |
|
|
$ |
23.5 |
|
|
$ |
— |
|
|
$ |
408.1 |
|
|
Operating expense |
75.0 |
|
|
11.6 |
|
|
— |
|
|
86.6 |
|
|
Depreciation and amortization expense |
78.4 |
|
|
9.7 |
|
|
— |
|
|
88.1 |
|
|
General and administrative expense |
13.9 |
|
|
11.4 |
|
|
2.6 |
|
|
27.9 |
|
|
Indemnity claim (income) under acquisition agreement |
— |
|
|
(13.5) |
|
|
— |
|
|
(13.5) |
|
|
Operating lease expense |
32.9 |
|
|
0.7 |
|
|
— |
|
|
33.6 |
|
|
Loss on sale |
2.0 |
|
|
0.4 |
|
|
— |
|
|
2.4 |
|
|
Interest income |
(0.1) |
|
|
(0.1) |
|
|
— |
|
|
(0.2) |
|
|
Interest expense |
40.9 |
|
|
5.1 |
|
|
(0.2) |
|
|
45.8 |
|
|
Income tax expense |
0.3 |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021 |
Containership Leasing |
|
Mobile Power Generation |
|
Elimination and Other |
|
Total |
|
Revenue |
$ |
331.6 |
|
|
$ |
41.0 |
|
|
$ |
— |
|
|
$ |
372.6 |
|
|
Operating expense |
68.2 |
|
|
12.4 |
|
|
— |
|
|
80.6 |
|
|
Depreciation and amortization expense |
75.2 |
|
|
12.1 |
|
|
— |
|
|
87.3 |
|
|
General and administrative expense |
11.7 |
|
|
6.6 |
|
|
0.8 |
|
|
19.1 |
|
|
Operating lease expense |
35.4 |
|
|
0.7 |
|
|
— |
|
|
36.1 |
|
|
Gain on sale |
— |
|
|
(0.5) |
|
|
— |
|
|
(0.5) |
|
|
Interest income |
(0.1) |
|
|
(0.4) |
|
|
— |
|
|
(0.5) |
|
|
Interest expense |
42.7 |
|
|
5.1 |
|
|
(1.0) |
|
|
46.8 |
|
|
Income tax expense |
0.1 |
|
|
6.6 |
|
|
— |
|
|
6.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31,
|
|
2022 |
|
2021 |
|
Containership leasing adjusted EBITDA |
$ |
262.8 |
|
|
$ |
216.3 |
|
|
Mobile power generation adjusted EBITDA(1)
|
13.3 |
|
|
21.3 |
|
|
Total segment adjusted EBITDA |
276.1 |
|
|
237.6 |
|
|
Eliminations and other |
(1.0) |
|
|
(0.3) |
|
|
Depreciation and amortization |
88.1 |
|
|
87.3 |
|
|
Interest income |
(0.2) |
|
|
(0.5) |
|
|
Interest expense |
45.8 |
|
|
46.8 |
|
|
Gain on derivative instruments |
(40.7) |
|
|
(8.7) |
|
|
Other expenses |
5.9 |
|
|
2.1 |
|
|
Loss on contingent consideration asset |
2.9 |
|
|
1.1 |
|
|
Loss on foreign currency repatriation |
3.2 |
|
|
6.0 |
|
|
Loss (Gain) on sale |
2.4 |
|
|
(0.5) |
|
|
Consolidated net earnings before tax |
$ |
169.7 |
|
|
$ |
104.3 |
|
(1)The
calculation of adjusted EBITDA does not include the Indemnity claim
under acquisition agreement (note 9) as an adjustment for the
mobile power generation segment. Although the revenue reported for
this segment is lower due to an injunction at one of the sites, the
losses are recoverable through an indemnification
agreement.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
2.Segment
reporting (continued):
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
March 31, 2022 |
|
December 31, 2021 |
|
Containership Leasing |
$ |
9,823.6 |
|
|
$ |
9,777.6 |
|
|
Mobile Power Generation |
830.4 |
|
|
842.7 |
|
|
Elimination and Other |
(57.3) |
|
|
(50.7) |
|
|
Total |
$ |
10,596.7 |
|
|
$ |
10,569.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
Capital expenditures by segment |
2022 |
|
2021 |
|
Containership leasing |
$ |
118.3 |
|
|
$ |
198.7 |
|
|
Mobile power generation |
4.9 |
|
|
1.2 |
|
3.Revenue:
Revenue disaggregated by segment and by type for the three months
ended March 31, 2022 and 2021 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2022
|
|
|
Containership Leasing(1)
|
|
Mobile Power Generation |
|
Total |
|
Operating lease revenue |
$ |
367.4 |
|
|
$ |
22.4 |
|
|
$ |
389.8 |
|
|
Interest income from leasing |
16.1 |
|
|
— |
|
|
16.1 |
|
|
Other |
1.1 |
|
|
1.1 |
|
|
2.2 |
|
|
|
$ |
384.6 |
|
|
$ |
23.5 |
|
|
$ |
408.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, 2021
|
|
|
Containership Leasing(1)
|
|
Mobile Power Generation |
|
Total |
|
Operating lease revenue |
$ |
320.5 |
|
|
$ |
38.2 |
|
|
$ |
358.7 |
|
|
Interest income from leasing |
10.0 |
|
|
— |
|
|
10.0 |
|
|
Other |
1.1 |
|
|
2.8 |
|
|
3.9 |
|
|
|
$ |
331.6 |
|
|
$ |
41.0 |
|
|
$ |
372.6 |
|
(1)Containership
leasing revenue includes both bareboat charter and time charter
revenue.
As at March 31, 2022, the minimum future revenues to be
received on committed operating leases, service arrangements
and interest income to be earned from direct financing leases are
as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease
(1)
|
|
Finance lease
(2)
|
|
Other |
|
Total committed revenue |
|
Remainder of 2022 |
$ |
1,232.1 |
|
|
$ |
47.8 |
|
|
$ |
3.1 |
|
|
$ |
1,283.0 |
|
|
2023 |
1,559.9 |
|
|
60.9 |
|
|
0.6 |
|
|
1,621.4 |
|
|
2024 |
1,356.2 |
|
|
58.2 |
|
|
— |
|
|
1,414.4 |
|
|
2025 |
906.5 |
|
|
55.2 |
|
|
— |
|
|
961.7 |
|
|
2026 |
469.9 |
|
|
53.1 |
|
|
— |
|
|
523.0 |
|
|
Thereafter |
345.1 |
|
|
393.1 |
|
|
— |
|
|
738.2 |
|
|
|
$ |
5,869.7 |
|
|
$ |
668.3 |
|
|
$ |
3.7 |
|
|
$ |
6,541.7 |
|
(1)Minimum
future operating lease revenue includes payments from signed
charter agreements on operating vessels that have not yet commenced
and includes $53,965,000 of lease payments from three vessels that
are classified as “Assets held for sale”.
(2)Minimum
future interest income includes direct financing leases currently
in effect.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
3.Revenue
(continued):
As at March 31, 2022, the minimum future revenues to be
received based on each segment are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Containership Leasing(1)(2)
|
|
Mobile Power Generation |
|
Total committed revenue |
|
Remainder of 2022 |
$ |
1,155.4 |
|
|
$ |
127.6 |
|
|
$ |
1,283.0 |
|
|
2023 |
1,517.2 |
|
|
104.2 |
|
|
1,621.4 |
|
|
2024 |
1,349.6 |
|
|
64.8 |
|
|
1,414.4 |
|
|
2025 |
896.9 |
|
|
64.8 |
|
|
961.7 |
|
|
2026 |
523.0 |
|
|
— |
|
|
523.0 |
|
|
Thereafter |
738.2 |
|
|
— |
|
|
738.2 |
|
|
|
$ |
6,180.3 |
|
|
$ |
361.4 |
|
|
$ |
6,541.7 |
|
(1)Minimum
future operating lease revenue includes payments from signed
charter agreements on operating vessels that have not yet commenced
and includes $53,965,000 of lease payments from three vessels that
are classified as “Assets held for sale”.
(2)Minimum
future interest income includes direct financing leases currently
in effect.
Minimum future revenues assume 100% utilization, extensions only at
the Company’s unilateral option and no renewals. It does not
include signed charter agreements on undelivered
vessels.
The Company’s revenue was derived from the following
customers:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2022
|
|
2021
|
|
COSCO |
$ |
121.1 |
|
|
$ |
106.8 |
|
|
Yang Ming Marine |
60.4 |
|
|
63.4 |
|
|
ONE |
58.6 |
|
|
64.3 |
|
|
Other |
168.0 |
|
|
138.1 |
|
|
|
$ |
408.1 |
|
|
$ |
372.6 |
|
4.Related
party transactions:
(a)The
income or expenses with related parties relate to amounts paid to
or received from individuals or entities that are associated with
the Company or with the Company’s directors or officers and these
transactions are governed by pre-arranged contracts.
(b)Over
the course of 2018, 2019 and 2020, Seaspan issued to Fairfax
Financial Holdings Limited and certain of its affiliates
("Fairfax") an aggregate $600,000,000 of 5.50% senior notes due in
2025, 2026 and 2027 (the
“Fairfax
Notes”)
and warrants to purchase an aggregate 101,923,078 common shares of
Seaspan. Two tranches of warrants, each for 38,461,539 common
shares, were exercisable at a price of $6.50 per share. One tranche
of warrants, for 25,000,000 common shares, was exercisable at a
price of $8.05 per share. As of April 7, 2022, all such warrants
have been exercised.
In April 2021, in connection with an amendment to the APR Energy
acquisition agreement, the Company issued to Fairfax warrants to
purchase 5,000,000 common shares of the Company at an exercise
price of $13.00 per share.
In June 2021, the Company and Seaspan exchanged and amended
$300,000,000 of the Fairfax Notes for (i) 12,000,000 Series J 7.00%
Cumulative Redeemable Perpetual Preferred Shares of the Company
(the “Series J Preferred Shares”), representing total liquidation
value of $300,000,000, and (ii) warrants to purchase 1,000,000
common shares at an exercise price of $13.71 per
share.
The exchanged Fairfax Notes were subsequently cancelled and, in
August 2021, Seaspan redeemed for cash the remaining Fairfax Notes
at a redemption price equal to 100% of the principal amount plus
any accrued and unpaid interest.
During the three months ended March 31,
2022,
the dividends paid on Series J Preferred Shares equal to
$5,250,000
(March 31, 2021 – nil).
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
4.Related
party transactions (continued):
(c)On
February 28, 2020, in connection with the acquisition of APR
Energy, Fairfax received common shares of Atlas as consideration
for its equity interests in APR Energy and as settlement of
indebtedness owing to Fairfax by APR Energy.
In addition, Atlas reserved for issuance Holdback Shares for
Fairfax. Fairfax remains a counterparty to certain indemnification
and compensation arrangements related to the acquisition of APR
Energy.
During the three months ended March 31, 2022,
48,985 common shares were issued out of Holdback Shares. These
Holdback Shares were released from the holdback of the minority
sellers and purchased by Fairfax. Fairfax also paid $2,885,000 to
the Company for settlement of an indemnity related to the cash
repatriation from a foreign jurisdiction. In addition, the Company
received $2,921,000 for the three months ended March 31, 2022
(March 31, 2021 – nil) from Fairfax for the settlement of
an
indemnity related to losses realized on sale or disposal of certain
property, plant and equipment and inventory items.
For the three months ended March 31, 2021, interest expense
related to the Fairfax Notes, excluding amortization of the debt
discount, was $8,250,000. For the three months ended March 31,
2021, amortization of debt discount was $5,494,000.
(d)As
at March 31, 2022, Fairfax held approximately 39.6% of the
Company’s issued and outstanding common shares and has designated
two members to the Company’s board of directors.
(e)As
at
March 31, 2022,
the Company has invested $1,000,000 (March 31, 2021
– nil) in a joint venture with Zhejiang Energy Group (“ZE JV”).
Pursuant to a ship management agreement, the Company manages the
ship operations of the vessel owned by the ZE JV.
During the
three months ended March 31, 2022, the Company earned revenue
of $489,000 (2021 – nil) and incurred expenses of $498,000 (2021 –
nil) in connection with the ship management of the
vessel.
5.Net
investment in lease:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Undiscounted lease receivable |
$ |
1,428.6 |
|
|
$ |
1,448.2 |
|
|
Unearned interest income |
(674.7) |
|
|
(689.9) |
|
|
Net investment in lease |
$ |
753.9 |
|
|
$ |
758.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Lease receivables |
$ |
753.9 |
|
|
$ |
751.4 |
|
|
Unguaranteed residual value |
— |
|
|
6.9 |
|
|
Net investment in lease |
753.9 |
|
|
758.3 |
|
|
Current portion of net investment in lease |
(17.1) |
|
|
(16.8) |
|
|
Net investment in lease |
$ |
736.8 |
|
|
$ |
741.5 |
|
At
March 31, 2022,
the minimum lease receivable from finance leases are as
follows:
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
59.7 |
|
|
2023 |
79.3 |
|
|
2024 |
79.5 |
|
|
2025 |
79.3 |
|
|
2026 |
79.3 |
|
|
Thereafter |
1,051.5 |
|
|
|
$ |
1,428.6 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
6.Property,
plant and equipment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
Cost |
|
Accumulated depreciation |
|
Net book value |
|
Vessels |
$ |
9,295.7 |
|
|
$ |
(2,855.0) |
|
|
$ |
6,440.7 |
|
|
Equipment and other |
564.1 |
|
|
(195.1) |
|
|
369.0 |
|
|
Property, plant and equipment |
$ |
9,859.8 |
|
|
$ |
(3,050.1) |
|
|
$ |
6,809.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
Cost |
|
Accumulated
depreciation |
|
Net book
value |
|
Vessels |
$ |
9,410.9 |
|
|
$ |
(2,830.4) |
|
|
$ |
6,580.5 |
|
|
Equipment and other |
557.3 |
|
|
(185.6) |
|
|
371.7 |
|
|
Property, plant and equipment |
$ |
9,968.2 |
|
|
$ |
(3,016.0) |
|
|
$ |
6,952.2 |
|
During the three months ended March 31, 2022, depreciation and
amortization expense relating to property, plant and equipment was
$80,486,000 (2021 – $80,006,000).
Vessel sales
In February 2022, the Company completed the sale of one 4,250 TEU
vessel to a liner company for gross proceeds of $32,750,000 and
recognized a gain on sale of $6,597,000.
Assets classified as held for sale
In December 2021, the Company entered into memoranda of agreement
with a liner company for the sale of three 4,250 TEU vessels. As at
December 31, 2021 these vessels were classified as held for use. In
February 2022, one of these vessels was delivered to the purchaser
as described above and the remaining two vessels were reclassified
as assets held for sale as at March 31, 2022.
An additional 4,250 TEU vessel was classified as held for sale at
March 31, 2022 and a loss on classification as asset held for
sale of $8,562,000 was recognized for this vessel (note
21).
7.Vessels
under construction
During the three months ended March 31, 2022, vessels under
construction includes $9,347,000 of capitalized interest and
$103,307,000 of installment payments (March 31, 2021 -
$776,000 and $179,220,000, respectively).
8.Right-of-use
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
Cost |
|
Accumulated amortization |
|
Net book value |
|
Vessel operating leases |
$ |
1,012.6 |
|
|
$ |
(353.4) |
|
|
$ |
659.2 |
|
|
Other operating leases |
14.5 |
|
|
(7.0) |
|
|
7.5 |
|
|
Vessel finance leases |
62.3 |
|
|
(0.7) |
|
|
61.6 |
|
|
Right-of-use assets |
$ |
1,089.4 |
|
|
$ |
(361.1) |
|
|
$ |
728.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
Cost |
|
Accumulated amortization |
|
Net book value |
|
Vessel operating leases |
$ |
1,066.6 |
|
|
$ |
(350.0) |
|
|
$ |
716.6 |
|
|
Office operating leases |
15.8 |
|
|
(7.5) |
|
|
8.3 |
|
|
Right-of-use assets |
$ |
1,082.4 |
|
|
$ |
(357.5) |
|
|
$ |
724.9 |
|
In January 2022, the Company exercised its option under an existing
lease financing arrangement to purchase one 10,000 TEU vessel. The
purchase is expected to complete in January 2023 at the
pre-determined purchase price of $52,690,000.
During the three months ended March 31, 2022, the amortization
of right-of-use assets was $29,600,000 (2021
– $30,777,000).
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
9.Other
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Intangible assets
(a)
|
$ |
86.2 |
|
|
$ |
90.1 |
|
|
Deferred dry-dock
(b)
|
75.8 |
|
|
79.4 |
|
|
Restricted cash |
38.2 |
|
|
38.2 |
|
|
Contingent consideration asset
(c)
|
40.7 |
|
|
49.2 |
|
|
Indemnity claim under acquisition agreement
(d)
|
56.1 |
|
|
42.5 |
|
|
Deferred financing fees on undrawn financing
(e)
|
75.3 |
|
|
77.0 |
|
|
Other |
48.8 |
|
|
48.0 |
|
|
|
$ |
421.1 |
|
|
$ |
424.4 |
|
(a)Intangible
assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
Cost |
|
Accumulated Amortization |
|
Net book value |
|
Customer contracts |
$ |
129.9 |
|
|
$ |
(80.2) |
|
|
$ |
49.7 |
|
|
Trademark |
27.4 |
|
|
(2.9) |
|
|
24.5 |
|
|
Other |
17.2 |
|
|
(5.2) |
|
|
12.0 |
|
|
|
$ |
174.5 |
|
|
$ |
(88.3) |
|
|
$ |
86.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2021 |
Cost |
|
Accumulated Amortization |
|
Net book value |
|
Customer contracts |
$ |
129.9 |
|
|
$ |
(76.2) |
|
|
$ |
53.7 |
|
|
Trademark |
27.4 |
|
|
(2.5) |
|
|
24.9 |
|
|
Other |
16.5 |
|
|
(5.0) |
|
|
11.5 |
|
|
|
$ |
173.8 |
|
|
$ |
(83.7) |
|
|
$ |
90.1 |
|
During the three months ended March 31, 2022, amortization
related to intangible assets was $4,592,000 (2021 –
$4,999,000).
Future amortization of intangible assets is as
follows:
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
13.6 |
|
|
2023 |
14.7 |
|
|
2024 |
11.9 |
|
|
2025 |
7.8 |
|
|
2026 |
4.2 |
|
|
Thereafter |
34.0 |
|
|
|
$ |
86.2 |
|
(b)Deferred
dry-dock:
During the three months ended March 31, 2022, changes in deferred
dry-dock were as follows:
|
|
|
|
|
|
|
December 31, 2021 |
$ |
79.4 |
|
|
Costs incurred |
3.7 |
|
|
Amortization expensed
(1)
|
(7.3) |
|
|
March 31, 2022 |
$ |
75.8 |
|
(1)Amortization
of dry-docking costs is included in depreciation and
amortization
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
9.Other
assets (continued):
(c)Contingent
consideration asset:
As a part of the acquisition of APR Energy on February 28, 2020,
the Company is compensated by the sellers for certain losses that
may be incurred on future cash repatriation from a foreign
jurisdiction until the earlier of (1) reaching the maximum cash
flows subject to compensation, (2) termination of specified
contracts, (3) sustaining the ability to repatriate cash without
losses, and (4) April 30, 2022. The amount of compensation depends
on the Company’s ability to generate cash flows on specific
contracts in the foreign jurisdiction and the magnitude of losses
incurred on repatriation. The maximum amount of cash flows subject
to compensation is $110,000,000. In February 2021, Fairfax
additionally agreed to compensate the Company for future losses
realized on sale or disposal of certain property, plant and
equipment and inventory items calculated as the difference between
the proceeds on sale or disposal and the book value of the
respective assets at February 28, 2020, prior to acquisition. The
maximum amount of losses subject to compensation under the February
2021 agreement is $64,000,000.
|
|
|
|
|
|
|
Contingent consideration asset, December 31, 2021
|
$ |
55.3 |
|
|
Change in fair value |
(2.9) |
|
|
Compensation received |
(6.2) |
|
|
Contingent consideration asset |
46.2 |
|
|
Current portion included in prepaid expenses and other |
(5.5) |
|
|
Contingent consideration asset, March 31, 2022
|
$ |
40.7 |
|
(d)Indemnity
claim under acquisition agreement
As a part of the acquisition of APR Energy on February 28, 2020,
the Company is compensated by the sellers for losses resulting from
an ongoing injunction on a certain site in Argentina. The losses
will be settled through a combination of cancellation of Holdback
Shares and cash at (i) the lifting of the injunction or (ii) the
expiry of the relevant contract in May 2022.
(e)Deferred
financing fees on undrawn financings
The Company has entered into financing arrangements for all of its
vessels under construction. As the financing arrangements are
undrawn as at March 31, 2022, the amounts incurred have been
capitalized and recorded as long-term asset. As the financing is
drawn, the amounts will be reclassified and presented as a direct
deduction from the related debt liability.
10.Long-term
debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Long-term debt: |
|
|
|
|
Revolving credit facilities
(a) (c)
|
$ |
— |
|
|
$ |
— |
|
|
Term loan credit facilities
(b) (c)
|
2,295.5 |
|
|
2,341.8 |
|
|
Senior unsecured notes
|
1,302.4 |
|
|
1,302.4 |
|
|
Senior unsecured exchangeable notes |
201.3 |
|
|
201.3 |
|
|
Senior secured notes
|
500.0 |
|
|
500.0 |
|
|
|
4,299.2 |
|
|
4,345.5 |
|
|
Debt discount on senior unsecured exchangeable notes |
— |
|
|
(5.1) |
|
|
Deferred financing fees |
(55.3) |
|
|
(57.6) |
|
|
Long-term debt |
4,243.9 |
|
|
4,282.8 |
|
|
Current portion of long-term debt |
(651.9) |
|
|
(551.0) |
|
|
Long-term debt |
$ |
3,592.0 |
|
|
$ |
3,731.8 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
10.Long-term
debt (continued):
(a)Revolving
credit facilities:
In February 2022, the Company closed a new $250,000,000, 3-year
unsecured revolving credit facility which replaces a $150,000,000
2-year unsecured revolving credit facility. At March 31, 2022
and December 31, 2021, the Company had three revolving credit
facilities, which provided, as at March 31, 2022, for aggregate
borrowings of up to $700,000,000 (December 31, 2021 –
$600,000,000), of which $700,000,000 (December 31, 2021 -
$600,000,000) was undrawn.
The Company is subject to commitment fees ranging between 0.45% and
0.5% (December 31, 2021 – 0.5% and 0.6%) calculated on the undrawn
amounts under the various facilities.
(b)Term
loan credit facilities:
As at March 31, 2022, the Company has entered into
$4,005,723,000 (December 31, 2021 – $4,052,103,000) of term loan
credit facilities, of which $1,710,224,000 (December 31, 2021 -
$1,710,224,000) was undrawn.
Term loan credit facilities drawn mature between December 31, 2022
and January 21, 2030.
For all but four of the Company’s term loan credit facilities,
interest is calculated based on three month or six month LIBOR plus
a margin per annum, dependent on the interest period selected by
the Company. The three month and six month average LIBOR was 0.7%
and 0.6%, respectively (December 31, 2021 – 0.2% and 0.2%) and the
margins ranged between 0.4% and 3.5% as at March 31, 2022
(December 31, 2021 – 0.4% and 3.5%).
For one of the term loan credit facilities with a total principal
amount outstanding of $24,005,000 (December 31, 2021 –
$27,198,000), interest is calculated based on the Export-Import
Bank of Korea (“KEXIM”) rate plus 0.7% per annum.
For two of the term loan credit facilities with a total principal
amount outstanding of $9,877,000 (December 31, 2021 – $10,923,000),
interest is calculated based on a fixed rate of 3.8% per
annum.
The weighted average rate of interest, including the applicable
margin, was 2.1% as at March 31, 2022 (December 31, 2021 –
1.9%) for the Company’s term loan credit facilities. One of the
Company’s term loan credit facilities bears interest at a fixed
rate of 7.7% per annum. Interest payments are made in monthly,
quarterly or semi-annual payments.
The Company is subject to commitment fees ranging between 0.2% and
0.6% (December 31, 2021 – 0.2% and 0.6%) calculated on the undrawn
amounts under the various facilities.
The following is a schedule of future minimum repayments of the
Company’s term loan credit facilities as of March 31,
2022.
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
509.1 |
|
|
2023 |
376.5 |
|
|
2024 |
148.9 |
|
|
2025 |
146.1 |
|
|
2026 |
851.7 |
|
|
Thereafter |
263.2 |
|
|
|
$ |
2,295.5 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
10.Long-term
debt (continued):
(c)Credit
facilities – other:
As at March 31, 2022, the Company’s credit facilities were
primarily secured by first-priority mortgages granted on most of
its power generation assets and 62 of its vessels, together with
other related security. The security for each of the Company’s
current secured credit facilities may include, without
limitation:
•A
first priority mortgage on collateral assets;
•An
assignment of the Company’s lease agreements and earnings related
to the related collateral assets;
•An
assignment of the insurance policies covering each of the
collateral assets that are subject to a related mortgage and/or
security interest;
•An
assignment of the Company’s related shipbuilding contracts and the
corresponding refund guarantees; and
•A
pledge over the related retention accounts.
As at March 31, 2022, $1,479,550,000 principal amount of
indebtedness under one of the Company’s term loan and revolving
credit facilities, together with $500,000,000 of
sustainability-linked fixed rate notes with maturities from June
2031 to June 2036, was secured by a portfolio of 49 vessels, the
composition of which can be changed, and is subject to a borrowing
base and portfolio concentration requirements, as well as
compliance with financial covenants and certain negative
covenants.
The Company may prepay certain amounts outstanding without penalty,
other than breakage costs in certain circumstances, with the
exception of one term loan credit facility, where the Company may
prepay borrowings up to March 6, 2023 with penalties and thereafter
without penalty. A prepayment may be required as a result of
certain events, including (without limitation) a change of control,
the sale or loss of assets, or a termination or expiration of
certain lease agreements (and the inability to enter into a lease
replacing the terminated or expired lease acceptable to lenders
within a specified period of time). The amount that must be prepaid
may be calculated based on the loan to market value. In these
circumstances, valuations of the Company’s assets are conducted on
a “without lease” and/or “orderly liquidation” basis as required
under the credit facility agreement.
Each credit facility contains a mix of financial covenants
requiring the borrower and/or guarantor of the facility to maintain
minimum liquidity, tangible net worth, interest and principal
coverage ratios, and debt-to-assets ratios, as defined. Each of
Atlas and Seaspan are guarantors under certain
facilities.
Some of the facilities also have an interest and principal coverage
ratio, debt service coverage and vessel value requirement for the
subsidiary borrower. The Company was in compliance with these
covenants as at March 31, 2022.
11.Operating
lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Operating lease commitments |
$ |
735.2 |
|
|
$ |
791.2 |
|
|
Impact of discounting |
(92.8) |
|
|
(104.6) |
|
|
Impact of changes in variable rates |
18.5 |
|
|
30.8 |
|
|
Operating lease liabilities |
660.9 |
|
|
717.4 |
|
|
Current portion of operating lease liabilities |
(145.3) |
|
|
(155.1) |
|
|
Operating lease liabilities |
$ |
515.6 |
|
|
$ |
562.3 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
11.Operating
lease liabilities (continued):
Operating lease costs related to vessel sale-leaseback transactions
are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
| |
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
Lease costs: |
|
|
|
|
Operating lease costs |
$ |
36.3 |
|
|
$ |
40.9 |
|
|
Variable lease adjustments |
(2.7) |
|
|
(3.8) |
|
|
|
|
|
|
|
Other information: |
|
|
|
|
Operating cash outflow used for operating leases |
33.0 |
|
|
35.5 |
|
|
Weighted average discount rate(1)
|
4.8 |
% |
|
4.8 |
% |
|
Weighted average remaining lease term |
5 years |
|
6 years |
(1)The
weighted average discount rate is based on a fixed rate at the time
the lease was entered into and is adjusted quarterly as each lease
payment is made.
12.Finance
lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Finance lease liabilities |
$ |
59.3 |
|
|
$ |
— |
|
|
Current portion of finance lease liabilities |
(59.3) |
|
|
— |
|
|
Long-term finance lease liabilities |
$ |
— |
|
|
$ |
— |
|
In January 2022, the Company exercised its option under an existing
operating lease to purchase one 10,000 TEU vessel. The purchase is
expected to complete in January 2023 at the pre-determined purchase
price of $52,690,000.
As at March 31, 2022, the total remaining commitments related
to financial liabilities of this vessel were approximately
$60,383,000 (December 31, 2021 – nil), including imputed interest
of $1,118,000 (December 31, 2021 – nil), repayable from 2022
through 2023.
The weighted average interest rate on obligations related to
finance leases as at March 31, 2022 was 3.2%.
13.Other
financing arrangements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Other financing arrangements |
$ |
1,338.0 |
|
|
$ |
1,363.1 |
|
|
Deferred financing fees |
(25.0) |
|
|
(23.3) |
|
|
Other financing arrangements |
1,313.0 |
|
|
1,339.8 |
|
|
Current portion of other financing arrangements |
(100.8) |
|
|
(100.5) |
|
|
Other financing arrangements |
$ |
1,212.2 |
|
|
$ |
1,239.3 |
|
Based on amounts funded for other financing arrangements, payments
due to lessors would be as follows:
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
75.9 |
|
|
2023 |
101.4 |
|
|
2024 |
102.6 |
|
|
2025 |
97.4 |
|
|
2026 |
94.2 |
|
|
Thereafter |
866.5 |
|
|
|
$ |
1,338.0 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
14.Other
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Asset retirement obligations(a)
|
$ |
35.1 |
|
|
$ |
37.4 |
|
|
Other |
35.0 |
|
|
22.3 |
|
|
Other long-term liabilities |
70.1 |
|
|
59.7 |
|
|
Current portion of other long-term liabilities |
(54.5) |
|
|
(42.0) |
|
|
Other long-term liabilities |
$ |
15.6 |
|
|
$ |
17.7 |
|
(a)Asset
retirement obligations:
|
|
|
|
|
|
|
Asset retirement obligations, December 31, 2021
|
$ |
37.4 |
|
|
Liabilities incurred |
(2.3) |
|
|
Asset retirement obligations, March 31, 2022
|
$ |
35.1 |
|
15.Income
tax:
The effective tax rate for the three months ended March 31,
2022 was 0.2% (March 31, 2021 – 6.4%). The tax rate was
significantly lower than the United Kingdom statutory rate of 19%
primarily due to international shipping reciprocal
exemptions.
16.Share
capital:
(a)Common
shares:
Pursuant to the APR Energy acquisition agreement, Holdback Shares
are issuable to the sellers at a future date, subject to settlement
of potential future events. As of March 31, 2022, 6,040,399
common shares are issuable as Holdback Shares, including 727,351
shares held in treasury.
During the three months ended March 31, 2022, 48,985 Holdback
Shares were released from holdback and issued to the
Sellers.
In March 2022, the Company’s stock incentive plan was amended and
restated to increase the number of common shares issuable under the
plan from 10,000,000 to 20,000,000.
(b)Preferred
shares:
As at March 31, 2022, the Company had the following preferred
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liquidation preference |
|
|
|
Shares |
|
Dividend rate
per annum |
|
Redemption by Company
permitted on or after(1)
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Series |
|
Authorized |
|
Issued |
|
|
|
|
|
D |
|
20,000,000 |
|
5,093,728 |
|
7.95 |
% |
|
January 30, 2018 |
|
$ |
127.3 |
|
|
$ |
127.3 |
|
|
H |
|
15,000,000 |
|
9,025,105 |
|
7.875 |
% |
|
August 11, 2021 |
|
225.6 |
|
|
225.6 |
|
|
I |
|
6,000,000 |
|
6,000,000 |
|
8.00 |
% |
|
October 30, 2023 |
|
150.0 |
|
|
150.0 |
|
|
J(2)
|
|
12,000,000 |
|
12,000,000 |
|
7.00 |
% |
|
June 11, 2021 |
|
300.0 |
|
|
300.0 |
|
(1)Redeemable
by the Company, in whole or in part, at a redemption price of
$25.00 per share plus unpaid dividends. The preferred shares are
not convertible into common shares and are not redeemable by the
holder.
(2)Dividends
are payable on the Series J Cumulative Redeemable Preferred Shares
at a rate of 7.0% for the first five years after the issue date,
with 1.5% increases annually thereafter to a maximum of
11.5%
The Company’s preferred shares are subject to certain financial
covenants. The Company was in compliance with these covenants on
March 31, 2022.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
16.Share
capital (continued):
(c)Cumulative
redeemable preferred shares:
As described in note 4(b), in June 2021, the Company and Seaspan
exchanged and amended $300,000,000 of the Fairfax Notes for (i)
12,000,000 Series J 7.00% Cumulative Redeemable Perpetual Preferred
Shares, representing total liquidation value of $300,000,000, and
(ii) warrants to purchase 1,000,000 common shares at an exercise
price of $13.71 per share.
Dividends are payable on the Series J Preferred Shares at a rate of
7.0% per annum for the first five years after the issuance, with
annual increases of 1.5% thereafter to a maximum of
11.5%.
(d)Restricted
shares:
During the three months ended March 31, 2022, the Company
granted 56,610 restricted shares to its board of directors which
vest on January 1, 2023. In March 2022, the Company granted
4,000,000 unrestricted, fully vested shares to the chairman of the
board with a requisite service period until September 1, 2027. From
the grant date to December 31, 2022, if he ceases to act as a
director, other than for reason of his death or disability, the
shares will be forfeited. From January 1, 2023 to the end of the
service period, except in the event of his death or disability, a
pro-rated number of shares will be returned for each month less
than 56 that he serves.
(e)Restricted
stock units:
During the three months ended March 31, 2022, the Company
granted 336,313 restricted stock units to certain members of senior
management. The restricted stock units generally vest over two
years, in equal tranches.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
17.Earnings
per share (“EPS”):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2022 |
|
Three Months Ended March 31, 2021 |
|
|
Earnings
(numerator)
|
|
Shares
(denominator)
|
|
Per share
amount
|
|
Earnings
(numerator)
|
|
Shares
(denominator)
|
|
Per share
amount
|
|
Net earnings |
$ |
169.4 |
|
|
|
|
|
|
$ |
97.6 |
|
|
|
|
|
|
Less preferred share dividends: |
|
|
|
|
|
|
|
|
|
|
|
|
Series D |
(2.5) |
|
|
|
|
|
|
(2.5) |
|
|
|
|
|
|
Series E(1)
|
— |
|
|
|
|
|
|
(2.8) |
|
|
|
|
|
|
Series G(1)
|
— |
|
|
|
|
|
|
(4.0) |
|
|
|
|
|
|
Series H |
(4.4) |
|
|
|
|
|
|
(4.5) |
|
|
|
|
|
|
Series I |
(3.0) |
|
|
|
|
|
|
(3.0) |
|
|
|
|
|
|
Series J |
(5.3) |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings attributable to common shareholders |
$ |
154.2 |
|
|
247,020,000 |
|
|
$ |
0.62 |
|
|
$ |
80.8 |
|
|
246,033,000 |
|
|
$ |
0.33 |
|
|
Effect of dilutive securities: |
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
2,391,000 |
|
|
|
|
— |
|
|
2,030,000 |
|
|
|
|
Fairfax warrants |
|
|
12,098,000 |
|
|
|
|
— |
|
|
9,284,000 |
|
|
|
|
Holdback shares |
|
|
3,521,000 |
|
|
|
|
— |
|
|
6,322,000 |
|
|
|
|
Senior unsecured exchangeable notes |
|
|
15,475,000 |
|
|
|
|
— |
|
|
— |
|
|
|
|
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest on senior unsecured exchangeable notes |
1.9 |
|
|
|
|
|
|
— |
|
|
|
|
|
|
Earnings attributable to common shareholders |
$ |
156.1 |
|
|
280,505,000 |
|
|
$ |
0.56 |
|
|
$ |
80.8 |
|
|
263,669,000 |
|
|
$ |
0.31 |
|
(1)On
July 1, 2021, the Company redeemed all of its outstanding 8.25%
Series E Cumulative Redeemable Preferred Shares and outstanding
8.20% Series G Cumulative Redeemable Perpetual Preferred shares for
cash at $25.00 per share plus all accrued and unpaid
dividends.
18.Supplemental
cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
Interest paid |
$ |
57.4 |
|
|
$ |
32.6 |
|
|
Interest received |
0.2 |
|
|
0.5 |
|
|
Undrawn credit facility fee paid |
6.3 |
|
|
0.4 |
|
|
Income taxes paid |
1.7 |
|
|
2.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
Non-cash financing and investing transactions: |
|
|
|
|
Change in right-of-use assets and operating lease
liabilities |
$ |
28.5 |
|
|
$ |
— |
|
|
Commencement of sales-type lease |
— |
|
|
88.1 |
|
|
Dividend reinvestment |
0.1 |
|
|
0.1 |
|
|
Interest capitalized on vessels under construction |
9.3 |
|
|
0.8 |
|
|
|
$ |
37.9 |
|
|
$ |
89.0 |
|
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
18.Supplemental
cash flow information (continued):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2022 |
|
2021 |
|
Changes in operating assets and liabilities |
|
|
|
|
Accounts receivable |
$ |
(11.0) |
|
|
$ |
(6.1) |
|
|
Inventories |
(3.9) |
|
|
(0.4) |
|
|
Prepaids expenses and other, and other assets |
(14.2) |
|
|
(8.1) |
|
|
Net investment in lease |
4.3 |
|
|
3.2 |
|
|
Accounts payable and accrued liabilities |
(21.1) |
|
|
(12.8) |
|
|
Settlement of decommissioning provisions |
(3.1) |
|
|
(0.4) |
|
|
Deferred revenue |
(17.3) |
|
|
(0.2) |
|
|
Income tax payable |
(2.6) |
|
|
5.1 |
|
|
Major maintenance |
(2.1) |
|
|
(5.6) |
|
|
Other liabilities |
9.1 |
|
|
(0.1) |
|
|
Operating lease liabilities |
(27.1) |
|
|
(30.0) |
|
|
Finance lease liabilities |
(3.0) |
|
|
— |
|
|
Derivative instruments |
6.1 |
|
|
6.8 |
|
|
Contingent consideration asset |
5.5 |
|
|
6.0 |
|
|
|
$ |
(80.4) |
|
|
$ |
(42.6) |
|
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, |
|
|
2022 |
|
2021 |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
251.3 |
|
|
$ |
337.5 |
|
|
Restricted cash included in other assets (note 9) |
38.2 |
|
|
38.2 |
|
|
Total cash, cash equivalents and restricted cash shown in
the
consolidated statements of cash flows
|
$ |
289.5 |
|
|
$ |
375.7 |
|
19.Commitments
and contingencies:
(a)Operating
leases:
At March 31, 2022, the commitment under operating leases for
vessels was $727,016,000 for the remainder of 2022 to 2029, and for
other leases was $8,147,000 for the remainder of 2022 to 2024.
Total commitments under these leases are as follows:
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
103.9 |
|
|
2023 |
139.3 |
|
|
2024 |
141.4 |
|
|
2025 |
127.8 |
|
|
2026 |
113.1 |
|
|
Thereafter |
109.7 |
|
|
|
$ |
735.2 |
|
For operating leases indexed to three-month LIBOR, commitments
under these leases are calculated using the LIBOR in place as at
March 31, 2022 for the Company.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
19.Commitments
and contingencies:
(b)
Vessel commitment:
As at March 31, 2022, the Company had entered into agreements
to acquire 67 vessels (December 31, 2021 – 67 vessels). The Company
has outstanding commitments for the remaining installment payments
as follows:
|
|
|
|
|
|
|
Remainder of 2022 |
$ |
965.1 |
|
|
2023 |
2,747.4 |
|
|
2024 |
2,457.8 |
|
|
Total |
$ |
6,170.3 |
|
(c)Letter
of credit:
As at March 31, 2022, the Company had $10,350,000 (December
31, 2021
–
$10,350,000) in letters of credit outstanding in support of its
mobile power generation business, all of which are
unused.
20.Financial
instruments:
(a)Fair
value
The carrying values of cash and cash equivalents, short-term
investments, restricted cash, accounts receivable, accounts
payable, income tax payable and accrued liabilities approximate
their fair values because of their short term to
maturity.
As of March 31, 2022, the fair value of the Company’s
revolving credit facilities and term loan credit facilities,
excluding deferred financing fees was $2,270,792,000 (December 31,
2021 – $2,326,568,000) and the carrying value was $2,295,499,000
(December 31, 2021 – $2,341,879,000). As of March 31, 2022,
the fair value of the Company’s other financing arrangements,
excluding deferred financing fees, was $1,394,100,000 (December 31,
2021 – $1,419,508,000) and the carrying value was $1,337,977,000
(December 31, 2021 – $1,363,098,000). The fair value of the
revolving and term loan credit facilities and other financing
arrangements, excluding deferred financing fees, was estimated
based on expected principal repayments and interest, discounted by
relevant forward rates plus a margin appropriate to the credit risk
of the Company. Therefore, the Company categorized the fair value
of these financial instruments as Level 2 in the fair value
hierarchy.
As of March 31, 2022, the fair value of the Company’s senior
unsecured notes was $1,341,013,000 (December 31, 2021 –
$1,349,212,000) and the carrying value was $1,302,350,000 (December
31, 2021 – $1,302,350,000). The fair value of the Company’s senior
unsecured exchangeable Notes was $198,724,000 (December 31, 2021 –
$209,566,000) and the carrying value was $201,250,000 (December 31,
2021
–
$201,250,000) or $201,250,000 (December 31, 2021
–
$196,177,000), net of debt discount. The fair value of the
Company’s senior secured notes was $453,873,000 (December 31,
2021
–
$456,875,000) and the carrying value was $500,000,000 (December 31,
2021
–
$500,000,000). The fair value was calculated using the present
value of expected principal repayments and interest discounted by
relevant forward rates plus a margin appropriate to the credit risk
of the Company. As a result, these amounts were categorized as
Level 2 in the fair value hierarchy.
The Company’s interest rate derivative financial instruments are
re-measured to fair value at the end of each reporting period. The
fair values of the interest rate derivative financial instruments
have been calculated by discounting the future cash flow of both
the fixed rate and variable rate interest rate payments. The
discount rate is derived from a yield curve created by nationally
recognized financial institutions adjusted for the associated
credit risk. The fair values of the interest rate derivative
financial instruments are determined based on inputs that are
readily available in public markets or can be derived from
information available in publicly quoted markets. Therefore, the
Company categorized the fair value of these derivative financial
instruments as Level 2 in the fair value hierarchy.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
20.Financial
instruments (continued):
(a)Fair
value (continued):
As part of the acquisition of APR Energy, the Company obtained a
contingent consideration asset related to compensation the Company
will receive from the sellers on losses that may be generated from
cash repatriation from a foreign jurisdiction. The fair value of
the contingent consideration asset is calculated as the present
value of expected future compensable losses from conversion of cash
from foreign currency to US dollars, derived from the discount
expected to be realized on repatriation of cash from the foreign
jurisdiction over a specified period of time, which is a
significant unobservable input. As such, the Company categorized
the fair value of the contingent consideration asset as Level 3 in
the fair value hierarchy. The discount expected to be realized on
future repatriation of cash as of March 31, 2022 is 52%. An
increase of 5% on the discount would result in an increase in the
fair value of approximately $55,000. A decrease of 5% on the
discount would result in a decrease in the fair value of
approximately $55,000.
As part of the acquisition of APR Energy, the Company also obtained
a contingent consideration asset related to compensation the
Company expects to receive from Fairfax on losses realized on
future sale or disposal of certain property, plant and equipment
and inventory items. The fair value of the contingent consideration
asset is determined based on the present value of expected future
compensation, calculated as the difference between the book value
of the respective assets at acquisition and the realizable value of
the asset obtained from market quotes, which is a significant
unobservable input. As such, the Company categorized the fair value
of the contingent consideration asset as Level 3 in the fair value
hierarchy.
Unobservable inputs for recurring and non-recurring Level 3
disclosures are obtained from third parties whenever possible and
reviewed by the Company for reasonableness.
(b)Interest
rate swap derivatives:
As of March 31, 2022, the Company had the following
outstanding interest rate derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed per annum rate swapped for LIBOR
|
|
Notional
amount as of
March 31, 2022
|
|
Maximum
notional
amount(1)
|
|
Effective date |
|
Ending date |
|
0.1925% |
|
$ |
500.0 |
|
|
$ |
500.0 |
|
|
January 31, 2022 |
|
January 31, 2032 |
|
5.4200% |
|
269.6 |
|
|
269.6 |
|
|
September 6, 2007 |
|
May 31, 2024 |
|
1.6490% |
|
160.0 |
|
|
160.0 |
|
|
September 27, 2019 |
|
May 14, 2024 |
|
0.7270% |
|
125.0 |
|
|
125.0 |
|
|
March 26, 2020 |
|
March 26, 2025 |
|
1.6850% |
|
110.0 |
|
|
110.0 |
|
|
November 14, 2019 |
|
May 15, 2024 |
|
0.6300% |
|
94.0 |
|
|
94.0 |
|
|
January 21, 2021 |
|
October 14, 2026 |
|
0.6600% |
|
94.0 |
|
|
94.0 |
|
|
February 4, 2021 |
|
October 14, 2026 |
|
1.4900% |
|
25.6 |
|
|
25.6 |
|
|
February 4, 2020 |
|
December 30, 2025 |
(1)Over
the term of the interest rate swaps, the notional amounts increase
and decrease. These amounts represent the peak notional amount over
the remaining term of the swap.
If interest rates remain at their current levels, the Company
expects that $8,998,000 would be settled in cash in the next 12
months on interest rate swaps maturing after March 31, 2022.
The amount of the actual settlement may be different depending on
the interest rate in effect at the time settlements are
made.
ATLAS CORP.
Notes to Interim Consolidated Financial Statements
(Unaudited)
(Tabular amounts in millions of United States dollars, except per
share amount and number of shares)
20.Financial
instruments (continued):
(c)Financial
instruments measured at fair value:
The following provides information about the Company’s financial
instruments measured at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2022 |
|
December 31, 2021 |
|
Contingent consideration asset (note 9(c)) |
$ |
46.2 |
|
|
$ |
55.3 |
|
|
Fair value of derivative assets |
|
|
|
|
Interest rate swaps |
39.0 |
|
|
6.1 |
|
|
Fair value of derivative liabilities |
|
|
|
|
Interest rate swaps |
14.6 |
|
|
28.5 |
|
The following table provides information about gains and losses
included in net earnings and reclassified from accumulated other
comprehensive loss (“AOCL”) into earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
2022 |
|
2021 |
(Gain) Loss on recognized
in net earnings: |
|
|
|
|
(Gain) on interest rate swaps |
$ |
(40.7) |
|
|
$ |
(9.4) |
|
|
Loss on derivative put instrument |
— |
|
|
0.7 |
|
|
Loss on contingent consideration asset |
2.9 |
|
|
1.1 |
|
|
Loss reclassified from AOCL to net earnings(1)
|
|
|
|
|
Depreciation and amortization |
0.2 |
|
|
0.3 |
|
(1)The
effective portion of changes in unrealized loss on interest rate
swaps was recorded in accumulated other comprehensive income until
September 30, 2008 when these contracts were de-designated as
accounting hedges. The amounts in accumulated other comprehensive
income will be recognized in earnings when and where the previously
hedged interest is recognized in earnings.
The estimated amount of AOCL expected to be reclassified to net
earnings within the next 12 months is approximately
$1,019,000.
21.Subsequent
events:
a)On
April 7, 2022, the Company declared quarterly dividends of
$0.496875, $0.492188, $0.500000 and $0.437500 per Series D, Series
H, Series I and Series J preferred share, respectively,
representing a total distribution of $15,223,000.00. The dividends
were paid on May 2, 2022.
b)On
April 7, 2022, the Company declared quarterly dividends of $0.125
per common share to all shareholders of record as of April 20,
2022. The dividends were paid on May 2, 2022.
c)In
April 2022, the Company completed the sale of one 4,250 TEU vessel
that was classified as “Assets held for Sale” for gross proceeds of
$15,500,000. The Company continues to manage the ship operations of
the vessel pursuant to a ship management agreement.
d)In
April 2022, the Company entered into memoranda of agreement to sell
four 4,250 TEU vessels, all of which are expected to be completed
in the second and third quarters of 2022, subject to closing
conditions.
e)In
April 2022, Fairfax exercised warrants to purchase 25,000,000
common shares of Atlas at an exercise price of $8.05 per share, for
an aggregate exercise price of $201,250,000.
f)In
April 2022, the Company exercised options to purchase two 10,000
TEU vessels. The purchases are expected to complete in April and
May 2023, respectively, at the pre-determined purchase price of
$52,690,000 per vessel.
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the unaudited
consolidated financial statements and related notes included in
this Report and the audited consolidated financial statements,
related notes and Management’s Discussion and Analysis of Financial
Condition and Results of Operations included in our Annual Report
on Form 20-F for the year ended December 31, 2021. The Annual
Report was filed with the U.S. Securities and Exchange Commission
on March 24, 2022. Unless otherwise indicated, all amounts are
presented in U.S. dollars, or USD. We prepare our consolidated
financial statements in accordance with U.S. GAAP.
Overview
General
We are Atlas Corp., a global asset manager and the parent company
of Seaspan Corporation (“Seaspan”) and APR Energy Ltd (together
with Apple Bidco Limited, “APR Energy”).
Atlas was incorporated in the Republic of the Marshall Islands in
October 2019 for the purpose of facilitating, and to become the
successor public company of Seaspan pursuant to, the
Reorganization. Atlas is a holding company and its sole assets are
its interests in Seaspan and APR Energy and their respective
subsidiaries.
Segment Reporting
For management purposes, the Company is organized based on its two
leasing businesses and has two reportable segments, containership
leasing and power generation. The Company’s containership leasing
segment, which is conducted through Seaspan, owns and operates a
fleet of containerships which are chartered primarily pursuant to
long-term, fixed-rate, time charters with major container liner
companies. The Company’s mobile power generation segment, which is
conducted through APR Energy, 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.
Containership leasing
Through Seaspan, we are a leading independent charter owner and
manager of containerships, which we charter primarily pursuant to
long-term, fixed-rate time charters with major container liner
companies. We primarily deploy our vessels on long-term, fixed-rate
time charters to take advantage of the stable cash flow and high
utilization rates that are typically associated with long-term time
charters. As at March 31, 2022, we operated a fleet of
132
vessels that have an average age of approximately eight years, on a
TEU weighted basis.
Customers for our operating fleet as at March 31, 2022 are as
follows:
|
|
|
|
|
|
|
|
|
Customers
for Current Fleet
|
Number of vessels
under charter |
TEUs under charter |
|
CMA CGM |
17 |
160,950 |
|
COSCO |
28 |
243,750 |
|
Hapag-Lloyd(1)
|
16 |
124,550 |
|
Maersk |
20 |
90,500 |
|
MSC |
9 |
103,600 |
|
ONE |
21 |
184,030 |
|
Yang Ming Marine |
15 |
210,000 |
|
ZIM |
6 |
30,600 |
|
Total |
132 |
1,147,980 |
(1)As
at March 31, 2022, two vessels are off charter and commenced
charters with Hapag-Lloyd in April and May 2022.
Our primary objective for Seaspan is to continue to grow our
containership leasing business through accretive vessel
acquisitions as market conditions allow. Most of our customers’
containership business revenues are derived from the shipment of
goods from the Asia Pacific region, primarily China, to various
overseas export markets in the United States and in
Europe.
We use the term “twenty-foot equivalent unit”, or TEU, the
international standard measure of containers, in describing the
capacity of our containerships, which are also referred to as our
“vessels”.
The following table summarizes key facts regarding Seaspan’s fleet
as of March 31, 2022:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vessel Class
(TEU)
|
# Vessels (Total Fleet) |
|
# Vessels (of which are unencumbered) |
|
Average Age (Years)(1)
|
|
Average Remaining Charter Period (Years)(1)(2)
|
|
Average Daily Charter Rate (in thousands of USD) |
|
Days Off-Hire(3)
|
|
Total Ownership Days(4)
|
|
2500-3500 |
14 |
|
6 |
|
13.8 |
|
2.9 |
|
24.3 |
|
56 |
|
1,260 |
|
4250-5100 |
31 |
|
22 |
|
14.9 |
|
2.8 |
|
20.9 |
|
93 |
|
2,834 |
|
8500-9600(5)
|
18 |
|
4 |
|
12.1 |
|
3.9 |
|
40.1 |
|
11 |
|
1,620 |
|
10000-11000(6)
|
33 |
|
4 |
|
6.5 |
|
4.2 |
|
31.7 |
|
15 |
|
2,970 |
|
12000-13100(7)
|
19 |
|
— |
|
7.0 |
|
6.8 |
|
42.4 |
|
2 |
|
1,710 |
|
+14000 |
17 |
|
2 |
|
6.2 |
|
3.9 |
|
48.0 |
|
4 |
|
1,530 |
|
Total/Average |
132 |
|
38 |
|
8.5 |
|
4.0 |
|
33.4 |
|
181 |
|
11,924 |
(1)Averages
shown are weighted by TEU.
(2)Excludes
options to extend charter.
(3)Days
Off-Hire includes scheduled and unscheduled days related to vessels
being off-charter during the quarter ended March 31,
2022.
(4)Total
Ownership Days for the quarter ended March 31, 2022, includes
time charters and bareboat charters, and excludes days prior to the
initial charter hire date.
(5)Includes
3 vessel on bareboat charter.
(6)Includes
8 vessels on bareboat charter.
(7)Includes
4 vessels on bareboat charter.
Power Generation
Through APR Energy, we also operate a fleet of power generation
assets, providing power generation to customers including large
corporations and public and private utilities. Our mobile, turnkey
power plants are deployed in cities, countries, and industries
around the world in both developed and developing markets. As of
March 31, 2022, we operated a fleet of 30 aero-derivative gas
turbines and 409 diesel generators. The average age of our turbines
is approximately nine years and the average age of our diesel
generators is approximately twelve years.
Our primary objective is to drive sustained growth and optimize
cash flow by delivering operational excellence and providing a
broad range of innovated technologies and offerings to generate
customer value. Our revenues are primarily derived through power
generation and our turnkey services include plant design,
fast-tracked installation of generating equipment and balance of
plant, plant operation, and around-the-clock service and
maintenance.
We use the term “megawatts”, or MW, in describing the capacity of
our power generation equipment.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Type |
Fleet Size (MW) |
|
Contracted Fleet (MW) |
|
Contracted Revenue
(USD millions)
|
|
Average Remaining Contract Term (Years)(1)
|
|
Mobile Power Fleet |
1,320 |
|
1,186 |
|
$361.4 |
|
0.9 |
(1)Average
remaining contract term excludes extensions; weighted by MW
installed.
Significant Developments During the Quarter ended March 31,
2022 and Subsequent
Shipbuilding Contracts for Newbuild Containerships
As at March 31, 2022, Seaspan had entered into agreements with
shipyards to build 67 newbuild containerships that are summarized
below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Newbuilds |
Total TEU |
Month Ordered |
|
12200 TEU |
2 |
24,400 |
December 2020 |
|
24000 TEU |
2 |
48,000 |
February 2021 |
|
15000 TEU LNG |
10 |
150,000 |
February 2021 |
|
12000 TEU |
4 |
48,000 |
February 2021 |
|
15000 TEU |
4 |
60,000 |
February 2021 |
|
16000 TEU |
9 |
144,000 |
March 2021 |
|
15500 TEU |
6 |
93,000 |
March 2021 |
|
12000 TEU |
2 |
24,000 |
June 2021 |
|
15000 TEU |
3 |
45,000 |
June 2021 |
|
7000 TEU LNG |
15 |
105,000 |
July and September 2021 |
|
7000 TEU |
10 |
70,000 |
August 2021 |
|
Total |
67 |
811,400 |
|
Upon delivery, these vessels will commence long-term charters with
leading global liner companies.
Containership Sale Developments
In February 2022, Seaspan completed the sale of one vessel for
gross proceeds of $32.8 million. Seaspan continues to manage the
ship operations of this vessel pursuant to a management agreement
entered into in connection with the sale. As of March 31, 2022,
Seaspan had also entered into agreements for five more vessel
sales, one of which closed in April 2022. The remaining four vessel
sales are expected to complete in the second quarter of 2022,
subject to closing conditions.
In April 2022, Seaspan entered into agreements for the sale of an
additional four 4,250 TEU vessels, all of which are expected to be
completed in the second and third quarters of 2022, subject to
closing conditions.
Financing Development
On February 16, 2022, Seaspan closed its new $250.0 million 3-year
unsecured revolving credit facility (the “2022 RCF”), which
replaces a $150.0 million 2-year unsecured revolving credit
facility. The 2022 RCF includes several new lenders and
improvements driven by Seaspan’s improving credit quality,
including greater liquidity, tenor and pricing.
In April 2022, Seaspan exercised options to purchase two 10,000 TEU
vessels. The purchases are expected to complete in April and May
2023, respectively, at the predetermined purchase price of $52.7
million per vessel.
Fairfax Warrant Exercise
In April 2022, Fairfax Financial Holdings Limited (“Fairfax”)
exercised warrants to purchase 25.0 million common shares of Atlas.
The warrants, which were originally issued on July 16, 2018, had an
exercise price of $8.05 per common share for an aggregate exercise
price of $201.3 million. Immediately following this exercise,
Fairfax Financial Holdings and its affiliates held in aggregate
124,805,753 common shares, representing 45.1% of the then issued
and outstanding common shares of Atlas. Fairfax continues to hold
6.0 million warrants.
Mobile Power Generation Developments
In December 2021, APR Energy entered into a contract to provide a
customer with up to 226 MW of gas power generation capacity in
Itaguaí, Rio De Janeiro, Brazil, for a minimum of 12 consecutive
months commencing in May 2022. In March 2022, the term of this
contract was extended to 44 months. Additionally, APR Energy
entered into a contract with a US counterparty to rent to the
counterparty five turbines representing 120 MW for a minimum of 12
consecutive months which commenced in February 2022. APR Energy
also entered into a contract with Imperial Irrigation District
(“IID”) for three turbines to provide grid stabilization solutions
to Southern California for four months commencing June 1, 2022. The
contract with IID represents its first renewal with APR
Energy.
Dividends
On January 6, 2022, our Board of Directors declared the quarterly
cash dividends on our outstanding common and preferred shares for a
total distribution of $46.1 million paid on January 31,
2022.
On April 7, 2022, our Board of Directors declared the
quarterly cash dividends on outstanding common and preferred shares
for a total distribution of $49.8
million paid on
May 2, 2022.
Recent Changes to Directors and Senior Management
In
February 2022,
Karen Lawrie resigned as General Counsel of Atlas and
Seaspan.
Impacts of Recent Developments in Ukraine
Since February 2022, as a result of the invasion of Ukraine by
Russia, economic sanctions have been imposed by the U.S., the EU,
the UK and a number of other countries on Russian financial
institutions, businesses and individuals, as well as certain
regions within the Donbas region of Ukraine. The nature and extent
of such sanctions continue to evolve. While it is difficult to
estimate the impact of current or future sanctions on the Company’s
business and financial position, these sanctions could adversely
impact the Company’s operations and/or financial results. Due to
volatility in the region caused by the invasion, with the support
of our customers, our vessels have ceased trading to Russia for the
time being. Given that Ukrainians constitute a significant number
of our seafarers, we also anticipate we may face challenges to
recruit seafarers in sufficient numbers to replace Ukrainians
seafarers who are not able to or permitted to leave their country,
as well as Ukrainians seafarers currently onboard our vessels who
request to disembark to return home. Finally, we expect that the
Russia-Ukraine conflict may exacerbate market volatility, and may
impact access to and pricing of capital.
Effects of COVID-19
The impacts of COVID-19 on our business continue unchanged since
the date of our Annual Report on Form 20-F for year ended December
31, 2021 filed with the U.S. Securities and Exchange Commission on
March 24, 2022 (the “2021 Annual Report”), with the most
significant impacts being on our ability to conduct crew changes on
our vessels and the costs associated therewith. Please read “Item
5. Operating and Financial Review and Prospects—Management’s
Discussion and Analysis of Financial Condition and Results of
Operations—Effects of COVID-19” in our 2021 Annual Report for more
information.
Three Months Ended March 31, 2022, Compared with Three Months
Ended March 31, 2021
The following tables summarize Atlas’ consolidated financial
results for select information, as well as the segmental financial
results, for the three months ended March 31, 2022 and
2021.
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Financial Summary
(in millions of U.S. dollars, except earnings per share
amount)
|
Three Months Ended
March 31,
|
|
|
2022 |
|
2021 |
|
Revenue |
$ |
408.1 |
|
|
$ |
372.6 |
|
|
Operating expense |
86.6 |
|
|
80.6 |
|
|
Depreciation and amortization expense |
88.1 |
|
|
87.3 |
|
|
General and administrative expense |
27.9 |
|
|
19.1 |
|
|
Indemnity claim under acquisition agreement |
(13.5) |
|
|
— |
|
|
Operating lease expense |
33.6 |
|
|
36.1 |
|
|
Loss (Gain) on sale |
2.4 |
|
|
(0.5) |
|
|
Operating earnings |
183.0 |
|
|
150.0 |
|
|
Interest expense |
45.8 |
|
|
46.8 |
|
|
Net earnings |
169.4 |
|
|
97.6 |
|
|
Net earnings attributable to common shareholders |
154.2 |
|
|
80.8 |
|
|
Earnings per share, diluted |
0.56 |
|
|
0.31 |
|
|
Cash from operating activities |
174.9 |
|
|
181.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental Financial Summary
(in millions of U.S. dollars)
|
Three Months Ended March 31, 2022
|
|
|
Containership Leasing |
|
Mobile Power Generation |
|
Elimination and Other(1)
|
|
Total |
|
Revenue |
$ |
384.6 |
|
|
$ |
23.5 |
|
|
$ |
— |
|
|
$ |
408.1 |
|
|
Operating expense |
75.0 |
|
|
11.6 |
|
|
— |
|
|
86.6 |
|
|
Depreciation and amortization expense |
78.4 |
|
|
9.7 |
|
|
— |
|
|
88.1 |
|
|
General and administrative expense |
13.9 |
|
|
11.4 |
|
|
2.6 |
|
|
27.9 |
|
|
Indemnity claim (income) under acquisition agreement |
— |
|
|
(13.5) |
|
|
— |
|
|
(13.5) |
|
|
Operating lease expense |
32.9 |
|
|
0.7 |
|
|
— |
|
|
33.6 |
|
|
Loss on sale |
2.0 |
|
|
0.4 |
|
|
— |
|
|
2.4 |
|
|
Interest expense |
(0.1) |
|
|
(0.1) |
|
|
— |
|
|
(0.2) |
|
|
Interest income |
40.9 |
|
|
5.1 |
|
|
(0.2) |
|
|
45.8 |
|
|
Income tax expense |
0.3 |
|
|
— |
|
|
— |
|
|
0.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segmental Financial Summary
(in millions of U.S. dollars)
|
Three Months Ended March 31, 2021
|
|
|
Containership Leasing |
|
Mobile Power Generation |
|
Elimination and Other(1)
|
|
Total |
|
Revenue |
$ |
331.6 |
|
|
$ |
41.0 |
|
|
$ |
— |
|
|
$ |
372.6 |
|
|
Operating expense |
68.2 |
|
|
12.4 |
|
|
— |
|
|
80.6 |
|
|
Depreciation and amortization expense |
75.2 |
|
|
12.1 |
|
|
— |
|
|
87.3 |
|
|
General and administrative expense |
11.7 |
|
|
6.6 |
|
|
0.8 |
|
|
19.1 |
|
|
Operating lease expense |
35.4 |
|
|
0.7 |
|
|
— |
|
|
36.1 |
|
|
Gain on sale |
— |
|
|
(0.5) |
|
|
— |
|
|
(0.5) |
|
|
Interest income |
(0.1) |
|
|
(0.4) |
|
|
— |
|
|
(0.5) |
|
|
Interest expense |
42.7 |
|
|
5.1 |
|
|
(1.0) |
|
|
46.8 |
|
|
Income tax expense |
0.1 |
|
|
6.6 |
|
|
— |
|
|
6.7 |
|
(1)Elimination
and Other includes amounts relating to gain/loss on contingent
consideration asset, elimination of intercompany transactions and
unallocated amounts.
Operating Results – 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 our fleet.
Total Ownership Days increased by 495 days for the three months
ended March 31, 2022, compared with the same period in 2021.
The increase for the three months ended March 31, 2022 was due
to the delivery of seven vessels after March 31, 2021, which
contributed 630 days. This increase was partially offset by 135
fewer ownership days from the sale of two vessels.
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 last eight
consecutive quarters:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2021 |
|
2022 |
|
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Vessel Utilization: |
|
|
|
|