Seaspan Corporation (SSW)

Q4 2010 Earnings Call

March 14, 2011 8:30 am ET


Gerry Wang - CEO

Sai Chu - CFO


Michael Webber - Wells Fargo

Gregory Lewis - Credit Suisse



Welcome to the Seaspan Corporation conference call to discuss the financial results for quarter and year-ended December 31, 2010, Seaspan's dividend increase and progressive dividend policy, participation in a new containership investment venture with the Carlyle Group and the re-entering into the newbuilding market.

Hosting the call today is Gerry Wang, Chief Executive Officer, Seaspan Corporation, and Sai Chu, Chief Financial Officer of Seaspan Corporation. Mr. Wang and Mr. Chu will be making some introductory comments, and then we will open the call up to Q&A. I will now turn the call over to Sai Chu.

Sai Chu

Before we begin, please allow me to remind you that this presentation contains certain forward-looking statements as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events and our operations, performance and financial condition, including in particular, the likelihood of our success in developing and expanding our business, effect of benefits and results of our containership investment venture with Carlyle and others, and its effects on the growth of our business, expected company performance during 2011, 2012 and 2013, and our ability to significantly increase our dividends.

These forward-looking statements reflect management's current views only as of the date of this presentation and are not intended to give any assurance as to future results. As a result, you are cautioned not to rely on any forward-looking statements. Although these statements are based upon assumptions we believe to be reasonable based upon available information, they are subject to risks and uncertainties detailed from time to time in our periodic reports.

We expressly disclaim any obligations to update or revise any of these forward-looking statements, whether because of future events, new information, a change in our views or expectations, or otherwise. We make no prediction or statement about the performance of our common shares.

I would also like to remind you that during this call, we may discuss certain non-GAAP financial measures, including adjusted EBITDA, cash available for distribution to common shareholders, and normalized net earnings and normalized earnings per share.

In regards to such financial measures and for reconciliation of such measures to the most closely comparable U.S. GAAP-measures, please refer to our earnings release, which is available on our website.

We will now begin our presentation. Please refer to our webcast presentation slides as provided on our website. In addition, you will find further details regarding our Q4 and full year results in our earnings release issued this morning before markets open and further details about the containership investment venture and related transactions in our press release and report on Form 6-K also issued this morning.

I will now pass the call over to Gerry, who will provide details on our highlights for the quarter.

Gerry Wang

This call will include discussion on our financial and operational results, our new progressive dividend policy, our containership investment vehicle with Carlyle, and our re-entry into the newbuilding market by signing a letter of intent for New Panamax 10000 TEU vessels.

Please turn to Slide 4. I'll begin by discussing the progress Seaspan has made during the past year and year-to-date 2011, which we believe has strengthened the company's position as a leading independent container charter owner. During the fourth quarter and the full year 2010, Seaspan's business continues to operate as expected, enabling the company to post strong operational and financial results.

First, our fleet remains fully secured on primarily long term fixed rate time charters, and we continue to achieve high utilization. Second, all of our customers continue to perform in accordance with our charter agreement. Third, we continue to grow both our fleet and revenues by taking deliveries of new vessels. Finally, we took additional decisive steps to enhance our capital structure and the financial flexibility and to position us to grow in the most attractive ship acquisition environment in over a decade.

During the quarter and until now, we have taken delivery of four vessels. Also China's shipping has exercised the two-year charter expansion opportunities for both CSCL Hamburg and CSCL Chiwan.

Our operating fleet continues to perform well; for the fourth quarter, we achieved a high utilization rate of 99.7%. This utilization included five days of scheduled off-hire for the dry-dockings of the Dubai Express. We incurred nine days of unscheduled off-hire for the quarter for CSCL Sao Paulo.

As highlighted in the earnings release issued this morning, our Board has made the decision to increase our new dividends by 50% to $0.75 per share for 2011, annualized. This would start with an anticipated $0.1875 per share quarterly dividend for Q1, 2011. This decision was based on the expectation that the company's cash available for distribution to common shareholders will increased significantly, as we take delivery of our fully constructed newbuilding fleet.

In making this decision, the Board also took into account the industry's strong fundamentals and the company's conservative business model, as well as the sustainability of the dividend.

On that note, we have pleased to announce that the Board has adopted a new, progressive dividend policy. The new policy will focus on increasing our per share dividends commensurate with projected cash flow increases, while preserving our long-term financial strength and our ability to undertake additional fleet growth.

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