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spk01: Welcome to the Atlas Corp fourth quarter 2020 earnings conference call. I would like to remind everyone that this call is being recorded today, March 9th, 2021. I would now like to turn the call over to Robert Weiner, head of investor relations of Atlas Corp.
spk08: Thank you and good morning, everyone. Thank you for joining us today to discuss Atlas Corp's fourth quarter 2020 earnings. We issued our earnings release last evening after market closed. We will refer to our quarterly earnings release, accompanying earnings presentation, and supplemental documents today in this conference, which all can be found on the Investor Relations tab on our website, www.atlascorporation.com. On the call with me today are David Sokol, Chairman of the Board of Atlas Corp. Bing Chen, President and Chief Executive Officer of Atlas Corp, and Graham Talbot, Chief Financial Officer of Atlas Corp. Joining us on the call during the Q&A session are C-SPAN's Chief Commercial Officer, Peter Curtis, and C-SPAN's Chief Operational Officer, Torsten Peterson. I would like to remind you that our discussion today contains forward-looking statements, which are noted on slide two in the accompanying earnings presentation. Actual results make different materials from those stated or implied due to risks and uncertainties associated with our business. Our known risk factors are discussed in our Form 20F and our reports on Form 6K filed from time to time and in connection with our quarterly financial results, which are all available on our website. With this quarterly report, you will note that we continue to report non-GAAP measures, which we believe provide investors a clearer understanding of the performance of our business The fourth quarter earnings release contains supplemental financial tables and information pertaining to our fourth quarter earnings report and includes definitions of non-GAAP financial measures and reconciliations of such non-GAAP measures to the most closely comparable U.S. GAAP numbers. These definitions may also be found in the appendices at the back of the earnings presentation, which we will refer to in our call discussion. It can also be found on our website. In addition, we have provided historical financial information through 2018, which are also available in the Q4 supplemental workbook on our website. Please turn to slide number four. I am now pleased to turn the call over to Atlas Corp's Chairman of the Board, David Sokol.
spk04: Thank you, Rob, and good morning, everyone. This is Dave Sokol speaking, Chairman of the Board of Atlas Corp, and I'd like to welcome all participants today and express my appreciation for your time and attention to our presentation. I've asked Bing to allow me to open today's call with a bit of a look back over the past three years, which encompasses the time since Bing joined us as CEO in January of 2018. What Bing and his team have accomplished is extraordinary and deserving of clear recognition. We have a wonderful company, a global multi-platform business that our team is very excited about. Atlas is uniquely positioned as a long-term capital allocation global multi-platform investment opportunity with key attributes. Three of those attributes are, first, a resilient business model, which ended 2020 with nearly $11 billion in total gross contracted cash flow, pro forma for $5.9 billion of gross contracted cash flow, added from recent vessel acquisitions, including 31 new builds and two second-hand vessel acquisitions. To create greater clarity for investors, we will be discussing total contracted cash flow today and in the future. Secondly, Atlas's core competencies are consistent operational excellence, creative customer partnerships, solid financial strength, quality growth, and disciplined capital allocation. This is what drives our execution and results. And thirdly, the team has been delivering quality growth, enhancing fleet and asset and creating greater diversification of our customers through the addition of quality assets with long-term quality margin contracted revenue. Our 2020 performance clearly depicts a divergence in Atlas' performance as compared to our peers, and even more broadly as benchmarked against other mid-cap investment opportunities. Being in the team's positioning of C-SPAN has allowed for Atlas to aggressively take advantage of current industry dynamics. growing the business dramatically with excellent margin long-term charters, and taking advantage of shipyard opportunities due to our team's industry relationships and design and construction oversight talents. The container shipping industry dynamics were not meaningfully set back by COVID, and in some ways, COVID shined light upon the importance of our world's global container shipping efficiency. Our other platform, APR Energy, was substantially more affected by COVID, as developing governments were virtually shut down and the resulting economic slowdowns materially reduced electricity demand. However, these delays should turn into opportunities when the global COVID pandemic is resolved. The three-year performance you see on this slide, which depicts the management team's performance since 2017, shows strong growth in revenues, cash flow, and earnings, yet with little contribution from APR as it was only closed in February of 2020. This performance is reflective of processes, programs, strategies, and leadership that Bing and his teams have built and developed over the past three years. A formula for success, leveraging the company's five key competencies to produce these results. We are confident that as we now begin to apply that formula to APR, we will drive similar progress in the future to that of C-SPAN. A closer look at the results illustrates the very impressive performance and execution of this team. From the 2017 results through 2020, the performance is quite extraordinary. Revenue increased by 70.9% from $831 million to $1.42 billion at the end of 2020, a 19.6% compounded growth rate. Adjusted EVA DA increased from $496 million to $924 million at the end of 2020, representing a 23% compounded growth rate. Funds from operation increased by 146% from $253 million to $622 million at the end of 2020, a 35% compounded growth rate. And cash flow from operations went from $391 million to $694 million in 2020. This represents a cumulative annual growth rate of 21.1%. And we also made significant progress with the balance sheet and the capital structure measurements. Now please turn to slide five. This slide depicts what I view as very impressive progress. In fact, I would say great results. This is the performance that growth stocks are made of, and we are doing this with significant identifiable and easily valued assets that are backed by long-term gross contracted cash flows and earnings performance. It may be difficult to find other companies with nearly $11 billion of future long-term gross contracted cash flow. Atlas is that company. Atlas has added long-term gross contracted cash flows by a whopping $5.9 billion in about the last three months. This is very impressive, and it may seem that it occurred surprisingly quickly. However, the foundation for this growth had been laid during the prior three years through disciplined execution and a total focus upon the customer's needs and expectations. Since 2017, we've added 71 new vessels and over 890,000 TEUs, an 80% increase in a little over three years, while at the same time strengthening the fleet with newer, larger vessels on longer tenure charters. This is exceptional performance, especially when you consider the myriad of challenges posed over the last year from COVID. The board of directors and I are very pleased with the team's commitment to high quality growth and high performance. Please turn now to slide six. On the left of this slide, You'll see C-SPAN's vessel categories when this team started on our path to high performance. Our vessels were more concentrated in smaller, less desirable categories and with a more spot oriented mix. Now in 2021, you see growth to 160 vessels from 89 at the end of 2017. And the depth and breadth of today's fleet is a far higher quality with enhanced environmental equipment, thereby developing a more desirable and attractive offering to the customers. C-SPAN's primary focus is on expanding the 10,000 to 15,000 TEU fleet category, as these are attractive vessels for major trade lanes and are expected to be the workhorses of the global fleet in the coming decades. These vessel sizes are preferred for major routes, given their operating scale and efficiency. 79% of our fleet on a TEU-weighted basis is greater than 10,000 TEUs. With an average age of 5.3 years, which we believe is unmatched in the industry, and significantly differentiate our value proposition with our customers. Please turn to slide seven. This slide importantly depicts the significant diversification of the company's credit risk profile, which has been a focal point for Bing and the board. We went from a very concentrated customer mix to a very balanced mix of customers and revenue sources, which drastically reduces our credit risk. This transformation is even more compelling when you evaluate over the same period, 2017 through 2020, the dramatic uptick in the health of the industry and the much improved credit ratings of our customers, which have been on a steady rise during this period. Atlas is now positioned more securely and dynamically than at any point in the past, with a diversified customer mix, a much strengthened and improved quality of our fleet, a strong market, and increasingly positive credit ratings within the industry. We begin 2021 with a strong tailwind and we're very well positioned to execute future quality growth and value creation for our shareholders. Now please turn to slide eight. We have a strong safety culture at Atlas. It is integrated in everything we do as a company. Our priority will always be the safety and wellbeing of our team and business partners through operational excellence in every aspect of our business. Torsen and his team walk this talk every day. We take this very seriously at the board level, and the teams have robust programs to ensure safe operations successfully executed in our daily work streams. We value our team members, and we want them to return home healthy and safely after every shift. We also have a strong commitment to social responsibility, investing in our team, providing the tools, training, and programs to be good corporate citizens. You will see on this slide that our safety record has dramatically improved and sits near an all-time record lows, and it's being maintained. This was a focus of ours when I came in as chairman, and again the team has delivered. We are optimizing the success formula at C-SPAN, which we are carrying over to APR, which is seeking ISO 14001 certification in 2021. Now if you would please turn to slide nine. As you can see from the graph on slide nine, The formula this management team is implementing is working and effectively increasing value for shareholders. The team is executed with a high level of performance, illustrated by the 90% total return delivered to shareholders of Atlas over the past three years, far outperforming competitive peers, and even more so, the broader equity markets. Before I turn over the forum to Bing, our Chief Executive, I want to conclude my remarks by pointing out the philosophy and practice of the Board of Directors and the management team. And that is simply that Atlas is clearly a shareholder-focused company, performing for all of our shareholders, small and large, and consistently delivering increasing value for the shareholders. We expect to continue to deliver exceptional value and returns, demonstrating Atlas' compelling investment opportunity. We remain optimistic, determined, and focused on achieving sustainable value and growth. Please turn to slide 11. And lastly, the Board and I are extremely pleased with the team's progress to date, and we look forward to more success. We're pleased, but we're never satisfied. Thank you again for your attention. I will now turn the forum over to Atlas CEO, Bing Chin.
spk06: Thank you, David, and good morning, everyone. I would like to first welcome our new CFO, Graham Talbot. Graham is a full-fledged CFO with a world-class finance background and decades of experience at global organizations. Since joining in February, he is already a key contributor to our organization. In 2021, I look forward to working with members of the investment community, along with Graham and Rob, to increase your awareness and appreciation of Atlas' resilient and differentiated business model Now let me turn to our performance, and please turn to slide 13. Looking back at 2020, what a year it has been for the world and the markets. The pandemic, shutdowns, uncertainties, economic opportunities and consequences, and the volatility caused by it all. 2020 was quite a year of unprecedented challenges. I'm happy to report that not only have we exceeded our financial guidance for 2020, but we have emerged stronger, more resilient, and have proven our operational excellence. I'm very proud of Atlas' achievements in 2020, but especially how our team stood ready, adapted well, stayed focused, overcame obstacles, and executed with precision, safety, and compassion. Our 2020 performance was very strong, building significantly upon 2019's momentum. Atlas achieved the following financial milestones in the fourth quarter of 2020. Our core financial metrics all improved quite dramatically in the fourth quarter of 2020, including total revenue growth of 25.9%, adjusted EBITDA growth of 32%, Funds from operations, or FFO, grew significantly by 45.2%. FFO per diluted share growth was 26%. Cash flow from operations growth of 53.6%. This is quality growth. All matrix generated strong double-digit growth despite the operational challenges posed by pandemic. This is testament of our differentiated and resilient business model and our team's commitment to consistent operational excellence and a strong execution. Our 2020 results included an impairment of certain APR assets under purchase accounting principle following the acquisition in February 2020. The impairment resulted from an independent asset valuation assessment which also had further third party opinion and verification. We acquired APR in February 2020 and this process is a typical analysis which is completed following the first year ownership of acquired assets. But I would like to reiterate that we do not view this as a changing of our principles and the reasons why we acquire APR. The APR acquisition value proposition stands strong The business is stable and the platform remains viable for future expansion. APR has a strong track record and reputation in the fast power solution space. As we look ahead, we are confident in the prospects of APR. Our work will take some time to generate desired results, but we have a good path to follow. The C-SPAN formula and Atlas' fiscal discipline and capital allocations. Please turn to slide 15. Atlas, C-SPAN, and APR all made progress in 2020. C-SPAN had a record year while we focused on integrating APR into the C-SPAN model by executing our five key competencies. I will briefly highlight some major achievements. At the Atlas level, the most significant for our shareholders is the overachievement of our 2020 financial guidance. That is the result of diligence, discipline, and execution based on long-term fundamental and strategic planning. The formation of Atlas as an asset owner and operator created a business platform that can leverage C-SPAN's execution and strategy, which was developed when our chairman, David Sokol, and I teamed up late in 2017. At that time, we set a course to strengthen the C-SPAN model by focusing on our five key competencies. Our 2020 C-SPAN performance demonstrates that our strategy has been effective and the business has significantly improved. With the acquisition of APR, we gained a platform with an established presence in energy markets. Yet, a business that requires us to apply the C-SPAN formula to improve and create opportunities for growth in the future. We are confident that we will be effective in fueling APR to the next level. At C-SPAN, between December 2019 and 2020, we acquired 15 high-quality second-hand vessels, growing quality fleet to approximately 1.1 million TEU. we have since announced the quality growth of 487,000 TEU, growing 45.4% in very short time, primarily through new builds, which may appear as a return to C-SPAN's history of new build. But that is not the case, as we are applying our disciplined capital allocation strategies, which remains agnostic to new builds or second-hand vessels, C-SPAN is driving quality growth through both channels. This is because we are growing discretely in close partnerships with our customers to fulfill their business needs and provide win-win solutions. Very importantly, our new vessel growth of 487,000 TEU has added $5.9 billion of gross contracted cash flow to C-SPAN within the last few months. I'm particularly proud of our partnership with ZIM to close 10 new-built 15,000 TEU dual-fuel LNG vessels backed by a 12-year charter. Through this transaction, we further strengthen our commitment to ESG principles. We continue to expand the scope of our customer solutions by elevating our focus on lowering the impact of emissions through the addition of LNG-powered vessels to our fleet. You have seen C-SPAN execute sustainability-linked financing, which parallel to this fleet expansion and illustrates our resolve to contribute to the greener business community. As our long-term objective is to achieve an investment-grade corporate credit rating, during 2020, we made significant strides forward in our pursuit. We achieved investment grade of BBB minus senior secured rating from Crow Bond Rating Agency. We closed $250 million of sustainability-linked loan, a first in container shipping, adding to innovative portfolio financing program to reach about $1.8 billion at the year end. And we closed an initial placement in unsecured credit markets of $200 million 3.75% coupon exchange for senior notes. At APR, we closed $285 million of financing program, ensuring flexibility and liquidity. While it was a year filled with transition through the team's resolve and despite the energy markets during the pandemic, APR secured contracts to provide 265 megawatts of peaking power in Mexico. Very importantly, APR was the only company to execute a mobile gas turbine development during 2020. Historically, APR's model built a strong reputation for delivering when others could not, and primarily focused on serving the situations where in developing countries that need scalable power quickly, in areas that require power periodically or in peak demand, or where APR fulfills rescue power during natural disasters or other type of disruptive situations. As we develop APR, we will focus on continuing to leverage our expertise in these key markets while seeking to expand to long-term contracts. Also, we are adding new avenues of growth through longer duration contracts in large scale power projects. Our continuous laser focus on our five key competencies is the driving force behind all these achievements. We remain confident that we will carry the momentum into 2021. Please turn to slide 17. Atlas was certainly not immune to the effect of COVID. one of our key markets, energy, was significantly impacted months after we acquired APR. While continued global trade helped fuel a fast recovery in maritime and specifically container shipping, many APR peers, however, suffered through the global impacts resulting from the pandemics. Atlas and our shareholders benefited from our resilient and differentiated business model as our operational excellence delivered consistent and dependable financial performance throughout the entire year. Other businesses in our markets experienced great variability, less consistency and dependability, and for some in the energy markets, a significant decline in business activities. We stayed resilient and delivered. It is important to note the differentiation of our business model creates a high quality investment profile compared to many in our markets. What sets Atlas apart competitively is our focus on the growth and quality of our predictable cash flows and providing greater long-term visibility and dependability for our investors. Over the last three months, we have added $5.9 billion of gross contracted cash flow. At 2020 year end, more than 93% of C-SPAN's 2021 revenue guidance at the midpoint is already contracted. That is a resilient and differentiated business model. We are increasing the quality of our assets Compared to our peers, our fleet is younger, larger, and more sought after by our customers. We have the scalable operation, versatile fleet, and integrated platform to deliver best-in-class solutions that maximize value creation for our customers. We have the financial strength to create value in partnership with our customers, and we are focused on ESG principles to enrich our business model and to innovate positive changes within our industry. The attributes on this slide reiterate our competitive advantage and set our business model apart. Now, I'm excited to update you on our recent announcement. Yesterday, we issued a press release regarding our new joint venture with Zhejiang Energy Group, Atlas together with ZE Group will form a new entity to be incorporated in China's Hangzhou Free Trade Zone. This JV will invest in projects in the global maritime and power industries. ZE Group is a leading global company with a strong track record of successful energy-related projects and infrastructure design and development. We're excited by the prospects of the JV and anticipate jointly developing meaningful projects in the future. Please turn to slide 19. Now I would like to turn to a brief update and outlook for our markets in 2021. I'm pleased to say that container shipping market is very strong and the energy markets are becoming incrementally stronger which we view as highly positive developments following all the uncertainty and disruption last year. The container shipping industry continues to strengthen at a rapid pace from the market lows due to the pandemic. Idle vessel counts are at historical lows with charter rates at near historical highs and availability of any vessels above 4,000 TEU is very scarce. While the current container market is great, C-SPAN at any given time only have about 10% to 15% market exposure as the majority of our fleet is secured by long-term contracts. As of 2020 year end, more than 93% of C-SPAN's 2021 revenue guidance at the midpoint is under contract. Yes, the current rate environment help us to renew the contracts, but the resiliency of our model is not dependent on those upswings in the market. We remain optimistic about the strength in the rate and the global trade to achieve quality growth for Atlas. Today's balance of supply and demand is fundamentally stronger than it has been in the past. Global demand is expected to continue to rise this year with some catch-up due to the pandemic, but also forecast to continue in years to come. The health of market participants' balance sheets and liquidity have strengthened over the past years, and we are seeing greater sophistication and automation in the markets. Technologies enabling decision-making, planning, and execution have been much more precise you know, versus the past. This is great for the industry to achieve gains while adopting new green and emission reduction initiatives. You can see from this slide the projection of a global recovery in 2021 is strong with forecasted growth in the range of approximately 5 to 6%. This should support a continuing strong performance for C-SPAN. We are confident that Our focus at APR will produce incrementally positive outcomes and increase returns for our shareholders. Please turn to slide 20. The new growth we have announced since 2020 year end is a very exciting development. As you can see from this slide, we have announced the addition of 33 new vessels to be added to our fleet. These new additions are in very attractive categories, 31 vessels in a 10,000 to 15,000 TEU category, a 59% increase, and two new ultra-modern 24,000 TEU vessels in ultra-large category, a new category for us, positioning us as the only full-spectrum TEU providers in the marketplace. What is most important is the $5.9 billion of long-term gross contracted cash flow that we have secured with these new vessels. This brings our total long-term gross contracted cash flow, as our chairman mentioned earlier, to $11 billion with an average duration of 6.5 years. You can also see that we are diversifying our revenue sources, particularly as a result of a growing partnership with Zim, we have a well-diversified revenue base with very strong customers. This strong growth demonstrates the resilient and differentiated business model we enjoy at Atlas. That concludes my formal remarks, and I'm now pleased to turn the call over to Graham Talbot, our new CFO.
spk05: Good morning, everyone. Firstly, I'd like to thank Bing for the warm welcome to Atlas. I look forward to working with you and Rob as we engage the investment community going forward. I'll begin my remarks by saying that I'm very excited to join the Atlas team. We have a very robust core business platform and a significant opportunity to continue to develop both our maritime and energy businesses as we simultaneously optimize the Atlas shared services models. Consistency is the best way to characterize our financial performance. That is, consistency in relation to our core asset cash flows and consistency in relation to quality growth. Atlas's fourth quarter financial performance was very strong. Compared to Q4 2019, our total revenue increased by 25.9% to $362.7 million. 56% of the increase in revenue was due to the contribution from APR while C-SPAN's revenue increased 11.3% to $320.6 million, primarily due to the expansion of our fleet. The 32% year-over-year increase in adjusted EBITDA was driven by increased revenue, operating expense leverage, and lower-than-expected G&A in both C-SPAN and APR. FFO increased by 45.2%, as a result of the acquisition of APR and continued growth in C-SPAN. We ended the year with over $770 million in liquidity and paid our 62nd consecutive dividend. C-SPAN closed out the year with vessel utilization of 99.6%. That's pretty close to perfection, reflecting the very robust container shipping market coupled with operational excellence. APR's asset utilization was as forecast at 61.8%, reflecting lower utilization as we demobilized the Mexicali project in Q3. During 2020, C-SPAN's fleet capacity reached approximately 1.1 million TEU, reflecting the 15 vessels we added during 2020, which we began to add late in Q4 of 2019. At the same time as delivering these great results, we also improved our safety performance as measured by lost time injury frequency, which declined by 32% to 0.47 at C-SPAN and sits at near record lows of 0.76 at APR. A key investment attribute of Atlas is our long-term gross contracted cash flow, which stood at $4.8 billion at year end at C-SPAN and $284 million for APR, the total gross contracted cash flow of $5.1 billion. This does not include any of the recently announced acquisitions and new builds, which will contribute further in the coming years. Also note that our $5.1 billion of contracted cash flow features an average remaining lease period of approximately four years at C-SPAN and just under two years at APR. Beginning late in 2019 and consistently throughout 2020, we grew our fleet by acquiring 15 young, high-value vessels. These vessels further strengthened the quality, depth, and versatility of our fleet, while also increasing our overall scale, which is an important element of our success. We actively screened both new and second-hand vessel acquisitions, and during the year, we turned down a number of opportunities which did not meet our investment criteria. Each transaction that makes it through our screening has to be driven by customer needs and the creation of mutually economic solutions. Quality growth is a key distinguishing characteristic of our company, but investors should also take note and be assured by our strong financial and capital allocation discipline. Our investments, capital expenditures and acquisitions are all governed by strict capital allocation disciplines which target At a minimum, high single digit unlevered returns coupled with risk mitigation that we diligently adhere to for every incremental investment dollar. Our ability to continuously deliver high quality results and growth is not due to a single factor. There's a combination of many factors that provide a unique full cycle platform and the delivery of unmatched and timely customer solutions. These are distinguishing attributes, which not only differentiates us from our market peers, but also many mid-cap equity investment choices in today's financial markets. Atlas closed out 2020 with continued strong performance, delivering value for our customers, business partners, shareholders and employees. While I'm new to the company, I must point out that I find our team's commitment and day-to-day performance gratifying and inspiring. which gives me confidence in our ability to sustain our high performance. Please turn to slide number 23. Now we will turn to the four-year financial performance for 2020. Again, as an outsider coming in, the growth has been stunning to me. Many regard the sector as cyclical and driven by external factors outside of management control. It's clear from our 2020 revenue growth of 25.6% that this is not true. Needless to say, 2020 has set a benchmark for the organization going forward. Highlights for ATLAS full-year 2020 performance include revenue growth of 25.6% compared to 2019, reaching a record of $1.421 billion. FFO growth of 65.8% to a record of $622.3 million. FFO per diluted share growth of 45% to $2.48 and adjusted EBITDA growth of 29.3% to a record of $923.8 million. As you've seen from our recent news, together with our customers, we've been working on new build opportunities which have resulted in over 31 new build vessels under contract. Yet we continue to have secondary market opportunities as well. As being mentioned, we have added $5.9 billion of gross contracted cash flows with industry leading customers. This brings our total long-term gross contracted cash flow to $11 billion. and with a total fleet average charter duration of 6.5 years. This is a fantastic accomplishment. Please turn to slide number 24. Now looking at our liquidity and balance sheet. We've strengthened our liquidity by 64.1% during 2020 to $771.3 million at year end. In APR, we conducted an extensive third-party asset value assessment, which resulted in an impairment of $117.9 million. A number of factors drove the change, including the continuing impact of lower power demand globally, which is increasingly affecting the market value of assets, our strategic decision to progressively exit the diesel power generation market due to our ESG principles, And finally, the consolidation and streamlining of warehousing facilities in Jacksonville. The lack of a rebound in new projects within the overall energy markets, primarily in our view associated with COVID, has lasted longer than many are anticipated and has resulted in restraints on new capital commitments, which we see continuing. While never desirable, the reduction in asset values are primarily associated with legacy technologies and fuel sources that do not represent where we plan to take the business in the future. In 2020, the team completed several progressive financings, including a $250 million sustainability link loan, which is added to our portfolio financing program, both which are firsts for the container shipping industry, This takes our facility up to approximately $1.8 billion at year end. This is an important step aligning our capital structure to green, sustainability-linked financial incentives. This is a key focus area for us and is linked to our ESG initiatives, which you'll hear more about at our upcoming Investor Day. C-SPAN achieved an investment-grade BBB-Senior Secured Rating from Kroll Bond Rating in relation to our portfolio financing program. This is an important step on our path to achieve our investment grade corporate rating from one of the major agencies. Over the next two to four years, we anticipate being positioned to achieve this milestone. C-SPAN also closed an initial placement in the unsecured credit markets, $201.3 million of 3.75% exchangeable senior notes. These notes carry an effective strike price of $17.85, which we view as more closely aligned with our value today. The notes mature in 2025 unless earlier exchanged, repurchased, or redeemed by the company. APR closed a $285 million financing during 2020, providing continued flexibility and liquidity. The package includes a revolver, a term loan, and a fixed rate privately placed component. In January 2021, C-SPAN issued $200 million in senior unsecured sustainability-linked bonds in the Nordic market, which is again creating increasing alignment to green initiatives and further diversifying our capital base. In the bottom half of slide number 24 is an important chart. As the new management team and board came together in mid to late 2017, The team here views 2018 as the starting point for measurement of our progress and performance. And when you look at this chart and see growth of 38 vessels, while at the same time you see an increase of nine unencumbered vessels with very high sustained utilization, flat debt to assets, and all with a 1.1 times improvement of the net debt to EBITDA ratio, this is excellent performance. In summary, our balance sheet is strong and we have increasing capacity and access in the capital markets. Going forward, we'll continue to actively manage our capital structure to fuel growth and optimize our cost of capital as we progress towards an investment grade corporate rating. Although we upgraded our guidance twice during the year, our final performance was either above guidance or within the communicated ranges. This demonstrates the high degree of consistency and transparency in our performance, which we continually strive to deliver. We are proud to have delivered these results for our shareholders and remain focused on continuing to execute efficiently, effectively, and with high performance, utilizing our five key competencies to guide our progress. Now a look at our initial 2021 financial guidance. Please turn to slide number 26. With a very strong 2020 performance now behind us, we are initiating our 2021 financial guidance today. It is important to note that more than 93% of C-SPAN's 2021 revenue guidance at the midpoint is under contract as of 2020 year end, and the majority of APRs forecasted revenue anticipated in 2021. This creates very strong visibility, dependability and consistency of our cash flows, which typically is awarded higher multiples and valuation by investors. Our guidance for the full year 2021 is as follows. Revenues in the range of $1.325 to $1.355 billion for C-SPAN and $180 to $205 million for APR. Operating expense of $276 to $290 million for C-SPAN and $35 to $37 million for APR. GNA expense of $41 to $46 million for C-SPAN and $45 to $47 million for APR. Operating lease expense of $144 to $152 million for C-SPAN and $3 million for APR. Adjustment EBITDA in the range of $839 to $874 million for C-SPAN and $97 to $118 million for APR. The financial objectives for 2021 reflect continued significant progress. We have work to do, yet with a team that is consistently delivered for shareholders, we are committed and confident in our resolve to perform at a high level. Please turn to slide number 28. I will wrap up my remarks by discussing why we believe Atlas represents an excellent investment. I hope investors will come to see the clear competitive differentiation in our model and the ability for this team to consistently deliver performance. We believe Atlas represents an excellent investment opportunity across all market cycles. Our business model is resilient and consistent with $11 billion of long-term gross contracted cash flows and an average charter duration remaining of approximately 6.5 years. We have proven the power of our five key competencies to develop Atlas into an increasingly differentiated, best-in-class business solution provider. Our financial position is strong with increasing liquidity and access to capital, and our focus on delivering solutions for our customers will continue to drive quality growth. These are key investment attributes which are unique to Atlas and offer investors significant opportunity to partner with an industry leader. While 2020 was a very challenging year for all of us, the team at Atlas persevered, as Bing mentioned, and delivered excellent performance. I'm very honored to join the team and I look forward to continuing to build the business and stay in front of our competition. Operator, we would now like to open the line to questions. Thank you.
spk01: Thank you. To ask a question, you would need to press star then one on your telephone. To withdraw your question, please press the pound key. Our first question comes from the line of Randy Givens with Jefferies. Your line is now open.
spk07: Howdy, gentlemen. How's it going?
spk05: Good, thanks, Randy.
spk07: Good. So I guess the first question, you know, it's been a while since C-SPAN or ATLAS. ordered numerous new buildings. So I guess around that, you know, why so many, maybe so quickly, and what kind of return should we expect on these time charters? Are they that much better than some secondhand acquisitions, or why such the preference on new buildings?
spk06: Hey, good morning, Randy. This is Ben. I'll try to answer your question. Yes, I think you see the numbers of new order came up. quite intense over the past three months, but this has actually been working quite over a period of time with our global liner customers. This is really a situation where it's driven by the customer demand. This is very different from what you have seen in the past maybe a few cycles where one is driven by the German KG where it is the tax-driven, and then the other one was around 2013, where you have those PEs that come in. They thought that they're going to be able to bottom fish in the market. Those are primarily driven not by the demand side, rather it's by the speculation. This time around, these new builds are driven by the fundamental change in the container shipping market, where Today, our liner customers are very disciplined. The market is very consolidated. Liner companies are looking for quality of service instead of prior, they're looking for more of a market share. The market fundamental is different. These new builds were driven by our customers, and also these new build vessels, as we noted, they are all 12,000 15,000 TEU, and 24,000 TEU. These are the young, large, fuel-efficient vessels that is very versatile, and they represent the best assets in this industry. So this time around, you know, once again, I think it's very different. It seems to be very fast, but at the same time, really, it's the market-driven. And, you know, most importantly, all our, you know, 31 new builds are backed by long-term charter. So, you know, this is a very important factor, and I think that that's something that we want to highlight. In terms of the returns, As we said it before, and we also highlight during our discussion earlier, is that we are very disciplined in terms of only grow with the quality. And what that quality is, two aspects. One is the quantitative, and the other one is qualitative. As we stated earlier, our criteria in terms of return is never changed. Just as I mentioned before, on an unlevered IR basis, our returns are very high single digits. And on the levered basis, on a normal leverage, I think it will be a very high teens at least. So that's the kind of return we had before when we acquired those 15 secondhand vessels during 2020, and now we have this new build. So the criteria actually is the same and with slight improvement. So we never compromise in terms of return. So this is why we're saying these are the quality growth, and we're very excited. And the other part of this growth is, as David has mentioned earlier, is the diversification of our customer base and further enhance of our fleet composition. So from all these aspects, these are the very quality growth and we're very excited we're able to partner with our global liner customers and have this kind of trust and an opportunity to support their growth.
spk07: Got it. And then does that mean no real appetite for kind of second hands at these levels? Or is just the new building that much better?
spk06: Yeah, once again, as you might be aware, also at the same time, I think about a week ago, we also acquired two 15,000 TU second-hand vessels that's about one year old. And those are the vessels that's also under the long-term contract with the customer. So you're actually asking a very good question. This is that we actually are looking at We do not differentiate or discriminate whether it's a new build or secondhand. Rather, we're looking at our customer needs. We're looking at the returns. We're looking at the asset, how that fits into the overall fleet strategy, and how we're going to get the best assets that have the highest residual value. So that's the criteria, just to name a few, that how we decide to deploy the capital. And, you know, again, looking forward, we will continue to evaluate those attractive, you know, investment opportunities as long as, you know, that brings that kind of return, enhance our fleet, and meet our customer, you know, requirement. Again, all these, you know, growth is primarily driven by our customer, not driven by any speculation.
spk07: Right. Okay, and then lastly for me, you just mentioned kind of deploying capital. So on the financing side, what's the total CapEx for these 33 vessels and how are you going to finance the acquisitions from a debt equity split? And then lastly, in terms of the dividend, any plans for possibly growing it with the new build orders?
spk05: So good question. Thanks, Randy. I think I'd probably start answering that by saying that The balance sheet is very much managed in the same way as we manage our vessels. Very active management, continuous optimization, and continuous innovation. Whenever we look at any of these transactions, a core part of the capital allocation process is to look at our long-term liquidity. We also often have non-binding term sheets associated with each of the deals that we look at. It's not really an issue of how do we get the capital, it's how do we get the right capital and then how does it fit into our longer term capital structure to optimize both growth capacity but also cost. So when we look at this new build program, we've got a range of different options and I'd say there's a bottoms up view of how we sort of can finance those with the regular tools and instruments that we use. But then there's the top-down layer as well, which is where we look at our longer-term capital strategy, where we have to sort of think outside the box a bit. And we've demonstrated that in the past with some of the more innovative financings, and I think we're going to be continuing to look at how we can learn from other industries, other sectors, and how we optimize both debt and equity going forward. So at the moment, all of these new builds are forecast into our cash flows, and that is keeping us well within our covenants that we have with all our existing financing partners, and we're very comfortable. So it's really around optimization rather than obtaining when we think of financing these vessels.
spk07: Okay, and in terms of total capex?
spk05: I don't have the number off the top of my head at the moment, Randy. I can get it back to you, though.
spk07: Sounds good. All right, well, I'll turn it over from there. Looking forward to the investor day. Thank you.
spk05: Thanks, Randy.
spk01: Thank you. Our next question comes from the line of Sadie Chalmon with BMO Capital Markets. Your line is now open.
spk03: Thank you. Good morning. First, maybe congratulations on really great results in the last few years and My question is kind of a little bit of follow-up from the previous question. I want to, what would the pro forma leverage look like once you kind of have these 31 new build in two years into the cash flow?
spk05: Hi, Patty. It's Graham. A very good question and something that we obviously spend a bit of time looking at as well as we model all of this out. At the sort of outturn of this on delivery, we're looking at just around 60%. We have an internal hurdle rate of 65, which relates to some of our covenants. But that's where it's at. And, you know, as Bing and I discussed, that's the forecast. So we know we are well within our covenant range on a forecast basis, but we've also got a few years of work to do on how we optimize that going forward.
spk03: Okay. Okay. And then given that the nature of these assets are relatively on a larger ships with longer duration in terms of cash flow commitment from the customer. Does it like are you inclined to maybe use more leverage because there's more contracted revenues? Or you're going to stick to your kind of goal of improving financial leverage in the next few years?
spk05: I think we'll definitely stick to the goal of improving our overall capital structure. And as we've mentioned a few times, getting to investment grade, that provides us with an additional depth of capital, future growth, and also improvement around cost. So at this stage, there's no movement away from that direction.
spk03: Okay. And one follow-up on the JV conversation. I think you mentioned some opportunities in the maritime industry. Would that be the same vertical you're in today, the container shipping, or are there other opportunities in the JV to maybe expand outside of that in the maritime industry?
spk06: Yeah, good morning, Shaman. This is Bing Chen. I will try to answer that question. Yeah, the JV that we have formulated is with the ZE Group, which is a – maybe I can give just a quick – overview of who is the Zhejiang Energy Group. This is a holding company with over 20 years of history. It's similar to that of Costco in energy business in China. This is a state-owned integrated energy company. They're mainly engaged in the power plant construction, power generation, natural gas development, power energy services, which includes the development, trading, and transportation of the petroleum, coal, natural gas, and energy services, including environmental protection technologies. So this is, as I said, a conglomerate that has a variety of the businesses. The entities that we're directly joint venture with is the TND, Environmental Protection Company, and they actually focusing on areas of the air, water, and waste substance, and also noise and other type of pollution control. The areas that, because this is a service company within the ZE Group that you know, as a power energy company, they need to, you know, have the environmental improvement services, and that's what this company is focusing on. So that being the case, the areas that we can potentially, you know, cooperate in with our JV partners through this JV venture, joint venture, is in the maritime because they're engaged in the transportation through the maritime or transportation of those natural gas, coal, the petroleum. Those are the areas that we could potentially cooperate in. In a power space, because they have a track record of building the large-scale and long-term power project, And that will be complementary to what APR's fast power international experience versus what ZE today is primarily still domestic focused. And in the environmental areas, particularly in the maritime and also in the energy area, ZE, the joint venture partner, they actually also provide the scrubber manufacturing and installation services. This is something that is immediately applicable to the maritime cooperations. There's a variety of areas that we could cooperate both in terms of maritime and also in the energy space, and that's what we are very excited about to have such a very credible partner for us to jointly develop the business across these two platforms, both of the companies that we have and focus on developing the business.
spk03: That's helpful. Thank you very much.
spk07: Thank you.
spk01: Thank you. Our next question comes from the line of Liam Burke with B. Riley. Your line is now open.
spk02: Yes, thank you. Bing, you laid out in an earlier question on the IRR, unlevered IRR on the projects on the new acquisitions were more than acceptable to your hurdle rates. By definition, higher returns get competed away in the future. So how do we think about what you can do in future investment projects to maintain these types of returns?
spk06: Good morning. As we said, we have been very disciplined. If we're looking at the past, what we have been deploying the capital over the past three years, we actually have been very consistent in achieving this investment return. The only difference is that during the different cycles, the different market conditions that we make in different type of investments, if you're looking back about a year ago, we did not have any new build. Rather, we're focusing on a second hand because we think that is a great time and opportunity where we can create those growth opportunities by closely working with our customers, understanding their needs, their challenges and be able to develop the solutions and at the same time by making those capital allocation decisions to support our customers' growth. So going forward, if you're looking at Atlas, I think broadly today we have two platforms. One is the maritime. The other one is the energy platform. If you're looking at about a year and a half ago, a year ago, When we acquired APR and formulated Atlas Group, and I think there was a lot of concerns in the market that the people are thinking that we are exiting the shipping business and focusing on energy business. But the reality is, I think, just the opposite. And why is that? It's because of the market condition. And that is also exactly the reason why we created Atlas platform, because that gave us the flexibility and the opportunity to best allocate in the capital and consistently achieving the returns that we set ourselves for. So in the current market, I think the shipping, and particularly in the continuous shipping market, that we see the great opportunity, and that is why we were able to capture this opportunity within a very short period of time. It seems to be very fast, but on the other hand, it's only us who are able and capable to be able to execute in this short period of time because we have the people, we have the platform, the integrated platform, and also we have the partnerships with our shipyard, with our financing partners, and also with our customers. So looking at what we have done in the past and looking at our principles in terms of our people, our business model, and also the strong balance sheet that we have, we will continue to seek the right opportunity and create those opportunities through the creative partnerships that we have with our customers, whether it's in shipping or whether it's in energy platform, that I'm confident that we have the right ingredients. We have the competencies as highlighted by our Chairman David. With these competencies, what I believe is you call the secret sauce that we will be able to consistently find in those type of opportunities, create those opportunities, and achieve the kind of return that we set out for ourselves.
spk02: Great. And, Bing, you've highlighted on the fleet side where your investment sweet spot would be in terms of vessel classes. You do have some smaller vessels in the fleet, and the order book on those vessels are exceedingly low or down to zero. Would you be opportunistic on the other side of the equation and sell those assets and reinvest them in assets that are more in line with your core desire of the larger vessels?
spk06: Yes, that's a great question. You know, we actually, we are in the business of managing the assets. So what you are talking about is something that we constantly evaluate. And this is the core capability of our business is to managing the assets and managing the risk. And specifically to your question is that for those smaller vessels, as we shared earlier today about close to, 79%, to be exact, our fleet above 10,000 TEU. But then anything sub-10,000, which is about 20%, out of these 20%, we have the smallest vessel is the 2,500, and that's only 10 or 11 of them. And then we have the 4,500 and 5,500, 8,500, and 9,000 vessels. all these vessels are all under a charter, and most of them actually under long-term charter. So, you know, these assets, even though they're small, they're, you know, relatively older, but because of our, you know, partnership with our customers, because of our reliable operations, all these vessels are, you know, on demand by our customer under the long-term contract, So at this point, they're generating part of this $11 billion of contracted cash flow. So they're working very well. We will continue to deploy them. At the same time, we also continue to evaluate if and when there's right opportunity when these vessels come off to free for potential sales that we will consider that. But this is something definitely we will be evaluating constantly, and we also actually have a team. It's called Asset Integrity Group, and they are the people who know exactly the residual value, the conditions of the vessel. So we're very actively managing them, and this is part of what we call the integrated platform. We manage the entire lifecycle of these assets, and that's what we do, and that's what we do the best.
spk02: Great. Thank you, Beng.
spk05: It's Graham here. I'd just like to circle back to Randy's question, if that's okay, just to clarify. I just wanted to double-check that my numbers included the two second-hand vessels. So the total capex commitment of the entire portfolio of 33 new vessels is just under $3.9 billion.
spk06: And we have $5.9 billion of contracted cash flow for this $3-some billion of investments. So you can understand the return of the invested capital.
spk01: Thank you. Our next question comes from the line of Chris Weatherby with Citi. Your line is now open.
spk09: Hey, thanks for the morning. Maybe just sort of following up on that, Graham, do you have the six vessels that you announced yesterday, the CapEx associated with those?
spk05: Yes, I do. That's included in that number.
spk09: Can you break it out?
spk05: It's approximately $700 million for those.
spk09: Okay, got it. All right, that's helpful. And then maybe a bigger picture question. I guess looking back to the APR acquisition, the question at the time was the relative size of that acquisition compared to the container ship fleet and portfolio, and the relative small size of that. Flash forward more than a year, you've made some significant strides in building out the container ship portfolio, further minimizing the impact of APR on the total company. So When we think ahead, does it still make sense to treat this as a portfolio company with investments across a range of asset classes? Because of this sort of overweight dynamic within the container ship, does it really kind of minimize the impact of something you do unless it's something significantly more dramatic in terms of size than APR? So, you know, it was a little curious then. I guess I feel like it might even be more curious now. So I'm kind of curious how you think about this going forward. Is this something that you'll be considering in terms of doing deals outside of container ship, or are we kind of all in now on container ship?
spk04: This is David. Actually, Chris, I think it's an excellent question. I think the importance of the, if you will, portfolio effect, particularly when you're talking about these types of assets and, frankly, just when you think about it, energy assets aren't a lot different than ships in many ways. I mean, the ships obviously move from place to place, and power plants usually don't. But I think the importance of having the different platforms – On one hand, the shipping industry right now, the relationships that C-SPAN has and that they and the team have created, we're in a very good part of that cycle. And the customer relationships and the demand for new vessels meeting changed environmental requirements, more efficient haul capabilities, et cetera, allow for that to be exploited right now. And the amazing thing is when you look at the background of contracted cash flows there, you know, that carries the whole company, uh, on a substantial growth platform for the next three to four years, just by itself. Energy right now is in the kind of the downside of a cycle. If you will, you're, if there's an uncertain period, COVID has caused a lot of reduction in electricity demand, and you're in the middle of a global environmental transition regarding CO2 from a power plant emissions capability. Um, In my view, and that's where I spent the bulk of my history, that's going to create enormous opportunity, but you have to wait for the right opportunities. If I think back at MidAmerican Energy, when we joined Berkshire in 2000, the company had about $10 billion in assets. Today, 21 years later, they're over $100 billion. But that wasn't steady growth in each of the platforms, whether it was the pipeline platform that U S utility platform, the foreign utility platform or, or independent power, they all came in cycles, uh, and opportunistic cycles. And that's the, that's the important thing I think about this. So for the, for the near term, there's no question. C-SPAN's growth will overwhelm, um, Atlas's overall, uh, you know, future. Um, but the, the, the energy side will, will have its time. Um, and, and there's going to be a digesting period at C-SPAN, um, as this new growth period shows up. I think one thing, Bing touched on something about the difference in the past and the shipping industry in the future. I think it's important to take a minute and think back to how the container shipping industry has grown and the difference that was made when the major liners decided to start looking at alliances very similar to the global airline industry and rationalize their capacity much more carefully than and get much more efficient in the marketplace, that's really what's created the huge opportunity for C-SPAN through the relationships that Peter and Bing and Torsen and them have developed with our customers. It's much more efficient for them to operate with someone like us who can sell to them an entire chain of ships for an entire route, improve their environmental performance and efficiency rather than dealing with a lot of one-offs. Now, we certainly have some capable competitors, but that dynamic is much more significant in the marketplace than I think a lot of people have recognized. The energy industry will have similar characteristics. And, you know, for my dollar, the best time to be involved in an industry is when there's a lot of change going on, and that typifies the energy field for the next 20 years. So today, no question, C-SPAN will overwhelm the current growth trends parts of Atlas. But I think we're all confident that the APR side will have its day. But the one thing this team and the board won't do is we're not going to do transactions just to look busy or to look like we're doing something. When the right opportunities aren't there, we're going to pass on them. And Bing has done that this last year. There have been numerous significant opportunities that the rates returned just weren't there. and we're not going to give away the quality of service that this organization has. We're also not going to mislead our customers that we can provide them the quality they want at those kinds of returns. It takes high-performance staff and a very focused team to deliver the kind of performance. So discipline, I think, in capital allocation is a critical thing. Anyway, hopefully that answers the question.
spk09: It's very helpful, Culler, so I appreciate the detail in the answer. The follow-up that I have is do you envision a scenario at some point in the next three to five years where energy can be large enough as a portion of the portfolio to really move the needle in a public company, sort of set aside the idea in sort of a portfolio approach from a cash flow generation standpoint, but in terms of actually moving a public company?
spk04: I think the opportunities will be there because energy projects tend to be very large in scale, very long in duration. Um, so I think, I think the opportunities will, will be there. Um, you know, it's going to be up to us to execute on them, but yeah, I, it wouldn't shock me if 10 years from now, uh, the two, the two platforms had almost an equal balance of earnings and capital deployed. Um, it'll be in different chunks. Uh, the energy side will typically largely come in, in, in larger projects, um, with much longer duration. Um, But, yeah, I think the potential is there. But we're going to have to, again, if the rate of returns aren't there, then we'll continue to grow APR at a very slower, steady pace. If the returns are there, we'll be excited to accelerate their growth. But only if the capital dollar spent there is risk-adjusted, a better return than over at C-SPAN. Okay.
spk09: That's helpful. Thank you very much.
spk04: You bet.
spk01: Thank you. Our last question comes from the line of Ken Holster with Bank of America. Your line is now open.
spk10: Hey, good morning, and thanks for the great details. So you've been growing so rapidly on the container side. Just maybe a little bit of insight into what gives you the sign of a peak in the market? What level of order book gets you concerned? And I guess I'm trying to dig into is the The market's just extremely tight right now given the need to catch up on the inventories and where we are. And then once we recover, you know, you could be in a scenario by 23 when these vessels start delivering that we're kind of now in a more of an overbuilt capacity and you start seeing returns or reinvestment renewals start to decelerate.
spk06: Good morning, Ken. I will answer your question, and my colleague Peter will be also here. Feel free to chime in. In terms of these new builds right now, I think it's still, as I said earlier, it's driven by the customer demand. If you're looking at the fundamentals of demand and supply, first of all, let's talk about the demand side. you know, today it's very disciplined. And disciplined in the sense that, you know, the market has gone through the paradigm shift in the sense that, you know, if you're looking at today about, you know, top eight, nine companies accounts for about, you know, 85, 90% of the total market. So they're very much focusing on the quality of services versus before they're competing for the market share. On the demand side today, if we're looking at last year, even given the, you know, the pandemic of the, you know, closed down, the logistics limitation, everything, and also the year before, 2019, was primarily a, you know, trade war rhetoric between the U.S. and China. I think for all these two years, if you're looking at the demand side, the global container shipping market, The volume last year was pretty much flat, you know, over 2019. And 2019 actually was growth over 2018. So the global trade and the demand is there. If you're looking at the forecast in the next two to three years, I believe 2021 is supposed to be somewhere around 4% to 5%. 22% is about 3%. 23% about 2% according to the industry's forecast. The demand is there. On the other hand, the supply side, I think, as you know, over the past at least three or four or five years, the order book has been in a historical low since I joined the industry about three years ago. And if you're looking at with all these new builds today, I think that these new builds today, first of all, they are filling in a segment which is the 15K that is rather new because this is the most versatile in the sense that, as I said earlier, the demand and also the size of the vessels both bring in both the advantage of the economic, environmental, and technology advance to the entire container shipping fleet. So that is like any other asset class. These are the best new developed assets. And therefore, that was the, you know, that was the driven of these new built, including the 24K, which is a new, completely new class, the ultra large vessels that I think for obvious reasons, because the cost per unit and for the specific trade route between Asia and Europe, this is the best assets. So if you're looking at behind of these kind of supply, The supply increased for a reason because there's a justification for those supply because there's a demand for there. So in our opinion, I think this is still a healthy development because the industry, by the way, also every year should also have a certain percentage of the vessels should be retired because they need to be replaced tonnage. And in today's environment, I don't think that there's any, you know, replacement tonnage that's been scrapped because, you know, very tight market. So if you're looking at demand and supply fundamentals so far, we've seen this is a healthy development. And from our perspective, for C-SPAN's new build, as I said earlier, all of these new builds have been backed by long-term development. you know, contract by these top global liners. So, therefore, this is not something that we will be exposed to any kind of a market fluctuation, whether it's up or down, rather that we have already have secured these long-term contracts. This is, again, is the differentiation of our business model. So, from this perspective, I think we think that current development is still healthy, and as market continues to evolve, we will have to, you know, we are very disciplined, and we are very closely monitoring the development and working very closely with our customers in understanding what their business needs are. Once again, you know, every investment and new build is driven by the demand of our customers.
spk10: So, Bing, would you say the lessors are taking share from the liners? Is that pretty steady in terms of their contribution? And then what are your thoughts about C-SPAN within the market itself versus the other lessor peers?
spk06: Yeah, I think, you know, if you're looking at what we have been able to achieve over the past few months, it's a very good testament of One is C-SPAN's capability today. I think we have the unique platform that allows us to be able to execute such a very complicated new build project with our customer in different technology, different size, within such a very short period of time. And this is the one thing, as I joined the company about three years ago, I keep talking about that C-SPAN has the integrated platform. And this integrated platform allows comes in very, very handy in situation like this, which is why we are able to differentiate ourselves by providing the advice, the services to our customer, and that's why we are able to be able to, in situation like this, and quickly come to that kind of a decision and execution. working with multiple parties throughout the value chain, as I mentioned, working with the customer and looking at the technology, looking at different type of a proportion system, for example, LNG versus the conventional, whether it's 24,000 versus 15,000, different size of the ships, different proportions, with different design, with all the different features because these vessels are, even though they are 15,000, but they are different specs with different features. Therefore, this is something we are very proud that we have the people We have the process, we have the system, and we have the partners that really is a solution-driven to our customer. And that's what I said at the very beginning is that we are the solution provider to our customer. We don't just offer a vessel. So that's how we differentiate ourselves in the marketplace. And by the same token, from our customer's perspective, As I also mentioned before, and so you've probably seen, that our line of customers today are really looking for the quality of their services. For them to, you know, focusing on the quality of services, they need to have the quality of the partners that will be able to provide a variety of solutions, not just the vessel, but, you know, the reliability of the operations, the most up-to-date, I think, industry-trained and the development in terms of environmental, which is one thing that is very important today. What is the future? How do we have the lower emission and things in that nature? And then the part is how you can actually manage a project with a new build, which is a very complicated process that you need to have the team being able to supervise, executing, and then comes to the financing. So from all these aspects, I think our customers are looking for a long-term partner who has the scale and who has the flexibility and who has the quality of the service to support them to grow their business. And C-SPAN is built exactly for that. And that's what we've been spending the past three years and really focusing on these areas And that's why we come to the moment like this, we were able to execute flawlessly. And that's something that our team has been very, very swift in delivering this type of service to our customer.
spk10: Maybe I was trying to get a more simple answer, a numerical answer. Do you think the liners are taking more share? I'm sorry, the lessors are taking more share from the liners. And then in that market, is C-SPAN taking a larger share of the leasing market? Or are you saying the market right now overall is just growing rapidly and you're staying static on the share side?
spk06: I think that today, based on the information that we have, I believe that C-SPAN actually took quite a significant share of this new build in the marketplace. I think overall that in today's market, we team up with the leasing companies, for example. But I think at this point, we do take a large share of that new build. And overall, I think in terms of the numbers of the new build, I don't have the exact number, but I think there's another probably – you know, about 30, 20, 20 to 30 vessels either being financed by the liners themselves or being financed by leasing companies or being financed by a few ship owners.
spk10: Okay. We'd love to see that at the end of the day, maybe a breakdown on kind of how the market is developing. And then just to follow up on Chris and Fadi's question on the energy market, What's the goal of the joint venture? Are you contributing anything right now? Was there initial investment? Does the forming of the joint venture mean we're likely to hear something soon? Or was there something being planned that you needed local expertise? Maybe just talk about that.
spk06: Yeah, the joint venture is a joint venture that is going to be based in China, Hangzhou, a special trading zone. The capital will be on an on-call basis. It's going to be 50-50. We're going to be working with our joint venture partner in jointly developing opportunities in both maritime and energy projects, as I mentioned. Some of those immediate projects, for example, in the shipping side, we are cooperating on, for example, the scrubber projects where we have the needs and they can provide that service, and also looking at you know, shipping in general, in looking at, you know, other type of shipping, transportation, other than transportation, other than container ships.
spk10: On the energy side... I understood your answer from Fadi. I just wanted to understand, was there anything that's imminent in terms of the forming of the joint venture? Does that mean something is coming soon? And did you contribute anything up front, just simply?
spk06: Yeah, there are things, for example... We are looking at some power projects together because they are looking at some projects that we can jointly looking at those type of opportunities. But as a next step, we will have to, you know, right now we enter into the agreement. Then we also have to formulate, formally incorporate that joint venture that's going to take, you know, several months. to formally, you know, create that joint venture. At the same time, we'll be jointly looking at opportunities in power and shipping space.
spk10: Okay, so nothing imminent. It takes a while to form the JV process. And then the thoughts on my last one, just on APR utilization, what's built into the outlook there? Any significant change in, you know, post-Mexicali, the change in utilization for APR in 21?
spk06: Yeah, the utilization is actually reflected in our 2021 financial forecast. I think in terms of utilization, so far we have projected similar to that of 2020. At the same time, we're strengthening our business development team. We're looking at different type of opportunities. The one thing that we want to be you know, we want to be very much focused on is looking at the quality of those projects where we're going to be very selective in engaging any type of projects. But anyway, to your question, this is the utilization due to the, you know, the short-term nature of The utilization, it will not be the same as what you've seen at the C-SPAN, which we achieved over 99%. But for APR, the utilization will be in the range around, you know, I would say 70%, 70% to 80%. That would be very high.
spk10: Thanks, Ben. Thanks for the time. Appreciate the answers.
spk06: You bet.
spk01: Thank you. There are no further questions at this time.
spk06: So thank you all very much. I appreciate you taking the time to join this call, and we look forward to seeing you all during our investor day conference, and that's going to be on the 23rd of March. So looking forward to seeing you all. Thank you all very much.
spk01: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.
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