Atlas Corp. Common Shares

First quarter 2021 earnings conference call. I would like to remind everyone that this conference call is being recorded today, May 4th, 2021. I would now like to turn the call over to Robert Weiner, head of investor relations at Atlas Corp.

Thank you. Good morning, everyone. Thank you for joining us today to discuss Atlas Corp's first quarter 2021 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. I would like to remind you that our discussion today contains forward-looking statements, and I'd like to draw your attention to the disclaimer on page two in the accompanying earnings presentation. 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 businesses. The first quarter earnings release contains supplemental financial tables and information pertaining to our first quarter earnings report and includes definition of non-GAAP financial measures and reconciliation of GUT's non-GAAP measures to the most closely comparable U.S. GAAP measures. 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 be found on our website. In addition, we have provided historical financial information through 2018, which are also available in the Q1 supplemental workbook on our website. Please turn to slide number three. On the call with me today are Ving Chen, President and Chief Executive Officer of Atlas Corp. and Graham Talbott, 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 Petersen. We will open up to a question and answer session following our formal remarks. Please turn to slide number four. I am pleased to now turn the call over to Atlas Corp CEO, Bing Chen.

Thank you, Rob, and good morning, everyone. Thank you for joining our call. Please turn to slide five. I'm pleased to report a strong Q1 financial performance, which was directly in line with our expectations. We are on track to achieve our 2021 annual financial guidance, and our performance affirms our long-term focus on quality growth and differentiated investment attributes. Let me reiterate that our business is not subject to short-term market swings like many others. We are highly dependable and consistent since our fully integrated platform is built on long-term contracted cash flow backed by global leading liners. In the first quarter of 2021, Atlas achieved revenue growth of 20.8% to $372.6 million, adjusted EBITDA growth of 21.1% to $237.9 million, FFO growth of 27.6% to $159.2 million, and FFO per share growth of 13.2% to 60 cents per share. And we recently paid our 63rd consecutive quarterly dividend. I'm proud of our team as these results reiterate our continued resiliency, operational excellence, and performance for the remainder of 2021 and beyond. We stand ready and focused on facing any challenges ahead. Please turn to slide six. In just five short months, C-SPAN added 37 new builds and four secondhand vessels. Through our total investment of $4.7 billion, we have added a gross contracted cash flow of $7 billion. And since this quarter alone, we achieved 47% growth of our fully delivered fleet on a TU basis, adding 536,000 TU. This sets a record for C-SPAN and perhaps within the industry. This historical growth has been made possible due to our focus on the following key aspects of our business. First, we always have a good understanding of the underlying market situation and anticipate a few steps ahead. Second, our customers' needs always come first. Third, we are constantly creating opportunities versus participating in auctions. Fourth, our relentless focus on building our five key competencies. And fifth, we have a world-class team of highly experienced professionals who are ready to execute at all times. For the same reasons, we have able to successfully complete 15 secondhand acquisitions in 2019 and 2020, then adjust it to our record new build program. This quality growth is important as it facilitates great scalability, reliability, and flexibility to create win-win outcomes with our customers through all market cycles. Especially with these new builds, we have gained deeper trust from our customers through our ability to assist with vessel design, shipyard negotiations, construction, financing, chartering, and operations. This is a great example of the fully integrated platform as we always talked about. As the table shows, we have significantly strengthened our fleet in the following segments. Nine 12,000 TU new builds, two 24,000 TU new builds, which are our first ultra-large vessels, and also a first for owner-operator vessels, for this segment, 26 15,000 TEU new builds in this strategic category featuring 10 dual-fuel LNG new builds, along with four secondhand acquisitions of two 15,000 TEU and two 8,500 TEU vessels. Please turn to slide seven. The past three years has been transformational and this has continued in Q1 2021. Here, we highlight the dramatic change since the start of 2021. We have upgraded our offering with significant additions to the 15 to 16,000 TEU segments, as well as for the 24,000 TEU segment. Today, 79% of our fleet on a TEU basis is positioned within the strategic 10,000 TEU and greater segments, which are expected to be the workhorse vessels in the coming decades for global trade. We're very pleased to have evolved our fleet into such a comprehensive, diversified, and versatile portfolio to meet our customers' needs and truly lead the industry. Please turn to slide eight. We have also diversified our customer mix. When I first joined, Costco chartered approximately 40% of our fleet on a TU base. Today, no single customer charters more than 20%. Our customers are eight out of the top 10 liners, with our top three customers representing 54% of the revenue at the end of Q1 2021, compared to 75%. at the end of 2017. This is clearly a differentiation as we are growing in tandem with our customers while fulfilling their needs through creating win-win outcomes. We continue to be well positioned for quality growth through our deeper and broader partnerships with each customer. Please turn to slide nine. Our record fleet growth, fleet optimization, and customer-based diversification drives a third important distinction of our resilient and differentiated platform, the growth of our growth contracted cash flows. Since the start of 2021, we have grown growth contracted cash flow by 102% to $12.1 billion. These are long term, highly visible cash flows secured by customer demand. This results in higher quality cash flows, longer lease durations, and increased resiliency of our business through all economic cycles. Our deep and creative customer partnerships, best in class execution, and solid financial strength makes Atlas the reliable solution provider of choice. This slide clearly shows our record progress achieved in Q1. As I mentioned, gross contracted cash flow increased by 102 percent to $12.1 billion. Fully delivered fleet grew by 27 percent, adding 36 vessels. We increased TU by 47 percent to 1.7 million TU. average flea age decreased by 2.1 years to 5.2 years, and the remaining lease term increased to 6.8 years from 4.3 years. This high-performance execution enables us to deliver consistent and sustainable value creation to our shareholders. Please turn to slide 10. ESG is important and timely, As responsible corporate citizens, it is important to lead the industry's development of ESG initiatives. Our teams are highly committed to leading our industries through operational excellence, high business standards, ethics, and principles. We look forward to issuing our inaugural sustainability reports at the end of Q2. Also, we are proud of our recent strategic partnership with the Maersk McKinney-Mueller Center for zero carbon shipping and become a signatory of the UN Global Compact. Our strong commitment to ESG is also evidenced by our long history in innovative saver ship designs and also adding 10,000, 15,000 TU dual-fuel LNG new builds. Finally, we see the increasing need for ESG as an important requirement for our customers, lenders, and investors. Our teams have made great progress through linking our capital structure with sustainability measures, such as our recent sustainability-linked loan and bond financings. Please turn to slide 11. I will conclude my formal remarks by providing an update on our 2021 priorities, which we outlined at our investor day. First, quality growth and disciplined capital allocation. This has been clearly demonstrated by our team during the quarter. For C-SPAN, we have increased our total TEU by 47%, grow our gross contracted cash flow to $12.1 billion. For APR Energy, we are proud to successfully secure Mexicali Fast Power contracts, which now marks our third year in a row of providing power to the region. APR's contracted service are rated at 330 megawatts through 10 gas turbines compared to last year's contract for eight turbines rated at 265 megawatts. This increases our penetration in an important market with significant future growth opportunities. Second, we are further enhancing our multi-platform business. For C-SPAN, we continue to optimize our fleet while diversifying our customer mix. For APR, we continue to exit the diesel generation market through a measured and prudent approach. A big part of increasing our competitiveness is the quality of our people. And in this regard, we recently add an experienced CFO, Philip Lord, to further strengthen the APR team. Our JV with the ZE Energy Group will provide unique and innovative growth opportunities for both parties. In addition, it will provide further revenue diversification in the maritime and energy sectors. We look forward to providing updates. We also continue to be innovative leaders by continuously optimizing our capital structure and improving our financial position. Our financial strength and flexibility for executing opportunities is unmatched and is one of our key competitive differentiators. Overall, we had a record start to 2021. Our achievements thus far solidifies our exciting future and ability to create sustainable value for our shareholders. I look forward to reporting on our progress in the coming months. Please turn to slide 12, and I will now turn the call over to our CFO, Graham Talbot.