Last year presented its share of challenges for Seaspan Corporation (NYSE:SSW), which continued in the fourth quarter. While the company's revenue stopped sinking, profits haven't bottomed out just yet. However, after completing several strategic initiatives in the past year, the company believes it can return to delivering profitable growth in 2018.

Seaspan Corporation results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Change


$214.4 million

$213.2 million


Normalized net earnings

$36.0 million

$38.8 million


Normalized EPS




Data source: Seaspan Corporation.

Container ships in the water with birds flying by under a blue sky.

Image source: Getty Images.

What happened with Seaspan Corporation this quarter?

Seaspan still hasn't completely turned around:

  • Seaspan's revenue rose both year over year as well as from last quarter. That said, it did come in at the bottom end of the company's $214 million to $218 million guidance range. Recent vessel additions helped drive the increase, with the company adding two ships to its operating fleet during the year, which more than offset lower rates from vessels on short-term contracts.
  • Earnings, however, dipped both year over year and from the third quarter, when the company hauled in $38.1 million, or $0.18 per share, in normalized net earnings. Driving the decline was higher expenses. Ship operating costs, for example, rose 2.6% to $48.1 million due to higher spending on spares and repairs related to planned maintenance on certain vessels, while operating lease expenses jumped 15% to $30.6 million because the company added one ship that it financed through a sale-leaseback transaction. General and administrative expenses, meanwhile, rose sharply due in part to an increase in share-based compensation relating to the retirement of former CEO Gerry Wang.
  • Normalized earnings per share declined more sharply because the company sold stock in the past year to bolster its balance sheet and finance vessel acquisitions, including selling $40.4 million of shares during the fourth quarter.
  • In addition to issuing more stock, Seaspan issued $80 million of debt as well as securing a credit facility to finance two newbuild ships that should join the fleet in the first half of this year. After the quarter ended, the company closed a $250 million investment from Fairfax Financial (TSX: FFH) to fund future growth and repay debt.
  • During the quarter, the company sold two 4,250 TEU (20-foot equivalent unit) vessels while taking delivery of a new 11,000 TEU ship that started a 17-year charter agreement. The company continued adding to its fleet after the quarter closed, receiving another new 11,000 TEU vessel that also began a 17-year charter, and buying two secondhand 2,500 TEU ships that it leased to shipping giant Maersk under four-year agreements.

What management had to say 

Board chairman David Sokol commented on the company's recent progress by saying:

2017 was an important and pivotal year for Seaspan. We continued to achieve strong operating results, maintain a sizable contracted revenue backlog, and grow our operating fleet on long-term time charters by taking delivery of five newbuildings with charters of 10 to 17 years. With a focus on driving shareholder value, we also took important steps to strengthen our corporate governance, deleverage our balance sheet, and increase our unencumbered asset base. We are pleased to have commenced 2018 with a $250 million investment by Prem Watsa-led Fairfax and the acquisition of two second-hand feeder vessels chartered to Maersk. Our transaction with Fairfax, as well as our success expanding our relationship with the world's largest liner company, underscores Seaspan's industry leadership and sharpened strategic focus.

While Seaspan's financial results haven't quite turned around due to the lingering effects of the downturn in the shipping sector, the company has still been working hard to shore up its operations and balance sheet. It completed several moves over the past year to raise capital that reduced debt and provided it with funding to acquire vessels that should eventually drive its financial result higher.

Looking forward 

Seaspan began "the next phase of our voyage," according to Bing Chen, who took over as CEO last month. His "goal during this important phase is to leverage our integrated platform to create substantial franchise value" by ensuring its fleet, operating platform, customer focus, and financial strength are "among the best in the industry." The new CEO further noted that with market fundamentals improving, "we see a rich set of opportunities before us," that should enable the company to deliver accretive growth as it increases its industry-leading position.

Matthew DiLallo owns shares of Seaspan. The Motley Fool recommends Seaspan. The Motley Fool has a disclosure policy.