Seaspan (ATCO) ended 2018 on a high note as it delivered record revenue, operating earnings, and cash flow for the fourth quarter, which pushed its full-year results to record levels as well. Driving that strong showing was the buyout of a joint venture, which significantly increased its fleet. On top of its strong financial results, Seaspan also shored up its balance sheet by closing several transactions with Fairfax Financial (FRFHF -0.59%), which is now its largest shareholder.

Seaspan results: The raw numbers


Q4 2018

Q4 2017

Year-Over-Year Change


$294.9 million

$214.4 million


Net earnings

$44.9 million

$42.4 million


Earnings per share




Data source: Seaspan.

What happened with Seaspan this quarter?

The Greater China Intermodal (GCI) acquisition continues to drive results:

  • Seaspan's revenue skyrocketed compared to the year-ago period thanks primarily to the consolidation of GCI, which added 16 vessels to its fleet, boosting it up to 112. Revenue set a quarterly record and came in just below the high end of the company's $291 million to $295 million guidance range.
  • Operating earnings set a record at $134.4 million, which was up 67% year over year as ship operating expenses, operating lease costs, and general and administrative costs all came within the company's guidance range. Net earnings, however, didn't grow quite as fast due to higher interest expenses. Earnings on a per-share basis fell year over year because the company's share count rose 40%, mainly due to the issuance of new shares to Fairfax Financial to help pay for the GCI deal and bolster its balance sheet.
  • For the full year, revenue was a record $1.1 billion, up nearly 40% from 2017. Net earnings rocketed 87% to $207.6 million, though on a per-share basis, earnings were 40% higher due to the Fairfax dilution.
  • Seaspan has raised about $1.5 billion in capital since the start of 2018 to shore up its balance sheet, $1 billion of which came from Fairfax Financial (FRFHF -0.59%) in three phases. The company completed the last one this past January, raising $500 million through a debt and stock investment.
  • The company is using that cash to repay some of its credit facilities to improve its financial flexibility. Furthermore, it agreed to invest up to $200 million into Swiber Holdings. It plans to invest $20 million for an 80% equity stake in Swiber, which is a Singaporean offshore engineering, procurement, and construction business that owns five maritime vessels, and up to another $180 million into a $1 billion LNG (liquefied natural gas) to power project in Vietnam that's under development. 

Check out the latest earnings call transcript for Seaspan.

Shipping containers on a ship at port with the sun rising in the background.

Image source: Getty Images.

What management had to say 

CEO Bing Chen said this about the company's progress during the quarter:

2018 has been a year of transformation for Seaspan. We started out the year with our largest acquisition to date – GCI – which was seamlessly integrated into Seaspan, and helped us grow 2018 revenue by 32% over the prior year. With continued commitment from our founding shareholders, the Washington Family, we have added Fairfax Financial Holdings as a strategic financial partner. As of January 2019, Fairfax has invested $1 billion into Seaspan, and in the process became our largest shareholder... Together, we have set the stage for a prosperous future for Seaspan.

Seaspan's aim over the past year has been to bolster its financial profile so that it can achieve investment-grade credit ratings, which will both lower its borrowing costs and increase its access to outside capital so that it has the flexibility to capture opportunities that may arise in the future. The company made good progress on that plan last year as it was able to raise $1.5 billion in cash to not only help fund the needle-moving GCI deal but pay off several of its credit facilities.

Looking forward 

With the close of the final investment by Fairfax, Seaspan has significantly improved its balance sheet, giving it the financial strength and flexibility to continue pursuing growth opportunities. In addition to the pending investment in Swiber, the company is also looking to acquire newbuild ships and secondhand vessels as well as both assets and businesses in the shipping industry and those outside the sector. It's aiming to make investments that will generate strong returns so that it can create long-term shareholder value.