Seaspan Corporation (SSW)

SSW 
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Industry: Transportation
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Seaspan Corporation (SSW)

Investor and Analyst Conference Call

June 6, 2013 12:15 pm ET

Executives

Kyle R. Washington – Co-Chairman and Co-Founder

Gerry Wang – Chief Executive Officer, Co-Chairman and Co-Founder

Sai W. Chu – Chief Financial Officer

Analysts

Ken Scott Hoexter – Merrill Lynch, Pierce, Fenner & Smith, Inc.

Justin B. Yagerman – Deutsche Bank Securities, Inc.

Brandon Oglenski – Barclays Capital

Presentation

Kyle R. Washington

All right, well welcome to the spectacular room here at the Plaza. We appreciate you all coming out of this gorgeous New York day to hear our update on Seaspan Corp. We would like to just get here more. We haven’t been here for – we didn’t get here last year, but we were certainly busy. And I’d like to introduce the two presenters, first of all I’m Kyle Washington, Chairman of Seaspan Corp. Presenting the story will be my great CEO Gerry Wang and Sai Chu our long time CFO.

So after the presentation, continue eating and you can field any questions. We do have a few directors sitting amongst you, and some other Seaspan staffs. So we’ll field some questions after the presentation. Enjoy the presentation.

Unidentified Company Representative

Thanks, Kyle. Ladies and gentlemen, while I walked into this room I was thinking it’s got to be a dancing hall in the early days. You must see the musical instruments here, the bands and the people dancing on the floor. So it’s a great opportunity to have you here and most of you have met with me, have seen me and I have met with you and it’s been long time for us to host this event and we are very excited.

So I remember two years ago we had the investor day event held at the PS Hotel and today we’re doing this thing. Together with me is my team CFO, Mr. Chu and two, three of our Board members are also here and we have also some very close advisors in our strategic team also being with us. So we have pretty much a full team here. We are very excited to be here in the room to connect with you, to share the excitement of what all we do and to tell you about the story, whether we’ve been developing. And one think I just want you to catch your attention to be honest is, I have said this thing several times, I have never been more excited than what it is today. That is really the sentiment I want to share with you. Today is a great time for our franchise, for our history.

We are very well positioned as a franchise in our sector, as the leader in the sector. We’ve been very patient. We’ve been very careful in that position ourselves for where we are today. The industry is what it is and I am pretty sure you guys are familiar with us and given our franchise, given where we are in terms of positioning to capitalize on the opportunities and I’m just very excited and our partner is excited, including the shareholder, Washington families are really excited as well. So we want to share the excitement with you and let me just go though some of the things that you see on the screen.

Seaspan for some of you that are not familiar with our franchise, we’re a leasing company like (inaudible) corporation. They deal with aircraft. We deal with container ships. So essentially we design, build, own and manage those container ships under long-term leases to the operators. People that move container boxes from point A to point B to move things from China to say Walmart, you are familiar with.

So we are essentially a leasing company (inaudible). We own a branch of very modern large container ships, we specialize in big ones. The average size of fleet is about 7000 TEUs which is pretty much to the size of a middle class aircraft carrier. Just give you guys a little perspective in terms of the size and the poise we deal with – ships we deal with.

The business was born during Asia’s financial crisis that was about 15 years ago. At that point in time our Chairman Kyle Washington together with me and Graham Porter with the support of the Washington family, we started the business with the first ship and chartered the channel shipping. Then we grew the business to 23 ships in the year of 2005, then we went public that year. We have the largest shipping IPO, a record, that record is still yet to be broken. I will talk little bit more later on. I just want to make sure if you’ve understand. As a leasing company, what is most important to us is the stability and sustainability of our cash flows.

With long-term contract, we have very stable cash flows. Then obviously we have dividend payout and Sai, our CFO would talk about the financial aspects of the business. He will talk about the stability and sustainability of our dividend, which is important to us to connect with our investors.

The other thing I want to talk about is Seaspan, as a franchise, we have a strong balance sheet. And if you look at where we were today versus 2009 when we were going through the financial crises, we’ve done a lot of things to make sure our balance sheet is as strong as ever. So we are very well capitalized and we are very happy to be where we are today in terms of capital structure and the balance sheet. Then obviously if you know where the industry is, what is the trend, what is going in the industry? I would use a very simple language. The industry is all about simply efficiency. It’s all about modernization, but it’s all about fuel efficient designs.

We started that trend by introducing, we call that SAVER design SAVER, Seaspan Action on Vessel Energy Reduction, that has unfortunately or fortunately has become unstoppable trend and that was what caused the change in terms of the container ships that are been used in carrying goods. Today I don’t think there is any Latin major who can say, I don’t need modern ships, everybody has to modernize their fleet and we are very excited to work with them and yet I was talking to one of the reporters. I was saying about Seaspan, what is the identity, what is your market share, all those things and I said to the reporter, you know what?

Let me give you one thing, in our space, in the container sector, when I deal with all the CEOs of the leading container operators, yeah I will say, none of the line operators are big ones. When they start thinking about outsourcing, tends on to use a bigger, it will be unimaginable for them not to talk to Seaspan first. So that’s where we are today. Okay. They have to speak to us, that’s just the power we have, that’s just the size we have, that’s the identity of Seaspan. So we are de facto (inaudible) just to make it very clear to you here.

Seaspan is not just one of the container ship owner, container leasing companies, we are the leading one, we’re the largest, we’re the ones everybody has to speak to. That makes me very happy. Then if you look at 10 years, 15 years ago when we were born, we were nothing, okay. We were new (inaudible) and people would say, what are those boys doing from Vancouver? I’ll pass from all the (inaudible) and the skiing all the things there. But you look at the trend that we set, the design of the ship, you look at the popular designs we have, TEU 8000, TEU 9000, TEU 13,000 TEU 14, 000 all those designs have come from us, and we have set the tone, all those designs can become the most popular design.

So we’re not just financial leasing company, but we have the technical operational know-how. I have a big team involved in designs, in operating those ships. We have about 3,000 crew members. We have about 400 (inaudible), so we are full scale turnkey operator. We provide lease to the operators. So that’s just identity of who we are, I just want to share that with you.

Talking about the development again; we were talking about three phases. Phase I, as I mentioned, there was a financial crisis; Asia financial crisis. We are trying to come up with a model that would sort of mimic aircraft living. That was part of my business school studies. There was aircraft leasing, why not ship leasing? That’s how it was born. So we are able to connect that with the real business at that point of time. We study the channel shipping. They wanted to grow the business, but didn’t have marketplace in that point of time. We became partners that we introduce the long-term leases versus their own self owning mechanism that was – that point of time of the prevailing ship owning situation.

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