Executive Summary / Key Takeaways

• Resilient Business Model: Atlas Corp. has transformed into a robust asset manager, leveraging long-term, fixed-rate contracts in containership leasing (Seaspan) and strategically evolving its mobile power generation (APR) segment to deliver predictable cash flows across economic cycles.
• Operational and Technological Edge: Seaspan's modern, efficient fleet, including dual-fuel LNG newbuilds, coupled with its operational excellence (high utilization, low injury rates, ahead-of-schedule deliveries), creates a significant competitive moat and drives consistent performance.
• Strong Financial Health & Disciplined Capital Allocation: The company maintains robust liquidity, a decreasing borrowings-to-asset ratio, and a proactive hedging strategy, supported by substantial contracted cash flows of $31.20 billion as of June 30, 2025.
• Strategic Growth Trajectory: Seaspan's significant newbuild program (44 vessels through August 2029) and APR's pivot towards long-term energy transition projects position Atlas for sustained, quality growth, despite ongoing geopolitical and market uncertainties.
• Competitive Differentiator: Atlas's focus on long-term customer partnerships, innovative financing structures like ECA-backed JOLCOs, and integrated operational platforms provide a distinct advantage against larger, more diversified competitors in both shipping and power.

Atlas Corp.: A Resilient Asset Manager Forging Long-Term Value

Atlas Corp. (ATCO-PH) stands as a specialized asset manager and operator, primarily through its Seaspan containership leasing segment and its mobile power generation unit, APR. The company's overarching strategy centers on generating stable, predictable cash flows through long-term, fixed-rate contracts, underpinned by operational excellence and disciplined capital allocation. This strategic pivot, initiated in 2017 with David Sokol's appointment as Chairman and further solidified by CEO Bing Chen in 2018, transformed Atlas from a company "near default on its debt" into a formidable player focused on core competencies and quality growth.

The global landscape for both container shipping and energy infrastructure provides a dynamic backdrop for Atlas's operations. Container shipping, driven by global trade from Asia Pacific to the U.S. and Europe, demands efficient and modern fleets. Concurrently, the energy sector is undergoing a significant transition, creating opportunities for flexible and long-term power solutions. Atlas aims to capitalize on these trends by enhancing its fleet and evolving its power generation services.

Technological Edge and Operational Excellence

Atlas Corp.'s competitive strength is deeply rooted in its technological and operational differentiators across both segments.

Seaspan's fleet modernization program is a cornerstone of its strategy. The company is actively investing in newbuilds, including dual-fuel liquefied natural gas (LNG) and scrubber-fitted containerships. These modern vessels offer enhanced fuel efficiency and environmental compliance, critical advantages in a regulatory-sensitive industry. As of June 30, 2025, Seaspan operated a fleet of 182 vessels, totaling 1.89 million TEU, with an average age of approximately seven years on a TEU-weighted basis. The ongoing 70-vessel newbuild program, including 42 newbuild containerships and two Pure Car Truck Carriers (PCTCs) expected for delivery through August 2029, underscores this commitment to a young, efficient fleet. The company's operational prowess is evident in its consistent vessel utilization rate, which stood at 98.90% in Q2 2025. Furthermore, Seaspan has a strong track record of delivering newbuilds ahead of schedule, a testament to its "knowhow" and experienced team. This operational excellence, combined with an industry-leading safety record (Lost Time Injury Frequency of 0.22 in Q3 2022), translates directly into reliable service for customers and sustained revenue for investors.

In the mobile power generation segment, APR, Atlas emphasizes "turnkey solutions". This includes comprehensive services such as plant design, fast-tracked installation, plant operation, and ongoing service and maintenance. This integrated approach allows APR to offer adaptable and efficient power solutions to industries like oil and gas, mining, and utilities. APR achieved an asset utilization of 80% and a perfect lost time injury rate of zero in Q3 2022. The strategic extension of contracts, such as the Brazil contract from 12 to 44 months, highlights the value of APR's solutions and its progress toward long-term contracted cash flows.

For investors, these technological and operational advantages are crucial. They contribute to Atlas's competitive moat by ensuring high asset utilization, reducing operational costs, and fostering strong, long-term customer relationships. The focus on modern, efficient vessels and integrated power solutions positions Atlas favorably to meet evolving market demands and regulatory requirements, driving sustained financial performance and market positioning.

Financial Strength and Disciplined Capital Allocation

Atlas Corp.'s financial performance reflects its strategic emphasis on predictable, long-term cash flows and robust balance sheet management. For the three months ended June 30, 2025, Seaspan reported revenue of $618.40 million, an 11.10% increase over the same period in 2024. Net earnings for the quarter reached $174.90 million, up from $151.90 million in Q2 2024. This growth was primarily driven by the delivery of newbuild vessels and the full-year impact of previous deliveries, partially offset by vessel sales. Operating earnings for the three months ended June 30, 2025, stood at $332.40 million.

The company's profitability margins are robust, with a TTM Gross Profit Margin of 49.60%, Operating Profit Margin of 44.27%, Net Profit Margin of 36.66%, and an EBITDA Margin of 65.40%. Cash flow from operating activities for Seaspan was $349.40 million for the three months ended June 30, 2025, and $716.90 million for the six months ended June 30, 2025. These figures demonstrate strong cash generation capabilities, essential for funding ongoing investments and managing debt.

Atlas maintains a strong liquidity position, with $1,397.30 million in cash and cash equivalents and $700 million in undrawn revolving credit facilities, totaling $2,097.30 million as of June 30, 2025. This substantial liquidity is critical for funding operating expenses, investments in vessels under construction, and debt repayments. The company's long-term objective is to target a total borrowings-to-asset ratio of 50-60%, and it has made progress, reducing this ratio to 63.30% as of June 30, 2025, from 66.70% at December 31, 2024.

Atlas actively manages its interest rate exposure, with approximately 70% of Seaspan's debt tied to fixed interest rates as of Q3 2022. As of June 30, 2025, $1.10 billion of its variable-rate financing was fixed through interest rate swaps, resulting in a net asset of $67.40 million related to these instruments. The weighted average interest rate for June 30, 2025, was 6.03%, a decrease from 6.93% at June 30, 2024. The company has also innovated its financing structures, notably upgrading financing for 15 newbuilds to a $1.5 billion ECA-backed JOLCOs structure, which offers a "significantly lower cost" and a "low-cost fixed rate component". This structure is now used to finance 33 newbuild vessels.

Capital recycling through strategic vessel divestments is another key aspect of Atlas's financial discipline. The company sells older, non-core vessels, such as Panamaxes, to generate cash and exit less efficient assets, while also considering customer needs and market conditions. This strategy allows Atlas to continuously optimize its fleet and reallocate capital to higher-return opportunities.

For investors, Atlas's financial strength and disciplined capital allocation translate into a more predictable and de-risked investment profile. The substantial contracted cash flows, proactive debt management, and strategic capital recycling underpin the company's ability to generate long-term value and progress towards an investment-grade credit rating.

Competitive Landscape: A Differentiated Approach

Atlas Corp. operates in highly competitive global markets, yet it has carved out a distinct position through its specialized approach and operational strengths.

In containership leasing, Seaspan is a leading independent charter owner and manager, primarily serving nine major container liner companies with long-term, fixed-rate time charters. This contrasts with integrated logistics giants like A.P. Moller-Maersk (AMKBY), which offer broader, end-to-end services. Seaspan's competitive advantage lies in its focused asset management, providing customized and reliable charter solutions. While Maersk's scale and global network offer cost advantages, Seaspan's operational excellence, demonstrated by its high utilization rates and industry-leading safety record, differentiates its service quality. Furthermore, Atlas's innovative financing structures, such as the ECA-backed JOLCOs, provide a lower cost of capital for its newbuild program, a capability few competitors can match. This financial prowess enables Atlas to continue investing in high-quality, environmentally sensitive ships, a critical factor as the industry faces increasing environmental regulations.

In the mobile power generation sector, APR competes with large industrial players like Siemens Energy (SMNEY) and General Electric (GE). While these competitors boast broader technological capabilities and extensive R&D, APR differentiates itself through its integrated, turnkey power solutions and adaptability for niche industrial applications. APR's strategic shift towards long-term contracted cash flows aims to align its business model more closely with Seaspan's, providing greater revenue predictability compared to the lumpiness often associated with short-term power projects. Atlas is actively building out its business development resources in Asia, Africa, and Central America to expand APR's pipeline of long-term opportunities.

Atlas's competitive moats include its extensive fleet of modern vessels and power equipment, its robust portfolio of long-term charter agreements, and its integrated operational platforms. These strengths allow Atlas to maintain a sustainable market position and capture specific growth opportunities. However, Atlas faces vulnerabilities, particularly its relatively newer market presence in some power segments compared to established industrial giants, and potential R&D gaps against companies with significantly larger innovation budgets. Despite these, Atlas's strategic adaptability and focus on customer partnerships enable it to mitigate these challenges.

For investors, Atlas's differentiated competitive approach suggests a resilient business capable of generating stable returns by focusing on its core strengths and strategically expanding into high-potential areas.

Strategic Outlook and Managing Future Dynamics

Atlas Corp. is positioned for continued growth, with a clear strategic roadmap for both its Seaspan and APR segments. Seaspan's primary objective is to grow its vessel leasing business through accretive acquisitions and the ongoing delivery of its 44 newbuild vessels through August 2029. The company's gross contracted cash flows of $31.20 billion as of June 30, 2025, provide significant revenue visibility and reduce liquidity risk. Seaspan will continue its capital recycling initiatives, optimizing its fleet and reallocating capital to enhance long-term value. The strategy also involves proactively forward-fixing existing vessels to extend charter durations, pushing contracts out to 2026-2032 for vessels previously ending between 2023-2025. This helps manage the influx of new capacity into the market and ensures consistent cash flow.

APR is undergoing a strategic transformation, aiming to shift its business model towards long-term contracted cash flows, mirroring Seaspan's success. This involves redeploying turbines from completed contracts, such as those from Argentina, to new, longer-term projects in markets like Brazil. Management anticipates a more stable utilization rate for APR in the second half of 2022 due to these new deployments. The ultimate goal is to leverage APR's platform to participate in the global energy transition, moving beyond short-term power services.

Atlas's capital strategy emphasizes maintaining diverse sources of capital for financial flexibility, managing leverage in alignment with long-term targets (50-60% borrowings-to-asset ratio), and growing its unencumbered asset base. The company also continues to manage its interest rate exposure proactively, expecting to receive $15.41 million in cash from interest rate swaps in the next 12 months.

However, investors should be aware of potential risks. Geopolitical events, such as the conflict in the Red Sea, can impact global shipping routes and operational costs. While Atlas uses interest rate swaps to manage market risk, significant fluctuations could still affect profitability. The company must also remain in compliance with various financial covenants in its credit facilities. The transition of APR's business model may introduce lumpiness in its financial performance during the redeployment phases. Furthermore, newbuild deliveries, while largely on schedule, are subject to external factors beyond the company's control. It is also important to note that while Atlas Corp. has entered into an agreement to be acquired by the Poseidon Consortium, the preferred shares of Atlas are expected to remain listed on the NYSE.

Conclusion

Atlas Corp. has successfully navigated a transformative period, emerging as a disciplined asset manager with a clear vision for long-term value creation. Its core investment thesis is built upon the resilience of its long-term contracted cash flow model, operational excellence in both containership leasing and mobile power generation, and a robust financial strategy aimed at strengthening its balance sheet and achieving an investment-grade credit rating. The company's commitment to fleet modernization, innovative financing, and strategic capital allocation provides a strong foundation for sustained growth.

Looking ahead, Atlas is well-positioned to capitalize on global trade demands and the ongoing energy transition. Its competitive advantages, rooted in specialized asset management and strong customer partnerships, enable it to differentiate itself from larger, more diversified players. While risks such as geopolitical events and the inherent lumpiness of APR's transition exist, Atlas's proactive risk management and clear strategic direction suggest a compelling outlook for investors seeking predictable returns and long-term value in essential global infrastructure.