Atlas hosted its annual investor day this week. There wasn’t a whole lot of new information, but there was some refinement on various pieces that lacked clarity. For me, these were the major takeaways:
- Core containership business outlook: Plenty of growth runway both within core containership leasing and ancillary technologies supporting the core, specifically around the green transition. Not hitting wall on places to invest in and around the core.
- APR Energy
- Purchase price was ~4x EBITDA, after purchase price adjustments were made based on lawsuit resolutions
- Going after whitespace in green transition technologies and long term contracted infrastructure builds
- Good management team finally in place
- Cash generation: Expect to produce $500m / yr in FCF on go forward basis and another $250m / yr after new build program is fully delivered in 2024. On ~300m shares at ~$15 / share, that’s roughly an 11% FCF yield today and ~16% by 2024.
Around the same time it was disclosed that David Sokol, the chairman of the company, was awarded a large stock grant that vests through 2027. I’m happy that there’s a solid retention incentive to keep him in his place, as he is the driving force behind the company.
Overall, while many lament the sideways share price over the past year, I’m happy to own what is effectively an infrastructure fund at a reasonable price with great management.
Disclosure: We own shares of Atlas Corporation, this isn’t investment advice. Do your own work.