Atlas Arteria · ASX:ALX
Atlas Arteria — FY2023 Earnings Presentation
59 slides from Atlas Arteria's earnings presentation, Feb 29, 2024
Slide 1: ASX Release: Atlas Arteria Results Presentation for the year ended 31 December 2023
29 February 2024 ASX RELEASE Atlas Arteria Results Presentation for the year ended 31 December 2023 Atlas Arteria (ASX:ALX) is pleased to release the attached results presentation for the year ended 31 December 2023. ___________________________________________________________________________________
Slide 2: US ownership restrictions
Atlas Arteria Limited 2 Atlas Arteria International Limited For further details of ownership restrictions that apply to residents of the United States and other U.S. Persons that are not Qualified Purchasers, please see our website. https://www.atlasarteria.com/stores/_sharedfiles/US_Ownership/Atlas
Slide 3: 2023 Results Presentation
2023 RESULTS PRESENTATION for the twelve months ending 31 December 2023 29 February 2024 Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 4: Important Information
Important Information Disclaimer Forward Looking Statements Basis of Preparation The information in this presentation is given in good faith and This presentation may contain forward-looking statements All financial results are presented in Australian dollars unless derived from sources believed to
Slide 5: Important Information
Important Information U.S. Ownership Restrictions Investors should note that neither of the Atlas Arteria entities To monitor compliance with these foreign ownership has been, or will be, registered under the U.S. Investment restrictions, the ASX’s settlement facility operator (“ASTC”) has Company A
Slide 6: Contents
CONTENTS KEY HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE OUTLOOK APPENDICES Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 4
Slide 7: Key Highlights: Robust financial performance and refined strategy
KEY HIGHLIGHTS Robust financial performance and refined strategy Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 5
Slide 8: 2023 Highlights
2023 HIGHLIGHTS Traffic1 Recent toll increases of Distribution guidance of 3.3% 3.1%3 at APRR 20 cps for H2 2023 EBITDA2 10.0% at Skyway 40 cps for 20244 7.1% 8.4% at Warnow Tunnel Safety is a key Chicago Skyway Refined business priority 12-month transition Strong focus on strategy continuous improv
Slide 9: Business Strategy – Refined Strategic Priorities
BUSINESS STRATEGY – REFINED STRATEGIC PRIORITIES Non-associated growth opportunities are not being considered Business optimisation • Optimising business activities across operations, maintenance, toll management and revenue recovery • Innovation to enhance efficiency and lower costs Associated grow
Slide 10: 2023 Financial Overview
2023 FINANCIAL OVERVIEW Strong results reflect record APRR traffic and earnings which outperformed 2022 and 2019 levels 2023 Traffic 2023 Toll Revenue3,4 2023 EBITDA3,4 Business VS 2022 VS 2019 VS 2022 VS 2019 VS 2022 VS 2019 APRR Group1 3.9% 6.2% 7.0% 13.4% 7.5% 15.4% ADELAC 5.0% 4.9% 11.5% 20.2% 1
Slide 11: Atlas Arteria Distribution Guidance
ATLAS ARTERIA DISTRIBUTION GUIDANCE Distribution guidance of 20.0 cps for H2 2023 reaffirmed and 40.0 cps for 2024 Distribution guidance for H2 2023 and 2024 Atlas Arteria distributions – by period earned (cps) • Reaffirmed distribution guidance of 20.0 cps for H2 2023 reflects the Guidance performa
Slide 12: Positively Correlated to Inflation
POSITIVELY CORRELATED TO INFLATION Inflationary environment supports toll increases and earnings, with mechanisms that embed predictability over future toll escalation Toll increases implemented 3.1% APPR APRR / AREA: 70% x CPI + increments agreed 1-Feb-20246 3.1% AREA APRR under any Investment Plan
Slide 13: Well-Positioned for Current Macro-Economic Environment
WELL-POSITIONED FOR CURRENT MACRO-ECONOMIC ENVIRONMENT High EBITDA margins with primarily fixed rate debt providing protection from interest rate risk Fixed vs floating debt profile at 31 December 2023 Fixed interest rate debt profile at 31 December 2023 Average term 5 18 10 22 APRR/FINANCIÈRE EIFFA
Slide 14: Strong Focus on Safe and Responsible Operations
STRONG FOCUS ON SAFE AND RESPONSIBLE OPERATIONS Building a strong safety culture to deliver safe outcomes for all our stakeholders Large businesses – lost-time injury frequency rate (LTIFR)1 Small businesses – lost time injuries (LTI)2 APRR Warnow Tunnel 2 Chicago Skyway 5.69 Dulles Greenway 5.18 Ta
Slide 15: Operational Performance
OPERATIONAL PERFORMANCE Record APRR traffic & Chicago Skyway 12-month transition plan complete Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 13
Slide 16: APRR Group Traffic Update
APRR GROUP TRAFFIC UPDATE Strong traffic and revenue performance reflecting robust light vehicle traffic and inflation-linked toll increases APRR Group traffic1 Traffic resilience through economic cycles Trade in France and Spain APRR Light vehicle VKT Household consumption France Spain Heavy vehicl
Slide 17: APRR Group Operational Update
APRR GROUP OPERATIONAL UPDATE Long-distance transport infrastructure tax enacted by the French State French transportation tax update Outlook for future concessions • In December 2023, the French Government enacted a new French tax (TEILD) applicable to • It has previously been acknowledged that the
Slide 18: A412 Project Update
A412 PROJECT UPDATE Potential expansion of the network and improving the customer experience Project overview Project location • A412 Thonon-Machilly is a new 16.5km motorway from Thonon-les-Bains to Machilly to the south of Lake Geneva and will operate under free-flow tolling • The new motorway is
Slide 19: Chicago Skyway Traffic Update
CHICAGO SKYWAY TRAFFIC UPDATE Traffic performance above business acquisition case with roadworks on the Indiana Toll Road (ITR) now complete Chicago Skyway traffic Long-term economic drivers1 Historical monthly traffic seasonality2 Heavy vehicle trips Light vehicle trips Heavy vehicle ADT U.S. Indus
Slide 20: Tolling Regime Supports Strong Revenue Performance
TOLLING REGIME SUPPORTS STRONG REVENUE PERFORMANCE Toll escalation formula, combined with relatively inelastic traffic, delivers sustainable revenue growth Toll revenue vs traffic performance Toll price elasticity (real)1 Heavy vehicle traffic Light vehicle traffic Toll revenue Implies a 1% real tol
Slide 21: Chicago Skyway Transition 12-Month Plan Complete
CHICAGO SKYWAY TRANSITION 12-MONTH PLAN COMPLETE Will deliver long-term cost savings and enhancements to asset quality as well as capital efficiency 2023 achievements – delivering on acquisition strategy Outperformed business acquisition case •✓ Asset Management Program • Initiated the transition an
Slide 22: Dulles Greenway Traffic Update
DULLES GREENWAY TRAFFIC UPDATE Continued gradual traffic improvement reflecting higher peak and weekday traffic Dulles Greenway traffic Population growth in Loudon County Travel time savings2 Total trips Toll revenue Loudon County Population PM peak time savings PM peak trips Washington-West Virgini
Slide 23: Dulles Greenway Operational Update
DULLES GREENWAY OPERATIONAL UPDATE Atlas Arteria is advocating for the Dulles Greenway to move to distance-based tolling, which is in the best interests of its customers and would put the business on a more sustainable financial path Approach to legislative change in Virginia Key people engaged in b
Slide 24: Warnow Tunnel Traffic Update
WARNOW TUNNEL TRAFFIC UPDATE Strong traffic and revenue growth due to roadworks on the competing route driving travel time savings Warnow Tunnel traffic Roadworks Travel time savings1 Traffic Toll revenue ADT Eastbound and westbound average Historical roadworks events COVID Linear (ADT) pandemic 14.
Slide 25: Sustainability Priorities
SUSTAINABILITY PRIORITIES Key Targets LTIFR ≤3 at large businesses and LTI ≤1 at small Maintain 40/40/20 commitment to gender balance and 25% reduction in scope 1 and 2 emissions by 2025, and businesses evolve representation across and within specific teams 46% by 2030, compared to a 2019 baseline P
Slide 26: Financial Performance
FINANCIAL PERFORMANCE Robust traffic drives strong financial performance Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 24
Slide 27: Atlas Arteria Income Statement
ATLAS ARTERIA INCOME STATEMENT Record APRR traffic driving strong profitability A$m 2023 2022 % change Toll revenue 133.2 116.7 14% Primarily driven by increase in Dulles Greenway toll revenue due to higher traffic as well as weakening of the AUD against the USD and EUR Other revenue 0.8 1.5 (47%) T
Slide 28: Atlas Arteria Cash Flow for H2 2023
ATLAS ARTERIA CASH FLOW FOR H2 2023 APRR dividends to Atlas Arteria (€m) Corporate cash flows (A$m) Cash balance (A$m) 155.6 381.2 (18.4) (4.1) (0.2) 2.8 21.2 224.4 flow cash balance Dist. from Remove net NPAT /dividend debt service / Financière & FX translation Net corporate cash Eiffarie H1 2023 O
Slide 29: APRR Financial Performance
APRR FINANCIAL PERFORMANCE APRR financial performance reflecting strength of the network €m1 2023 2022 % change • Growth in operating revenue reflects higher traffic and toll price increases at APRR and AREA of c.4.7% from 1 February 2023 Traffic (VKTm) 26,095.7 25,104.6 3.9% • Operating expenses in
Slide 30: APRR Capital Expenditure Program
APRR CAPITAL EXPENDITURE PROGRAM Investing to grow the footprint and improve customer experience APRR capital expenditure program • Capex spend across the year was around €330m — Majority of spend was on road improvements — A6 Chalon Nord on/off ramp upgrade commenced in March 2023 and is expected t
Slide 31: APRR Group Financial Position
APRR GROUP FINANCIAL POSITION APRR strong balance sheet rated A by Fitch Ratings and A- by S&P APRR Group debt maturity profile APRR has significant balance sheet as at 31 December 2023 (€m)1 flexibility to support growth Rating A Stable Outlook (Fitch); A- Stable Outlook (S&P) Sources of Debt • APR
Slide 32: Chicago Skyway Financial Overview
CHICAGO SKYWAY FINANCIAL OVERVIEW Outperforming the business acquisition case on key metrics US$m (100%)1 2023 2022 % change • Traffic fell by 7.2% compared to 2022, but was above the acquisition business case, which allowed for the negative Traffic (ADT) 35,941 38,710 (7.2%) impact of the planned I
Slide 33: Dulles Greenway Financial Overview
DULLES GREENWAY FINANCIAL OVERVIEW Traffic improvement driven by gradual return to office-based work US$m1 2023 2022 % change • Increased revenue reflects improved traffic performance and higher violation revenue collection. Growth in traffic was Traffic (m) 13.1 12.3 6.4% largely driven by higher w
Slide 34: Warnow Tunnel Financial Overview
WARNOW TUNNEL FINANCIAL OVERVIEW Toll increases and robust traffic driving higher revenue €m1 2023 2022 % change • Traffic was 3.1% higher vs 2022 as motorists opted for the travel time savings offered by the Warnow Tunnel given Traffic (m) 4.7 4.5 3.1% roadworks on the competing route along Am Stra
Slide 35: Capital Management
CAPITAL MANAGEMENT Disciplined balance sheet and capital management Growing free cash Appropriate gearing across the Funding to support strategic flow portfolio objectives • H2 2023 and 2024 distribution to be • APRR credit rating of A/A- with a Stable • Strong underlying cash flows to funded by und
Slide 36: Outlook: Delivering on our strategic priorities
OUTLOOK Delivering on our strategic priorities Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 34
Slide 37: The Atlas Arteria Value Proposition
THE ATLAS ARTERIA VALUE PROPOSITION Mature, established Geographically diverse, High-quality brownfield global toll road business cash generative business of scale asset base A unique investment opportunity Positively leveraged to Attractive distribution High EBITDA margins, inflation yield limited
Slide 38: Summary
SUMMARY STRONG DELIVERING ON MAXIMISING PERFORMANCE THE STRATEGY DISTRIBUTIONS Record APRR traffic Chicago Skyway 12-month 2024 full year distribution performance transition plan complete guidance of 40.0 cps Chicago Skyway outperformed Eiffage and APRR consortium in US$116m of capital releases to b
Slide 39: Thank You Q&A
THANK YOU Q&A Contact for investors Chloe Heazlewood Acting Director, Investor Relations +61 (0) 438 493 692 investors@atlasarteria.com Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 37
Slide 40: Appendix A: Additional Financial Information
APPENDIX A Additional Financial Information Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 38
Slide 41: Reporting changes from H1 2024 - Corporate Costs
Reporting changes from H1 2024 - Corporate Costs • Atlas Arteria is providing notice that from H1 2024 corporate costs will be reported under a new classification methodology to provide greater consistency with market practice • Historically, Atlas Arteria has accounted for centralised employee and
Slide 42: Atlas Arteria Consolidated Balance Sheet
ATLAS ARTERIA CONSOLIDATED BALANCE SHEET As at As at Statutory accounts 31 December 2023 31 December 2022 A$m Current assets 345.1 533.5 Investments accounted for using the equity method 5,097.2 5,350.1 Tolling concessions 2,103.5 2,167.9 Goodwill 14.3 13.8 Other non-current assets 484.6 253.2 Total
Slide 43: Proportionate EBITDA by Business
PROPORTIONATE EBITDA BY BUSINESS APRR Group 100% Chicago Skyway 100% 2023 2022 % change 2019 % change 2023 2022 % change 2019 % change (€m) 1 (US$m) Traffic (VKTm) 26,096 25,105 3.9% 24,581 6.2% Traffic (ADT) 35,941 38,710 (7.2%) 35,472 1.3% Total revenue 3,249.2 3,153.8 3.0% 3,015.9 7.7% Total reve
Slide 44: Appendix B: About the Business
APPENDIX B About the Business Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 42
Slide 45: The Atlas Arteria Business
THE ATLAS ARTERIA BUSINESS Ownership: 31.14% APRR 2,316km motorway network in Eastern France Virginia, United States 2035 concession expiry1 Dulles Greenway Luxembourg United States HQ European HQ Rostock, Germany Warnow Tunnel Ownership: 31.14% A79 88km east-west transversal link 2068 concession ex
Slide 46: APRR - Overview
APRR - OVERVIEW APRR heavy and light vehicle traffic LV VKT HV VKT 25,000 5,000 20,000 4,000 15,000 3,000 HV VKT LV VKT 10,000 2,000 5,000 1,000 0 0 2008 2023 APRR EBITDA & EBITDA margin EBITDA EBITDA margin (excl. construction services) EBITDA margin (excl. construction services & taxes) 86.5 87.1
Slide 47: APRR - Contractual Toll Regime
APRR - CONTRACTUAL TOLL REGIME APRR & AREA contractual toll regime ADELAC contractual toll regime • Tolls escalate annually in February by a percentage of French CPI, plus supplemental increases • Under the concession contract, tolls typically increase each year in February by French CPI as agreed w
Slide 48: APRR - French Taxes
APRR - FRENCH TAXES Corporate Income Tax Motorway Specific Tax (TAT) Territorial economic contribution (CET) • The current corporate tax rates in France are shown in the • The French Tax Code provides for a specific tax payable by • The territorial economic contribution (Contribution table below mot
Slide 49: Warnow Tunnel - Overview
WARNOW TUNNEL - OVERVIEW Warnow tunnel traffic 14,000 13,000 12,000 11,000 ADT Program of roadworks in 10,000 and around Rostock 9,000 CAGR 2008 – 2023 = 1.3% 8,000 7,000 2008 2023 Warnow Tunnel EBITDA & EBITDA margin EBITDA EBITDA margin 76.8 75.3 71.3 73.1 73.3 74.9 71.1 68.3 69.0 68.9 • Warnow Tu
Slide 50: Warnow Tunnel - Toll Regime
WARNOW TUNNEL - TOLL REGIME • Tolls may be escalated annually and are subject to approval by the Ministry of Energy, Infrastructure and State Development for the State of Mecklenburg-Vorpommern • Toll increases are linked to pre-tax equity IRR of the concession as outlined below • Warnow Tunnel toll
Slide 51: Chicago Skyway - Overview
CHICAGO SKYWAY - OVERVIEW Chicago Skyway heavy and light vehicle traffic LV ADT HV ADT 50,000 5,000 40,000 4,000 30,000 3,000 LV ADT HV ADT 20,000 2,000 10,000 1,000 0 0 2008 2023 Chicago Skyway EBITDA & EBITDA margin EBITDA EBITDA margin 87.8 88.6 88.3 87.1 88.0 87.5 87.7 85.2 84.0 84.8 85.1 86.8 8
Slide 52: Chicago Skyway - Toll Regime
CHICAGO SKYWAY - TOLL REGIME Toll escalation linked to macroeconomic factors with a 2.0% floor, based on a 2-year look-back Toll escalates at the greater of: Annual US nominal GDP • There are six tolled vehicle classes based on vehicle axles: Annual US CPI growth 2.0% per annum per capita growth — C
Slide 53: Chicago Skyway - Toll Outcomes
CHICAGO SKYWAY - TOLL OUTCOMES 2016 2017 2018 2019 2020 2021 2022 Cumulative CAGR Toll drivers Variables Variables Variables Variables Variables Variables Variables 2016-22 2016-22 US nominal GDP per 2.1% 3.8% 5.2% 3.8% (3.0%) 10.9% 10.0% 36.8% 5.4% capita US CPI 2.1% 2.1% 1.9% 2.3% 1.4% 7.0% 6.5% 2
Slide 54: Chicago Skyway - United States Federal and State Tax
CHICAGO SKYWAY - UNITED STATES FEDERAL AND STATE TAX The current tax situation US Federal and State income tax rates • The majority of Chicago Skyway’s depreciable / amortisable Upstream tax profile assets are depreciated / amortised for tax purposes over a • Chicago Skyway is subject to US Federal
Slide 55: Dulles Greenway - Overview
DULLES GREENWAY - OVERVIEW Dulles Greenway traffic 60,000 50,000 40,000 ADT 30,000 20,000 10,000 0 2008 2023 Dulles Greenway EBITDA & EBITDA margin EBITDA EBITDA margin 81.6 81.4 81.3 82.2 77.8 80.5 78.5 79.8 80.8 79.8 78.7 73.8 77.1 70.1 71.7 73.1 EBITDA Margin (%) • Dulles Greenway is a 22km tolle
Slide 56: Dulles Greenway - Toll Regime
DULLES GREENWAY - TOLL REGIME Tolls on the Dulles Greenway are set on application by the Virginia State Corporation Commission (SCC) under the Virginia Highway Corporation Act (1988) (VHCA) • From 1 Jan 2022 onward, the SCC will determine the toll rates under the VHCA in accordance with Section §56-
Slide 57: Atlas Arteria Summary Corporate Structure
ATLAS ARTERIA SUMMARY CORPORATE STRUCTURE as at 31 December 2023 Stapled ATLAX (Australia) ATLIX (Bermuda) 13.43% Dulles Greenway 86.57% economic interest (via loans)1 100% 66.67%2 Third Party Investors Eiffage MIBL CCPI 33.71% 4.00% 62.29% 100% Eiffage MAF / MAF2 100% Chicago Skyway Warnow Tunnel 5
Slide 58: Appendix C: References
APPENDIX C References Atlas Arteria → Results Presentation for the twelve months ending 31 December 2023 → 56
Slide 59: Glossary of Terms
GLOSSARY OF TERMS ADT Average daily traffic DSCR Debt service coverage ratio MIBL MIBL Finance (Luxembourg) S.à r.l. ADELAC The concessionaire of the A41 north motorway Eiffarie Eiffarie SAS n.a. Not applicable ALX Atlas Arteria E&P Earnings & Profit NPAT Net Profit after Tax APRR Group Includes APR