Atlas Arteria · ASX:ALX
Atlas Arteria — FY2022 Earnings Presentation
65 slides from Atlas Arteria's earnings presentation, Feb 23, 2023
Slide 1: 2022 Results Presentation
2022 RESULTS PRESENTATION for the twelve months ending 31 December 2022 23 February 2023 Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: 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 3: 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 4: Contents
CONTENTS KEY HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE OUTLOOK APPENDICES Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 4
Slide 5: Key Highlights
KEYHIGHLIGHTS A year of consistent execution and business transformation Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 5
Slide 6: Key Highlights
KEY HIGHLIGHTS H2 distribution Doubled the average Strong weighted guidance of concession life of the average traffic up business to 7.8% 20.0 cps in 2022 vs 2021 and guidance of 37 years through acquisition of a driven by continued 40.0 cps distribution majority interest in performance at APRR1 for
Slide 7: 2022 Financial Overview
2022 FINANCIAL OVERVIEW Revenue contributors to Atlas Arteria expanded with the addition of the A79 and Chicago Skyway 2022 Traffic 2022 Toll Revenue4,5 2022 EBITDA4,5 Business VS 2021 VS 2019 VS 2021 VS 2019 VS 2021 VS 2019 APRR Group1 8.2% 2.1% 8.8% 6.0% 10.1% 7.3% ADELAC 21.4% (0.1%) 27.9% 7.7% 2
Slide 8: Atlas Arteria Distributions
ATLAS ARTERIA DISTRIBUTIONS Record full year distribution guidance of 40.0 cps Distribution guidance for H2 2022 and 2023 Atlas Arteria distributions – by period earned (cps) • Distribution guidance of 20.0 cps for H2 2022 reflects the performance Guidance of both APRR and Warnow Tunnel during the p
Slide 9: Acquisition of Majority Interest in Chicago Skyway
ACQUISITION OF MAJORITY INTEREST IN CHICAGO SKYWAY Acquisition of Chicago Skyway is an important step in Atlas Arteria’s growth as a global owner, operator and developer of toll roads One of the longest duration North American toll road concessions, with a remaining concession life of 81 years Deep
Slide 10: Transition of Ownership in Chicago Skyway
TRANSITION OF OWNERSHIP IN CHICAGO SKYWAY Working alongside Ontario Teachers’ and the management team to deliver value-add for stakeholders Key highlights since acquisition completion Focus areas for remainder of 2023 Smooth and successful transition from Continue working with Chicago Skyway to deli
Slide 11: APRR & AREA Investment Plan
APRR & AREA INVESTMENT PLAN Investment Plan to further ESG offering as well as upgrading existing and linking roads on APRR and AREA network APRR & AREA Investment Plan The fourth Investment Plan was signed with the French State in January 2023. It includes the below carbon reduction and environment
Slide 12: Dulles Greenway Update
DULLES GREENWAY UPDATE 2023 Virginia Legislative session underway Achieving distance-based tolling at Dulles Greenway SCC Rate Case Application • Legislation is being considered by the Virginia General Assembly which would • If the legislation is not successful, a request for a toll rate increase to
Slide 13: Positively Correlated to Inflation
POSITIVELY CORRELATED TO INFLATION Inflationary environment supports toll increases and earnings APRR / AREA: 70% x CPI + increments agreed Increased on 1 Feb 2023 by: APRR under any Investment Plans1 • 4.68% at APRR (4.74% awarded) GROUP A79: 75% x CPI + 15% x TP01 + 10% x TP092 • 4.69% at AREA (4.
Slide 14: Operational Performance
OPERATIONAL PERFORMANCE Strong traffic performance continues despite macroeconomic uncertainty Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 14
Slide 15: APRR Group Traffic Update
APRR GROUP TRAFFIC UPDATE Traffic performance in 2022 driven by strong leisure demand and international trade APRR Group Traffic1 Traffic resilience through economic cycles Trade in France and Spain4 Heavy vehicle VKT Light vehicle VKT Household consumption Real GDP France Spain APRR Heavy Vehicle V
Slide 16: Traffic at A79
TRAFFIC AT A79 Tolling commenced on the A79 in France on 4 November 2022 A79 Tolling framework Traffic LV vs HV1 • The A79 commenced tolling on 4 November 2022 • The A79 toll prices are set according to environmental criteria • The first motorway in France to be commissioned with free-flow tolling t
Slide 17: Warnow Tunnel Traffic Update
WARNOW TUNNEL TRAFFIC UPDATE Strong traffic growth to end 2022 despite negative impacts of German government’s temporary €9 transport pass Warnow Tunnel Traffic Roadworks Travel time savings1 AADT Eastbound and westbound average Historical roadworks events COVID pandemic Linear (AADT) starts 25 14,0
Slide 18: Chicago Skyway Traffic Update
CHICAGO SKYWAY TRAFFIC UPDATE Traffic growth due to roadworks along the competing route and strong industrial production growth Chicago Skyway Traffic Roadworks Industrial production Heavy vehicle traffic Light vehicle traffic Heavy Vehicle ADT Roadworks on Chicago Skyway U.S. Industrial Production
Slide 19: Dulles Greenway Traffic Update
DULLES GREENWAY TRAFFIC UPDATE Gradual traffic improvement continues with traffic growing across peak and off-peak periods Dulles Greenway Traffic Peak period traffic Travel time savings1 Peak trips Weekday Off-peak PM peak trips PM peak time savings Weekend trips Total trips 7,000 16 10% ADT, perce
Slide 20: Sustainability Priorities
SUSTAINABILITY PRIORITIES SAFETY OUR PEOPLE CUSTOMERS & ENVIRONMENTAL COMMUNITY STEWARDSHIP • Achieved lost time injury target of ≤1 • Maintained our 40% commitment to • Established a baseline customer • 25% reduction in scope 1 and 2 Headline for small businesses1 gender balance and evolve satisfac
Slide 21: Addressing Climate-Related Risks and Opportunities
ADDRESSING CLIMATE-RELATED RISKS AND OPPORTUNITIES Progress against the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations • Formalised Board oversight and Management roles and responsibilities • TCFD Working Group established to inform and guide approach Significant • Underto
Slide 22: Financial Performance
FINANCIAL PERFORMANCE Strong financial performance in inflationary environment Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 22
Slide 23: Atlas Arteria Income Statement
ATLAS ARTERIA INCOME STATEMENT Share of net profits of equity accounted investments driving strong profitability A$m 2022 2021 % Chg Revenue and other income Increase driven by Dulles Greenway toll revenue as a result of — Toll revenue 116.7 99.5 17% higher traffic and increased toll rates as well a
Slide 24: Atlas Arteria Cash Flow for H2 2022
ATLAS ARTERIA CASH FLOW FOR H2 2022 APRR dividends to Atlas Arteria (€m) Corporate cash flows (A$m) Capital management cash flows (A$m) Chicago Skyway transaction Warnow distribution income / cash balance Skyway acquisition and transaction costs2 Dist. from Net corporate cash NPAT /dividend Financiè
Slide 25: APRR Financial Performance
APRR FINANCIAL PERFORMANCE APRR financial performance reflecting strength of the network €m1 2022 2021 % change • Growth in revenues supported by increased traffic and toll price increases and a Traffic (VKTm) 25,104.6 23,194.6 8.2% €41m contribution from the Fulli business (€27m in 2021) Operating
Slide 26: APRR Capital Expenditure Program
APRR CAPITAL EXPENDITURE PROGRAM Investing to grow the footprint and improve customer experience APRR Capital Expenditure Program • Capex spend for 2022 was around €400m excluding A79 — Majority spend was on A48/A480 project (completed in H2 2022) • Capex projects remaining under the 2015 Motorway I
Slide 27: APRR Group Financial Position
APRR GROUP FINANCIAL POSITION APRR strong balance sheet rated A with a stable outlook by Fitch Ratings APRR Group debt maturity profile APRR has significant balance sheet as at 31 December 2022 (€m)1 flexibility to support growth Rating A Stable Outlook (Fitch); A- Stable Outlook (S&P) Sources of De
Slide 28: Warnow Tunnel Financial Overview
WARNOW TUNNEL FINANCIAL OVERVIEW Strong traffic recovery continues with toll increases driving revenue outcomes €m1 2022 2021 % chg • Traffic continued its post COVID-19 recovery finishing the year 3.4% above 2021 levels Traffic (m) 4.5 4.4 3.4% • Traffic remains lower compared to 2019 in-part due t
Slide 29: Chicago Skyway Financial Performance
CHICAGO SKYWAY FINANCIAL PERFORMANCE Strong heavy vehicle traffic driving revenue performance US$m (100%)1 2022 2021 % change • Atlas Arteria completed the 66.67% acquisition of Chicago Skyway on 1 December 2022. For comparative purposes, figures presented assume Traffic (AADT) 38,710 37,887 2.2% ow
Slide 30: Chicago Skyway Financial Position
CHICAGO SKYWAY FINANCIAL POSITION Robust credit profile, with significant headroom to deliver capital releases over time Chicago Skyway debt maturity profile Long-term, largely fixed rate capital as at 31 December 2022 (US$m) structure Sources of Debt • Chicago Skyway is currently rated BBB+ by S&P
Slide 31: Dulles Greenway Financial Overview
DULLES GREENWAY FINANCIAL OVERVIEW Gradual traffic recovery with toll increases driving stronger financial performance US$m1 2022 2021 % chg • Increased operating revenues reflect improved traffic performance, a 5.0% increase in off-peak toll prices from Traffic (m) 12.3 11.6 6.6% January 2022, and
Slide 32: Capital Management
CAPITAL MANAGEMENT Disciplined balance sheet management for the benefit of securityholders Sustainable distributions Appropriate gearing across the Funding to support growth funded from operating business portfolio objectives cash flows • Strong traffic performance at APRR • APRR credit rating upgra
Slide 33: Outlook
OUTLOOK Executing on organic growth opportunities and transition of Chicago Skyway Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 33
Slide 34: Focus on Organic Growth Opportunities
FOCUS ON ORGANIC GROWTH OPPORTUNITIES APRR Dulles Greenway Chicago Skyway • Ongoing dialogue with French • Remain focused on developing a long- • Engage and collaborate with Ontario Government on achieving their road term pathway to increase the value Teachers’ to deliver a smooth and development an
Slide 35: Creating a Platform for a Sustainable Future
CREATING A PLATFORM FOR A SUSTAINABLE FUTURE Atlas Arteria is focused on enhancing long-term value for securityholders 2018 2019 - 2021 2022 Fully internalised and highly experienced Expanded and enhanced traffic forecasting Costly and complex external management management team capabilities Market
Slide 36: Atlas Arteria Investment Proposition
ATLAS ARTERIA INVESTMENT PROPOSITION Positively leveraged to high inflation Sustainable distributions Strong organic growth potential A uniquely experienced team and culture, with a proven track record of executing complex multi-party transactions to unlock value Resilient balance sheet with good li
Slide 37: Thank You Q&A
THANK YOU Q&A Contact for investors Tess Palmer Director, Investor Relations +61 (0) 438 493 692 investors@atlasarteria.com Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 37
Slide 38: Appendix A: Additional Financial Information
APPENDIX A Additional Financial Information Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 38
Slide 39: Atlas Arteria Consolidated Balance Sheet
ATLAS ARTERIA CONSOLIDATED BALANCE SHEET As at As at Statutory accounts 31 December 2022 31 December 2021 A$m Current assets 533.5 245.2 Investments accounted for using the equity method 5,350.1 2,591.8 Tolling concessions 2,167.9 2,101.4 Goodwill 13.8 13.7 Other non-current assets 253.2 267.1 Total
Slide 40: Proportionate EBITDA by Business
PROPORTIONATE EBITDA BY BUSINESS APRR Group 100% Chicago Skyway 100% 2022 2021 % change 2019 % change 2022 2021 % change 2019 % change (€m) (US$m) Traffic (VKTm) 25,105 23,195 8.2% 24,581 2.1% Traffic (AADT) 38,710 37,887 2.2% 35,472 9.1% Operating revenue 2,818.5 2,569.2 9.7% 2,611.0 7.9% Operating
Slide 41: Appendix B: Chicago Skyway Additional Information
APPENDIX B Chicago Skyway Additional Information Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 41
Slide 42: Chicago Skyway - Overview
CHICAGO SKYWAY - OVERVIEW The Skyway is more efficient in getting commuters from Northwest Indiana to Chicago compared to competing routes AM Peak (6am-9am) PM Peak (4pm-9pm) Travel Length Chicago to Westbound Eastbound West of Portage, Indiana1 17 mins 22 mins c.9 km time savings time savings short
Slide 43: Chicago Skyway - Performance
CHICAGO SKYWAY - PERFORMANCE Tolling regime supporting EBITDA growth Chicago Skyway Light Vehicle Traffic Chicago Skyway Heavy Vehicle Traffic Chicago Skyway EBITDA & EBITDA Margin Light vehicle traffic Heavy vehicle traffic EBITDA EBITDA margin 86.8 87.8 88.6 88.3 87.1 88.0 87.5 87.7 85.2 86.9 86.7
Slide 44: Chicago Skyway - Revenue
CHICAGO SKYWAY - REVENUE Revenue resiliency supported by diverse user base, attractive tolling escalation and inelastic demand Toll Revenue1 vs Weighted Average Toll/Trip Public ownership Private ownership I-94 Roadworks COVID-19 Pandemic 140 12 ITR Construction 120 120 114 10 Weighted Average Toll/
Slide 45: Chicago Skyway - Inelastic Demand
CHICAGO SKYWAY - INELASTIC DEMAND Ability to implement attractive toll increases over time, combined with relatively inelastic traffic, delivers sustainable revenue growth Toll Price Elasticity (real)1 0.6 • Historical experience with changing toll prices and traffic demand 0.5 indicates that custom
Slide 46: Chicago Skyway - Yearly Databook
CHICAGO SKYWAY - YEARLY DATABOOK 10 yr Chicago Skyway (100%)1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CAGR1 Revenue Total Toll Revenue 50.43 56.20 53.24 62.31 63.60 59.46 67.27 69.80 79.85 80.67 88.71 88.14 99.97 98.80 91.84 84.85 114.24 120.11 5.6%
Slide 47: Chicago Skyway - Quarterly Databook
CHICAGO SKYWAY - QUARTERLY DATABOOK Chicago Skyway (100%) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Revenue Total Toll Revenue (US$m) 20.46 23.43 26.14 21.81 19.19 17.73 26.79 21.15 20.60 30.75 34.17 28.71 23.02 31
Slide 48: 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 49: Chicago Skyway - Long-Term Benefits of Toll Regime
CHICAGO SKYWAY - LONG-TERM BENEFITS OF TOLL REGIME The Chicago Skyway’s toll escalation formula delivers compounded toll escalation above individual macroeconomic variables Implied Toll Escalation Growth of 1.5x Inflation • Chicago Skyway’s concession agreement allows for tolls to escalate at the gr
Slide 50: 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 51: Chicago Skyway - Maintenance Capex
CHICAGO SKYWAY - MAINTENANCE CAPEX No major rehabilitation expected until c.2050 as a result of capital investment since 2000 Historical investments have ensured performance and robust safety standards Historical Maintenance Capex • No major rehabilitation expected until c.2050 as a result of capita
Slide 52: Appendix C: About the Business
APPENDIX C About the Business Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 52
Slide 53: The Atlas Arteria Business
THE ATLAS ARTERIA BUSINESS Virginia, United States Ownership: 31.14% Dulles Greenway Luxembourg APRR 2,386km motorway network in Eastern France United States HQ European HQ GROUP 2035 concession expiry1 Rostock, Germany Warnow Tunnel Ownership: 31.17% ADELAC 20km commuter road connecting Annecy to G
Slide 54: APRR - Overview
APRR - OVERVIEW An efficient, safe and cost effective network for customers Comparison between average tolls on APRR versus rest of France1 75 Euro cents per VKT 32 30 25 25 21 21 16 13 13 11 11 10 ATLANDES ALBEA SFTRF ARCOUR SANEF/SAPN A'LIENOR APRR/AREA ALIS ATMB ALICORNE ADELAC ASF/ESCOTA COFIROU
Slide 55: APRR - Performance
APRR - PERFORMANCE Historically strong traffic and EBITDA growth APRR Light Vehicle Traffic APRR Heavy Vehicle Traffic APRR EBITDA & EBITDA Margin APRR LV VKT APRR HV VKT EBITDA EBITDA margin EBITDA margin (excl. operating taxes) Linear (APRR LV VKT) Linear (APRR HV VKT) 87.5 87.9 85.7 86.0 86.3 85.
Slide 56: APRR - Contractual Toll Regime
APRR - CONTRACTUAL TOLL REGIME Predictable cash flows underpinned by inflation-linked tolling and established regulatory regimes APRR & AREA contractual toll regime ADELAC contractual toll regime • Tolls escalate annually in February by a percentage of French CPI, plus supplemental increases • Under
Slide 57: APRR - French Taxes
APRR - FRENCH TAXES The current tax situation Corporate Income Tax Motorway Specific Tax (TAT) Territorial economic contribution (CET) • The current corporate tax rates in France are shown in • The French Tax Code provides for a specific tax payable • The territorial economic contribution (Contribut
Slide 58: Warnow Tunnel - Overview
WARNOW TUNNEL - OVERVIEW Program of works on surrounding networks positively impacted performance in recent years Warnemünde Warnow Tunnel Traffic AADT Linear (AADT) 14,000 WarnowTunnel 13,000 12,000 11,000 AADT 4 10,000 Program of roadworks in and around Rostock Rostock 6 9,000 3 5 CAGR 2008 – 2022
Slide 59: Warnow Tunnel - Toll Regime
WARNOW TUNNEL - TOLL REGIME Warnow Tunnel toll escalation • 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 outli
Slide 60: Dulles Greenway - Overview
DULLES GREENWAY - OVERVIEW Connecting growing, prosperous communities to connector roads and Washington DC On a stand alone basis, tolls on the Dulles Greenway are in the mid to high end of On a per mile basis, the Dulles Greenway prices for the roads in Virginia1 offers good value for customers1 18
Slide 61: Dulles Greenway - Performance
DULLES GREENWAY - PERFORMANCE Stable historical financial performance prior to COVID-19 Historically, surrounding network events have negatively impacted traffic Dulles Greenway EBITDA & EBITDA Margin however the current program is now complete EBITDA EBITDA margin AADT 60,000 1 80.5 80.8 81.6 81.4
Slide 62: 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 63: Atlas Arteria Summary Corporate Structure
ATLAS ARTERIA SUMMARY CORPORATE STRUCTURE as at 31 December 2022 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 64: Appendix D: References
APPENDIX D References Atlas Arteria → Results Presentation for the twelve months ending 31 December 2022 → 64
Slide 65: Glossary of Terms
GLOSSARY OF TERMS AADT Average annual daily trips E&P Earnings & Profit n.m. Not financially meaningful ADT Average daily trips ESG Environmental, Social and Corporate Governance NPAT Net Profit after tax ALX Atlas Arteria EU European Union O&M Operations & Maintenance APRR Group Includes APRR, AREA