Atco Ltd. Class I · TSX:ACO.X
Atco Ltd. Class I — Investor Presentation (February 2020)
58 slides from Atco Ltd. Class I's investor presentation, February 2020
Slide 1: Investor Presentation February 2020
INVESTOR PRESENTATION FEBRUARY 2020
Slide 2: Legal Disclaimer
LEGAL DISCLAIMER Statements made by representatives for ATCO Ltd. and Canadian Utilities Limited and information provided in this presentation may be considered forward-looking statements. By their nature, such statements are subject to numerous known and unknown risks and uncertainties and therefor
Slide 3: Table of Contents
TABLE OF CONTENTS 1 ATCO Group Overview Page 5 2 Canadian Utilities Limited Page 11 Regulated Utility Businesses Page 15 Energy Infrastructure Businesses Page 18 3 Other ATCO Investments Page 27 Structures & Logistics Page 29 Neltume Ports Page 39 Commercial Real Estate Page 47 4 Appendix Page 49 IN
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Slide 5: ATCO Group Overview
ATCO GROUP OVERVIEW
Slide 6: Organizational Structure
ORGANIZATIONAL STRUCTURE (TSX: ACO.X / ACO.Y) ~$6 billion common equity capitalization INVESTOR PRESENTATION FEBRUARY 2020 6
Slide 7: Track Record of Success: Earnings Growth
TRACK RECORD OF SUCCESS: EARNINGS GROWTH ATCO $355 million Canadian Utilities $607 million in 2018 in 2018 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 1
Slide 8: Continued Dividend Growth
CONTINUED DIVIDEND GROWTH ATCO $1.74 Canadian Utilities $1.74 27 years of annual dividend increases* per share 48 years of annual dividend increases* per share Longest track record of annual dividend increases of any Canadian publicly traded company 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09
Slide 9: ATCO Credit Ratings
ATCO CREDIT RATINGS DBRS S&P INVESTOR PRESENTATION FEBRUARY 2020 9
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Slide 11: Canadian Utilities
CANADIAN UTILITIES ENERGY INFRASTRUCTURE 11
Slide 12: Organizational Structure
ORGANIZATIONAL STRUCTURE Canadian Utilities (TSX: CU / CU.X) CU Inc. ~$11 billion common ~$8 billion debt equity capitalization capitalization INVESTOR PRESENTATION FEBRUARY 2020 12
Slide 13: High Quality Earnings
HIGH QUALITY EARNINGS 2018 ADJUSTED EARNINGS 86% Regulated Earnings 14% Long-term Contracted Earnings INVESTOR PRESENTATION FEBRUARY 2020 13
Slide 14: Growth: Q3 2019 YTD Earnings
GROWTH: Q3 2019 YTD EARNINGS $432M $420M Q3 2018 YTD Q3 2019 YTD INVESTOR PRESENTATION FEBRUARY 2020 14
Slide 15: Regulated Utilities
REGULATED UTILITIES ELECTRIC TRANSMISSION ELECTRIC DISTRIBUTION $5.3B Rate Base $2.7B Rate Base NATURAL GAS DISTRIBUTION NATURAL GAS TRANSMISSION INTERNATIONAL NATURAL GAS $2.8B Rate Base $1.8B Rate Base DISTRIBUTION $1.2B Rate Base INVESTOR PRESENTATION FEBRUARY 2020 15
Slide 16: Rate Base Growth
RATE BASE GROWTH Regulated Capital Investment Mid-Year Rate Base Expected to Grow 3%- 4% per year $1.2B $1.2B $1.1B $13.4B $12.9B $1.1B $12.5B $11.9B $1.2B $10.3B $1.1B $8.9B $1.5B $2.2B $2.3B 2013 2014 2015 2016 2017 2018 2019 2020 2021 2013 2014 2015 2016 2017 2018 2019 2020 2021 INVESTOR PRESENTA
Slide 17: Utilities Achieve Top Tier Returns on Equity
UTILITIES ACHIEVE TOP TIER RETURNS ON EQUITY 11.2% 10.9% CU Inc.’s average ROE +2.3% above average AUC approved over last 10 years 8.7% 8.7% (+2.8% over last 3 years) 8.6% 8.4% 10-Year Average 3-Year Average (2009 - 2018) (2016 - 2018) CU Inc. Average Alberta Utility Average (excluding CU) AUC Appro
Slide 18: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES ELECTRICITY GENERATION ELECTRICITY GENERATION ELECTRICITY GENERATION CANADA AUSTRALIA MEXICO 24 MW 176 MW 44 MW INDUSTRIAL WATER SERVICES HYDROCARBON STORAGE NATURAL GAS STORAGE CANADA CANADA CANADA 85,200 m3/day 400,000 m3 52 PJ INVESTOR PRESENTATION FEBRUARY 2020 1
Slide 19: Capital Recycling: Canadian Electricity Generation Sale
CAPITAL RECYCLING: CANADIAN ELECTRICITY GENERATION SALE • Sold our entire Canadian fossil fuel- based power generation portfolio for aggregate proceeds of $821 million in September 2019 • Coal-fired and natural gas-fired electricity generation assets located in Alberta, British Columbia, Saskatchewa
Slide 20: Canadian Utilities Direct Greenhouse Gas Emissions
CANADIAN UTILITIES DIRECT GREENHOUSE GAS EMISSIONS INVESTOR PRESENTATION FEBRUARY 2020 20
Slide 21: Electricity Generation Post Sale
ELECTRICITY GENERATION POST SALE Highly Contracted Expanding Renewable Portfolio Generation Capabilities Merchant 24 MW (10%) Hydro 59 MW (24%) Long-Term Natural Gas Contracted 185 MW 220 MW (76%) (90%) INVESTOR PRESENTATION FEBRUARY 2020 21
Slide 22: Electricity Generation Post Sale
ELECTRICITY GENERATION POST SALE CAPACITY RUN-OF-RIVER HYDRO SHARE (MW) 1 OLDMAN RIVER 24 2 VERACRUZ 35 NATURAL GAS 3 SAN LUIS POTOSI 9 4 KARRATHA 86 5 OSBORNE 90 TOTAL 244 INVESTOR PRESENTATION FEBRUARY 2020 22
Slide 23: Capital Recycling: Alberta PowerLine Sale
CAPITAL RECYCLING: ALBERTA POWERLINE SALE • Sold Alberta PowerLine Limited Partnership (APL) in December 2019 for total proceeds to CU of approximately $220 million (plus assumption of $1.4 billion of APL debt) • Seven Indigenous communities acquired 40 per cent equity interest in APL • Canadian Uti
Slide 24: Capital Investment Approach
CAPITAL INVESTMENT APPROACH • Disciplined and prudent approach • Utility and utility-like assets: regulated or long-term contracted • “A” range credit rating focus • The ability to leverage our operating model • Geographic diversification: Outside Alberta, North America, Latin America, & Australia I
Slide 25: Canadian Utilities Summary
CANADIAN UTILITIES SUMMARY International Natural Gas Distribution Natural Gas Transmission Natural Gas Distribution Electricity Transmission Electricity Distribution INVESTOR PRESENTATION FEBRUARY 2020 25
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Slide 27: Other ATCO Investments
ATCO OTHER ATCO.INVESTMENTS
Slide 28: ATCO Focus: Global Essential Services
ATCO FOCUS: GLOBAL ESSENTIAL SERVICES INVESTOR PRESENTATION FEBRUARY 2020 28
Slide 29: Structures & Logistics
STRUCTURES & LOGISTICS Modular Structures Workforce Housing & Space Rentals • Permanent modular construction • Mobile office trailers • Relocatable modular buildings Logistics and Facility O&M Services Lodging & Support Services • Facility operations • Lodging, catering • Maintenance services • Main
Slide 30: Structures & Logistics Adjusted Earnings
STRUCTURES & LOGISTICS ADJUSTED EARNINGS $23M $15M $6M 2017 2018 Q3 YTD 2019 INVESTOR PRESENTATION FEBRUARY 2020 30
Slide 31: Structures & Logistics
STRUCTURES & LOGISTICS Modular Structures increased rental utilization by 14 per cent since 2016 70% 71% 63% 57% 2016 2017 2018 Q3 YTD 2019 INVESTOR PRESENTATION FEBRUARY 2020 31
Slide 32: Structures & Logistics
STRUCTURES & LOGISTICS Winning key Modular Structures contracts • LNG Canada Workforce Accommodation 4,500 person camp construction underway to house construction workers on LNG Canada’s facility in Kitimat, B.C. • Coastal Gaslink Pipeline 3 camps serving providing operational and support services f
Slide 33: Structures & Logistics
STRUCTURES & LOGISTICS Diversifying the global customer base into non-traditional modular markets such as public education facilities, high density urban residential housing, hotels and correctional facilities $65M $44M Thomastown School Dandenong North Primary School Victoria, Australia Victoria, A
Slide 34: ATCO Sabinco (Ultramar Partnership)
ATCO SABINCO (ULTRAMAR PARTNERSHIP) New 100,000 sq. ft. Chilean Manufacturing Facility further cements the business foundation we are re-establishing in South America. Arica Iquique Antofagasta 2% 7% Copiapó Mining Energy 12% Curauma Infrastructure Santiago Ranked #3 in Overall Modular Construction
Slide 35: ATCO Espaciomovil
ATCO ESPACIOMOVIL • In 2018, Structures & Logistics acquired a majority ownership position in ATCO Espaciomovil, a leading modular building manufacturer in Mexico. • ATCO is now the largest manufacturer of modular products in the Mexican market, with the second largest fleet of modular rental assets
Slide 36: ATCO Structures Australia
ATCO STRUCTURES AUSTRALIA INVESTOR PRESENTATION FEBRUARY 2020 36
Slide 37: Frontec: Emergency Response
FRONTEC: EMERGENCY RESPONSE Chico, California • Contract for camp maintenance including food services, housekeeping and janitorial services for the 1,500 person camp fire disaster relief. Work began in April 2019 and will continue until early 2020. Puerto Rico, Hurricane Maria • Deployed a team of p
Slide 38: Structures & Logistics Key Highlights
STRUCTURES & LOGISTICS KEY HIGHLIGHTS Diversifying our customer Lowering operating Expanding geographically in base into new market costs and increasing new global markets with long- segments and rebuilding our rental utilization term growth potential customer lead list 12,675 10,613 2016 Q3 YTD 201
Slide 39: Neltume Ports Investment
NELTUME PORTS INVESTMENT Adjusted Earnings Port Operations Services • ATCO acquired a 40% ownership interest in Neltume Ports in $11M September 2018 for approximately $450 million • Neltume Ports is a leading port operator in South America with 16 ports in 4 countries $4M $6M 2017 2018 Q3 YTD 2019 I
Slide 40: Neltume Ports Operations
NELTUME PORTS OPERATIONS BY CARGO TYPE IN 2018 BY GEOGRAPHY IN 2018 5% 9% Container 28% Brazil Break Bulk Approx. 18% Uruguay Approx. Bulk 44 M 44 M Chile 55% Tonnes Tonnes Argentina 17% 68% *Based on 100% of volumes of ports where Neltume Ports has an ownership stake INVESTOR PRESENTATION FEBRUARY
Slide 41: Port Overview
PORT OVERVIEW PERCENT TERMINAL Puerto Angamos (PANG) Montecon (MON) PORT COUNTRY KEY CARGO OWNERSHIP TYPE Terminal Puerto Arica 50% CHL Container Mixed Terminal Puerto Angamos 40% CHL Multi Copper Terminal Graneles del Norte 40% CHL Dry Bulk Coal Puerto Mejillones 50% CHL Dry Bulk Coal/Copper Termin
Slide 42: Growth Driven by Macroeconomic Tailwinds
GROWTH DRIVEN BY MACROECONOMIC TAILWINDS Strong macro economic growth indicators: FORECASTED AGGREGATE GROWTH • GDP growth in Neltume Port countries to outpace Canadian GDP growth 12% • Chile has been one of Latin America’s fastest‐growing economies averaging 3.5% GDP growth over the last 9 years. 1
Slide 43: Growth Due to Rising Copper Global Demand
GROWTH DUE TO RISING COPPER GLOBAL DEMAND GLOBAL FORECASTED COPPER DEMAND Exposure to Growing Copper Global Demand: 30 • Chile represents approximately 28% of global copper 29 production and owns the largest copper reserves in the world. 28 • Copper supply deficit starting in 2020 is expected to spu
Slide 44: Brownfield Growth Potential
BROWNFIELD GROWTH POTENTIAL • A portion of ATCO’s investment may be used for berth expansions or additions of multi-purpose berths. • Berth expansions create increased draft that allows terminals to receive bigger ships & larger volumes. • Berth extensions or adding berths create additional growth p
Slide 45: Growth by Acquisition and Construction
GROWTH BY ACQUISITION AND CONSTRUCTION Acquisition of Rio Estiba and Increased participation in Montecon, Sagres and Ontur via the takeover of Schandy Awarded port Tender of TPS Construction of TGN Construction of Puerto Awarded port tender Partnership Increased Mejillones of TPA TPS/MSC participati
Slide 46: Neltume Ports Investment Strategic Rationale
NELTUME PORTS INVESTMENT STRATEGIC RATIONALE Investment with a Portfolio, industry, Exposure to growing Strong macro factors trusted long-term and geographic global trade and and economic partner with shared diversification transportation tailwinds values INVESTOR PRESENTATION FEBRUARY 2020 46
Slide 47: Growth: Commercial Real Estate
GROWTH: COMMERCIAL REAL ESTATE • Held properties can be monetized opportunistically • Increase portfolio occupancy with 3rd party tenants • Increase portfolio value and earnings by investing in commercial real estate projects on high potential sites, already in our portfolio INVESTOR PRESENTATION FE
Slide 48: Key ATCO Highlights
KEY ATCO HIGHLIGHTS INVESTOR PRESENTATION FEBRUARY 2020 48
Slide 49: Appendix
ATCO APPENDIX
Slide 50: Regulatory Update
REGULATORY UPDATE Electric Transmission 2019 2020 2021 Application DecisionDecision General Tariff Filed ExpectedExpected Application (GTA) Gas Transmission 2019 2020 2021 General Tariff Application Decision Decision Expected Expected Expected Application (GRA) 2019 2020 2021 2021 to 2022 Generic Ap
Slide 51: Australia Utility
AUSTRALIA UTILITY We provide safe and reliable natural gas service to the Perth metropolitan area and the wider Western Australian community ▪ Approximately 761,000 customers ▪ 14,000 km of natural gas distribution pipelines INVESTOR PRESENTATION FEBRUARY 2020 51
Slide 52: Electricity Distribution & Transmission
ELECTRICITY DISTRIBUTION & TRANSMISSION We build, own and operate electrical distribution and transmission facilities ▪ 258,000 farm, business and residential customers in 242 Alberta communities ▪ Approximately 11,000 km of transmission lines, and delivers power to and operates 4,000 km of lines ow
Slide 53: Natural Gas Distribution
NATURAL GAS DISTRIBUTION We build, own and operate natural gas distribution facilities in Alberta ▪ Alberta’s largest natural gas distribution company ▪ Serves approximately 1.2 million customers in nearly 300 Alberta communities ▪ We build, maintain, and operate 41,000 km of natural gas distributio
Slide 54: Natural Gas Transmission
NATURAL GAS TRANSMISSION We build, own and operate key high-pressure natural gas transmission facilities in Alberta ▪ Transports clean, efficient energy from producers and other pipelines to utilities, power generators and major industries ▪ Owns and operates 9,200 km of pipeline ▪ Delivers a peak o
Slide 55: Financial Strength: Balance Sheet as at Q3 2019
FINANCIAL STRENGTH: BALANCE SHEET AS AT Q3 2019 ATCO Canadian Utilities 10% 11% 54% 52% 38% 35% Debt (net of cash) Preferred Shares Equity Debt (net of cash) Preferred Shares Equity INVESTOR PRESENTATION FEBRUARY 2020 55
Slide 56: Manageable Debt Maturity Profile
MANAGEABLE DEBT MATURITY PROFILE $325M $220M $200M $200M $185M $160M $160M $150M $120M $125M $100M $100M 2020 2021 2022 2023 2024 2028 2034 2035 2036 2037 2038 2039 CU Inc. CU INVESTOR PRESENTATION FEBRUARY 2020 56
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Slide 58: Investor Relations Contact
www.ATCO.com www.canadianutilities.com Tel: 403.292.7500 Investor Relations 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada