Atlas Arteria · ASX:ALX
Atlas Arteria — H1 2023 Earnings Presentation
60 slides from Atlas Arteria's earnings presentation, Aug 31, 2023
Slide 1: H1 2023 Results Presentation
H1 2023 RESULTS PRESENTATION for the six months ending 30 June 2023 31 August 2023 Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 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: U.S. Ownership Restrictions
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 six months ending 30 June 2023 → 4
Slide 5: Record APRR traffic drives strong financial performance
KEY HIGHLIGHTS Record APRR traffic drives strong financial performance Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 5
Slide 6: H1 2023 Highlights
H1 2023 HIGHLIGHTS Distribution guidance of Traffic1 20.0 cps for H1 2023 Positively 4.5% fully funded by operating leveraged to EBITDA2 cash flows and existing cash 40.0 cps for 2023 high inflation 8.5% maintained3 Safety is our top Disciplined Chicago Skyway priority execution across integration C
Slide 7: H1 2023 Financial Overview
H1 2023 FINANCIAL OVERVIEW Weighted average traffic, toll revenue and EBITDA all outperformed H1 2022 and H1 2019 H1 2023 Traffic H1 2023 Toll Revenue3,4 H1 2023 EBITDA3,4 Business VS H1 2022 VS H1 2019 VS H1 2022 VS H1 2019 VS H1 2022 VS H1 2019 APRR Group1 4.6% 7.0% 7.5% 14.1% 8.3% 17.0% ADELAC 7.
Slide 8: Atlas Arteria Distributions
ATLAS ARTERIA DISTRIBUTIONS Full year distribution guidance of 40.0 cps maintained Distribution guidance for H1 2023 and H2 2023 Atlas Arteria distributions – by period earned (cps) • Distribution guidance of 20.0 cps for H1 2023 to be fully funded by Guidance operating business cash flows and cash
Slide 9: 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 10: Long-Term Benefits of High Inflation on EBITDA and Valuation
LONG-TERM BENEFITS OF HIGH INFLATION ON EBITDA AND VALUATION Conceptual illustration of the beneficial impact of high inflation between 2021 and 2023 Impact is a permanent, compounding EBITDA uplift driving c.7% valuation increase over ECB / Fed Target Inflation scenario c.10% EBITDA uplift EBITDA 2
Slide 11: Strong Focus on Safe and Responsible Operations
STRONG FOCUS ON SAFE AND RESPONSIBLE OPERATIONS Safety is our top priority APRR lost-time injury frequency rate (LTIFR)1 APRR – Testing of B-Robot Automatic Cone Laying Machine Target to keep LTIFR ≤3 5.18 4.99 3.46 2.66 2.85 2.30 2018 2019 2020 2021 2022 H1 23 • New robotic technology successfully
Slide 12: Record APRR Traffic & Chicago Skyway Transition on Track
OPERATIONAL PERFORMANCE Record APRR traffic & Chicago Skyway transition on track Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 12
Slide 13: APRR Group Traffic Update
APRR GROUP TRAFFIC UPDATE Record traffic and revenue performance reflecting strong operating conditions and a high inflation environment APRR Group Traffic1 Traffic resilience through economic cycles Unemployment near 40-year low Heavy vehicle VKT Light vehicle VKT Household consumption Real GDP 13%
Slide 14: APRR Group Operational Update
APRR GROUP OPERATIONAL UPDATE The future of the toll road concession system in France is a key priority for the current Government Outlook for future concessions • Both the Finance and Transport Ministers have affirmed their view that the private concession model is the most effective way to operate
Slide 15: Warnow Tunnel Traffic Update
WARNOW TUNNEL TRAFFIC UPDATE Robust traffic and revenue due to prolonged 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
Slide 16: Chicago Skyway Traffic Update
CHICAGO SKYWAY TRAFFIC UPDATE Traffic performance above acquisition case noting negative impact of planned roadworks on the Indiana Toll Road (ITR) Chicago Skyway Traffic Roadworks H1 Traffic performance Heavy vehicle trips Light vehicle trips 25% Toll Revenue Preparation works eastbound 20% Eastbou
Slide 17: Chicago Skyway Attractive Tolling Regime
CHICAGO SKYWAY ATTRACTIVE TOLLING REGIME Toll escalation formula ensures toll growth over time exceeds US nominal GDP per capita and US CPI growth 1 2016 2017 2018 2019 2020 2021 2022 Cumulative CAGR Toll drivers Variables Variables Variables Variables Variables Variables Variables 2016-22 2016-22 U
Slide 18: Chicago Skyway Transition Plan on Track
CHICAGO SKYWAY TRANSITION PLAN ON TRACK Minimises whole-of-life cost. Optimises asset condition and capital efficiency. Asset Refinancing Operational management 2023 / 2024 review program Implement a pro-active whole- Champion expertise, efficiency Optimise capital structure of-life approach to asse
Slide 19: Dulles Greenway Traffic Update
DULLES GREENWAY TRAFFIC UPDATE Gradual traffic improvement reflecting higher peak and weekday traffic Dulles Greenway Traffic Peak period traffic1 Return to work Total trips Toll Revenue Peak trips Weekday Off-peak Washington DC Average (US) Weekend trips Total trips 100 44.4 44.2 10% 90 ADT, percen
Slide 20: Dulles Greenway Operational Update
DULLES GREENWAY OPERATIONAL UPDATE Rate case application for increased tolls submitted in July 2023 State Corporation Commission (SCC) Rate Case Application Next Steps • In July 2023 TRIP II filed an application seeking approval for an increase in the maximum level of tolls from the Virginia State C
Slide 21: Sustainability Priorities
SUSTAINABILITY PRIORITIES Key Targets LTIFR ≤3 at large businesses and LTI ≤1 at small Maintain 40% gender diversity and evolve 25% reduction in scope 1 and 2 emissions by 2025, and businesses representation across and within specific teams 46% by 2030, compared to a 2019 baseline Priorities SAFETY
Slide 22: Robust traffic drives strong financial performance
FINANCIAL PERFORMANCE Robust traffic drives strong financial performance Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 22
Slide 23: Atlas Arteria Income Statement
ATLAS ARTERIA INCOME STATEMENT Record APRR traffic driving strong profitability A$m H1 2023 H1 2022 % change Increase driven by Dulles Greenway toll revenue as a result of Toll revenue 63.1 53.8 17% higher traffic as well as weakening of the AUD against the USD Other revenue 0.4 0.4 - Total revenue
Slide 24: Atlas Arteria Cash Flow for H1 2023
ATLAS ARTERIA CASH FLOW FOR H1 2023 APRR dividends to Atlas Arteria (€m) Corporate cash flows (A$m) Cash balance (A$m) flow cash balance Dist. from NPAT /dividend Financière Eiffarie & FX translation Net corporate cash H2 2022 Opening distribution MAF2 taxes/ from MAF2 cash flow Closing cash Remove
Slide 25: APRR Financial Performance
APRR FINANCIAL PERFORMANCE APRR financial performance reflecting strength of the network €m1 H1 2023 H1 2022 % change Traffic (VKTm) 12,374.8 11,828.2 4.6% • Growth in operating revenue supported by increased traffic and higher tolls at APRR and AREA of c.4.7% from 1 February Operating revenue 1,454
Slide 26: APRR Capital Expenditure Program
APRR CAPITAL EXPENDITURE PROGRAM Investing to grow the footprint and improve customer experience APRR Capital Expenditure Program • Capex spend across the half was around €120m — Majority of spend was on road improvements — A6 Chalon Nord on/off ramp upgrade commenced in March 2023 • Completed capit
Slide 27: APRR Group Financial Position
APRR GROUP FINANCIAL POSITION APRR strong balance sheet rated A by Fitch Ratings and A- by S&P APRR Group debt maturity profile APRR has significant balance sheet as at 30 June 2023 (€m)1 flexibility to support growth Rating A Stable Outlook (Fitch); A- Stable Outlook (S&P) Sources of Debt • APRR is
Slide 28: Warnow Tunnel Financial Overview
WARNOW TUNNEL FINANCIAL OVERVIEW Toll increases and robust traffic driving higher revenue €m1 H1 2023 H1 2022 % change • Traffic during the half was elevated due to roadworks along Am Strande, a competing route, which increased the travel Traffic (m) 2.3 2.1 7.2% time savings for commuters using War
Slide 29: Chicago Skyway Financial Overview
CHICAGO SKYWAY FINANCIAL OVERVIEW Toll increases and better than expected traffic driving revenue outcomes US$m (100%)1 H1 2023 H1 2022 % change • Traffic fell by 2.4% compared to H1 2022, but was above the acquisition business case, despite the negative impact of the Traffic (ADT) 34,070 34,918 (2.
Slide 30: Dulles Greenway Financial Overview
DULLES GREENWAY FINANCIAL OVERVIEW Traffic improvement driven by gradual return to office-based work US$m1 H1 2023 H1 2022 % change • Increased revenue reflects improved traffic performance. Growth in traffic was largely driven by higher weekday traffic, Traffic (m) 6.4 5.9 8.4% reflecting the gradu
Slide 31: Capital Management
CAPITAL MANAGEMENT Disciplined balance sheet management for the benefit of securityholders Sustainable distributions Appropriate gearing across the Funding to support growth funded from operating business portfolio objectives cash flows • H1 2023 distribution to be fully funded • APRR credit rating
Slide 32: Delivering long-term value for securityholders
OUTLOOK Delivering long-term value for securityholders Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 32
Slide 33: Summary
SUMMARY STRONG DELIVERING ON MAXIMISING PERFORMANCE THE STRATEGY DISTRIBUTIONS Record APRR traffic Chicago Skyway 2023 distribution guidance performance transition on track maintained Proportionate toll Proactively engaged in French H1 2023 distribution not reliant on revenue up 7.9% political revie
Slide 34: Atlas Arteria Investment Proposition
ATLAS ARTERIA INVESTMENT PROPOSITION Positively leveraged to high inflation with protection from high interest rates Sustainable distributions underpinned by long term cash flows Strong organic growth potential A uniquely experienced team and culture, with a proven track record of executing complex
Slide 35: Thank You Q&A
THANK YOU Q&A Contact for investors Chloe Heazlewood Acting Director, Investor Relations +61 (0) 438 493 692 investors@atlasarteria.com Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 35
Slide 36: Appendix A: Additional Financial Information
APPENDIX A Additional Financial Information Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 36
Slide 37: Atlas Arteria Consolidated Balance Sheet
ATLAS ARTERIA CONSOLIDATED BALANCE SHEET As at As at Statutory accounts 30 June 2023 31 December 2022 A$m Current assets 179.6 533.5 Investments accounted for using the equity method 5,469.2 5,350.1 Tolling concessions 2,194.9 2,167.9 Goodwill 14.5 13.8 Other non-current assets 496.8 253.2 Total ass
Slide 38: Proportionate EBITDA by Business
PROPORTIONATE EBITDA BY BUSINESS APRR Group 100% Chicago Skyway 100% H1 2023 H1 2022 % change H1 2019 % change H1 2023 H1 2022 % change H1 2019 % change (€m) 1 (US$m) Traffic (VKTm) 12,374.8 11,828.2 4.6% 11,561.9 7.0% Traffic (ADT) 34,070.4 34,918.4 (2.4%) 33,502.9 1.7% Total revenue 1,538.3 1,492.
Slide 39: Appendix B: Chicago Skyway Additional Information
APPENDIX B Chicago Skyway Additional Information Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 39
Slide 40: Chicago Skyway - Overview
CHICAGO SKYWAY - OVERVIEW The Skyway is more efficient in getting commuters from Northwest Indiana to Chicago compared to competing routes AM Peak (6am-9am) PM Peak (4pm-9pm) Travel Length Chicago to Westbound Eastbound West of Portage, Indiana1 17 mins 22 mins c.9 km time savings time savings short
Slide 41: Chicago Skyway - Revenue
CHICAGO SKYWAY - REVENUE Revenue resilience supported by diverse user base, attractive tolling escalation and inelastic demand Toll Revenue1 vs Weighted Average Toll/Trip Public ownership Private ownership I-94 Roadworks COVID-19 Pandemic 140 12 ITR Construction 120 120 114 10 Weighted Average Toll/
Slide 42: Chicago Skyway - Demand
CHICAGO SKYWAY - DEMAND Ability to implement attractive toll increases over time, combined with relatively inelastic traffic, delivers sustainable revenue growth Toll Price Elasticity (real)1 0.6 • Historical experience with changing toll prices and traffic demand 0.5 indicates that customer demand
Slide 43: Chicago Skyway - Yearly Databook
CHICAGO SKYWAY - YEARLY DATABOOK 10 yr Chicago Skyway (100%)1 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 CAGR1 Revenue Total Toll Revenue 50.43 56.20 53.24 62.31 63.60 59.46 67.27 69.80 79.85 80.67 88.71 88.14 99.97 98.80 91.84 84.85 114.24 120.11 5.6%
Slide 44: Chicago Skyway - Quarterly Databook
CHICAGO SKYWAY - QUARTERLY DATABOOK Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Chicago Skyway (100%) 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 2022 2022 2022 2023 2023 Revenue Total Toll Revenue (US$m) 20.46 23.43 26.14 21.81 19.19 17.73 26.79 21.15 20.60 30.75 34.1
Slide 45: 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 46: 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 47: 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 48: 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 49: Appendix C: About the Business
APPENDIX C About the Business Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 49
Slide 50: The Atlas Arteria Business
THE ATLAS ARTERIA BUSINESS Virginia, United States Ownership: 31.14% Dulles Greenway Luxembourg APRR 2,404km 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 51: APRR - Overview
APRR - OVERVIEW APRR Heavy and Light Vehicle Traffic APRR LV VKT APRR PL 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)
Slide 52: 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 53: 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 French Tax Code provides for a specific tax payable • The territorial economic contribution (Contribution the table below by mot
Slide 54: Warnow Tunnel - Overview
WARNOW TUNNEL - OVERVIEW Warnow Tunnel Traffic ADT Linear (ADT) 14,000 13,000 12,000 11,000 ADT Program of roadworks 10,000 in and around Rostock 9,000 CAGR 2008 – 2022 = 1.2% 8,000 7,000 2008 2023 Warnow Tunnel EBITDA & EBITDA Margin EBITDA EBITDA margin 74.9 76.8 75.3 71.3 73.1 73.3 71.1 67.1 67.7
Slide 55: 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 56: Dulles Greenway - Overview
DULLES GREENWAY - OVERVIEW Dulles Greenway Traffic ADT 60,000 50,000 ADT 40,000 30,000 20,000 10,000 0 2008 2023 Dulles Greenway EBITDA & EBITDA Margin EBITDA EBITDA margin 80.5 79.8 80.8 81.6 81.4 81.3 82.2 79.8 77.8 78.5 77.1 71.7 73.1 73.8 70.1 EBITDA Margin (%) • Dulles Greenway is a 22km tolled
Slide 57: 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 58: Atlas Arteria Summary Corporate Structure
ATLAS ARTERIA SUMMARY CORPORATE STRUCTURE as at 30 June 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 50% +
Slide 59: Appendix D: References
APPENDIX D References Atlas Arteria → Results Presentation for the six months ending 30 June 2023 → 59
Slide 60: Glossary of Terms
GLOSSARY OF TERMS ADT Average daily traffic Eiffarie Eiffarie SAS RCF Revolving Credit Facility ADELAC The concessionaire of the A41 north motorway E&P Earnings & Profit S&P Standard & Poor’s ALX Atlas Arteria FE Financière Eiffarie SAS SCC Virginia State Corporation Commission APRR Group Includes A