Atco Ltd. Class I · TSX:ACO.X
Atco Ltd. Class I — Investor Presentation (May 2019)
60 slides from Atco Ltd. Class I's investor presentation, May 2019
Slide 1: Investor Presentation May 2019
INVESTOR PRESENTATION MAY 2019
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 16 Energy Infrastructure Businesses Page 21 3 Other ATCO Investments Page 31 Structures & Logistics Page 32 Neltume Ports Page 40 Commercial Real Estate Page 49 4 Appendix Page 51 IN
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Slide 5: ATCO Group Overview
ATCO GROUP OVERVIEW
Slide 6: Organizational Structure
ORGANIZATIONAL STRUCTURE ATCO is a diversified global ATCO holding corporation with (TSX: ACO.X / ACO.Y ) approximately 6,000 employees ~$5 billion common and assets of $24 billion. equity capitalization INVESTOR PRESENTATION MAY 2019 6
Slide 7: ATCO Focus: Global Essential Services
ATCO FOCUS: GLOBAL ESSENTIAL SERVICES Energy Real Estate Housing Logistics & Water Transportation Agriculture INVESTOR PRESENTATION MAY 2019 7
Slide 8: Continued Dividend Growth
CONTINUED DIVIDEND GROWTH ATCO $1.62 Canadian Utilities $1.69 per share 26 years of annual dividend increases* per share 47 years of annual dividend increases 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 MAY 2019 9
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Slide 11: Canadian Utilities
CANADIAN UTILITIES ENERGY INFRASTRUCTURE 11
Slide 12: Organizational Structure
ORGANIZATIONAL STRUCTURE CU Inc. Canadian Utilities ~$8 billion (TSX: CU / CU.X) debt ~$10 billion common capitalization equity capitalization INVESTOR PRESENTATION MAY 2019 12
Slide 13: High Quality Earnings
HIGH QUALITY EARNINGS 2018 ADJUSTED EARNINGS 86% Regulated Earnings 14% Long-term Contracted Earnings INVESTOR PRESENTATION MAY 2019 13
Slide 14: Growth: Record Adjusted Earnings in 2018
GROWTH: RECORD ADJUSTED EARNINGS IN 2018 INVESTOR PRESENTATION MAY 2019 14
Slide 15: Growth: Adjusted Earnings
GROWTH: ADJUSTED EARNINGS Utilities Energy Infrastructure Businesses INVESTOR PRESENTATION MAY 2019 15
Slide 16: Utility Adjusted Earnings
UTILITY ADJUSTED EARNINGS INVESTOR PRESENTATION MAY 2019 16
Slide 17: Alberta Distribution Utility Adjusted Earnings
ALBERTA DISTRIBUTION UTILITY ADJUSTED EARNINGS INVESTOR PRESENTATION MAY 2019 17
Slide 18: Growth: 2019–2021 Capital Investment
GROWTH: 2019 – 2021 CAPITAL INVESTMENT INVESTOR PRESENTATION MAY 2019 18
Slide 19: Rate Base Growth
RATE BASE GROWTH Regulated Capital Investment Mid-Year Rate Base Expected to Grow 4% per year $1.2B $1.2B $1.1B $13.4B $1.1B $12.5B $12.9B $11.9B $1.2B $10.3B $1.1B $8.9B $1.5B $2.2B $2.3B 2013 2014 2015 2016 2017 2018 2019 2020 2021 2013 2014 2015 2016 2017 2018 2019 2020 2021 INVESTOR PRESENTATION
Slide 20: Regulatory Update
REGULATORY UPDATE Electric Transmission 2018 2019 2020 2021 Hanna Region Decision Decision Decision Development Deferral Expected Expected Expected Application Electric Transmission 2018 2019 2020 2021 Decision Decision Decision 2018 to 2019 General Expected Expected Expected Tariff Application (GTA
Slide 21: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES ELECTRICITY GENERATION ELECTRICITY GENERATION ELECTRICITY GENERATION CANADA AUSTRALIA MEXICO 24 MW 176 MW 41 MW INDUSTRIAL WATER SERVICES HYDROCARBON STORAGE NATURAL GAS STORAGE CANADA CANADA CANADA 85,200 m3/day 400,000 m3 52 PJ INVESTOR PRESENTATION MAY 2019 21
Slide 22: Growth: Energy Infrastructure
GROWTH: ENERGY INFRASTRUCTURE INVESTOR PRESENTATION MAY 2019 22
Slide 23: Growth: Energy Infrastructure
GROWTH: ENERGY INFRASTRUCTURE Disciplined capital Higher Alberta recycling with sale Power Market Alberta PowerLine project of U.K. Barking Prices ($/MWh) completed ahead of schedule Power Assets INVESTOR PRESENTATION MAY 2019 23
Slide 24: Alberta PowerLine
ALBERTA POWERLINE Fort McMurray West 500 kV Transmission Project • Target energization date was June 2019 on this $1.6 Billion project. • Construction was completed and transmission line was energized three months ahead of schedule in March 2019. This resulted in $13 million of early energization in
Slide 25: Canadian Electricity Generation Sale
CANADIAN ELECTRICITY GENERATION SALE • On May 27, 2019 Canadian Utilities entered into definitive agreements to sell the Canadian fossil fuel-based power generation portfolio for approximately $835 million • Selling 12 coal-fired and natural gas-fired electricity generation assets located in Alberta
Slide 26: Electricity Generation Post Sale
ELECTRICITY GENERATION POST SALE Highly Contracted Portfolio Expanding Renewable Generation Capabilities Merchant 24 MW (10%) Hydro 59 MW (25%) Long-Term Natural Gas Contracted 182 MW 217 MW (75%) (90%) INVESTOR PRESENTATION MAY 2019 26
Slide 27: Electricity Generation Post Sale
ELECTRICITY GENERATION POST SALE INVESTOR PRESENTATION MAY 2019 27
Slide 28: Storage & Industrial Water Growth
STORAGE & INDUSTRIAL WATER GROWTH We build, own and operate non-regulated industrial water, natural gas storage, hydrocarbon storage, and NGL related infrastructure • 85,200 m3/day water infrastructure capacity • 400,000 m3 hydrocarbon storage capacity • 52 PJ natural gas storage capacity • ~ 116 km
Slide 29: Canadian Utilities Summary
CANADIAN UTILITIES SUMMARY 2018 Adjusted Earnings International Natural Gas Distribution Natural Gas Transmission Natural Gas Distribution Electricity Transmission Electricity Distribution Ongoing Capital High Quality Track Record of Investment Driving Earnings Dividend Growth Utility Asset Growth I
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Slide 31: Other ATCO Investments
ATCO OTHER ATCO.INVESTMENTS
Slide 32: 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 33: Structures & Logistics Adjusted Earnings
STRUCTURES & LOGISTICS ADJUSTED EARNINGS $15M $6M 2017 2018 INVESTOR PRESENTATION MAY 2019 33
Slide 34: Structures & Logistics: Rental Utilization
STRUCTURES & LOGISTICS Modular Structures increased rental utilization by 13 per cent 70% 63% 57% 2016 2017 2018 INVESTOR PRESENTATION MAY 2019 34
Slide 35: Structures & Logistics: Winning Key Contracts
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 36: Structures & Logistics: Diversifying Customer Base
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 37: 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 38: 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 39: 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 12,600 10,613 2016 2018 Total
Slide 40: Neltume Ports Investment
NELTUME PORTS INVESTMENT Adjusted Earnings Port Operations Services • ATCO acquired a 40% ownership interest in Neltume Ports in September 2018 for approximately $450 million • Neltume Ports is a leading port operator in South America with 16 ports in 4 countries INVESTOR PRESENTATION MAY 2019 40
Slide 41: Neltume Ports Operations
NELTUME PORTS OPERATIONS BY CARGO TYPE IN 2018 BY GEOGRAPHY IN 2018 5% 9% 28% Container 18% Brazil Approx. Approx. Uruguay Break Bulk 44 M 44 M Tonnes 55% Tonnes Chile Bulk 68% Argentina 17% *Based on 100% of volumes of ports where Neltume Ports has an ownership stake INVESTOR PRESENTATION MAY 2019
Slide 42: 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 43: Strong Volume Growth
STRONG VOLUME GROWTH Consistent and growing volumes support stability of cash flows 55 2010 - 2018 4000 49 50 9% Cargo CAGR 44 3500 5% Container CAGR 45 3000 40 36 36 36 35 34 2500 30 29 2482 27 2320 2330 2147 2228 2000 25 23 2047 1767 1814 1500 20 1546 15 1000 10 500 5 0 0 2010 2011 2012 2013 2014
Slide 44: 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 45: 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 46: 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 47: 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 Construction of Tender of TPS TGN Awarded port tender Increased Construction of Puerto Partnership of TPA participation in Mejillones TP
Slide 48: 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 MAY 2019 48
Slide 49: Growth: Commercial Real Estate
GROWTH: COMMERCIAL REAL ESTATE Grand Prairie industrial space Calgary office space • ATCO Investments Ltd. owns 15 commercial real estate properties throughout Alberta • In 2018, completed commercial property sales for approximately $13M Calgary industrial space – Sold in 2018 Heartland industrial l
Slide 50: Key ATCO Highlights
KEY ATCO HIGHLIGHTS Geographic EPS Accretion Global Essential Services Diversification Energy Real Estate Housing Logistics & Water Transportation Agriculture INVESTOR PRESENTATION MAY 2019 50
Slide 51: Appendix
ATCO APPENDIX
Slide 52: Regulated Utilities
REGULATED UTILITIES ELECTRIC TRANSMISSION ELECTRIC DISTRIBUTION $5,095M Rate Base $2,585M Rate Base NATURAL GAS DISTRIBUTION NATURAL GAS TRANSMISSION INTERNATIONAL NATURAL GAS $2,717M Rate Base $1,802M Rate Base DISTRIBUTION $1,211M Rate Base INVESTOR PRESENTATION MAY 2019 52
Slide 53: 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 MAY 2019 53
Slide 54: 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 55: 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 56: 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 57: First Quarter 2019 Adjusted Earnings
FIRST QUARTER 2019 ADJUSTED EARNINGS Utilities Energy Infrastructure Businesses & Corporate INVESTOR PRESENTATION MAY 2019 57
Slide 58: Financial Strength: Balance Sheet
FINANCIAL STRENGTH: BALANCE SHEET AS AT Q1 2018 ATCO Canadian Utilities 9% 10% 33% 60% 58% 30% Debt (net of cash) Preferred Shares Equity Debt (net of cash) Preferred Shares Equity INVESTOR PRESENTATION MAY 2019 58
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Slide 60: Investor Relations Contact
www.ATCO.com www.canadianutilities.com Tel: 403.292.7500 Investor Relations 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada