Atco Ltd. Class I · TSX:ACO.X
Atco Ltd. Class I — Investor Day (September 2018)
47 slides from Atco Ltd. Class I's investor day presentation, Sep 14, 2018
Slide 1: 2018 Investor Day Presentation
2018 INVESTOR DAY PRESENTATION SEPTEMBER 14, 2018
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: Nancy C. Southern, Chair & Chief Executive Officer
NANCY C. SOUTHERN CHAIR & CHIEF EXECUTIVE OFFICER
Slide 4: Investment Summary
INVESTMENT SUMMARY ATCO is purchasing a 40 per cent interest in Neltume Ports for approximately $450M CAD. 40% 60% • 16 port operations & 3 stevedoring businesses • In 4 countries: Chile, Uruguay, Argentina and Brazil 2018 INVESTOR DAY PRESENTATION 4
Slide 5: Organizational Structure
ORGANIZATIONAL STRUCTURE 100% 52.4% 40% 100% Structures & Logistics Energy Ports and Real Estate Infrastructure Transportation The Neltume investment represents a fourth pillar in ATCO’s global portfolio. 2018 INVESTOR DAY PRESENTATION 5
Slide 6: ATCO Focus: Global Essential Services
ATCO FOCUS: GLOBAL ESSENTIAL SERVICES Energy Real Estate Housing Logistics & Water Transportation Agriculture 2018 INVESTOR DAY PRESENTATION 6
Slide 7: Strategic Rationale
STRATEGIC RATIONALE Investment with a Exposure to Strong macro Portfolio, industry, trusted long-term growing global factors and and geographic partner with trade and economic diversification shared values transportation tailwinds 2018 INVESTOR DAY PRESENTATION 7
Slide 8: Siegfried W. Kiefer, President & Chief Strategy Officer
SIEGFRIED W. KIEFER PRESIDENT & CHIEF STRATEGY OFFICER
Slide 9: Neltume Ports Overview
NELTUME PORTS OVERVIEW • Neltume Ports is a leading port operator and developer with a diversified range of terminals across South America and is headquartered in Santiago, Chile o 16 port terminals in 4 countries: Chile, Uruguay, Argentina and Brazil o 2 stevedoring companies in Chile, 1 in Uruguay
Slide 10: Neltume Ports Operations
NELTUME PORTS OPERATIONS BY CARGO TYPE BY GEOGRAPHY 5% 11% 33% Brazil Container Approx. Approx. 20% 48% Uruguay Break Bulk 51 M 51 M Tonnes Tonnes Chile Bulk 64% Argentina 19% *Based on 100% of volumes of ports where Neltume Ports has an ownership stake 2018 INVESTOR DAY PRESENTATION 10
Slide 11: Neltume Ports Diversified Earnings
NELTUME PORTS DIVERSIFIED EARNINGS APPROXIMATE EARNINGS MIX Multi- Minerals & Purpose Resources Containers 2018 INVESTOR DAY PRESENTATION 11
Slide 12: Port Overview
PORT OVERVIEW PERCENT TERMINAL Puerto Angamos (PANG) Montecon (MON) PORT COUNTRY KEY CARGO OWNERSHIP TYPE Terminal Puerto Arica 35% 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 13: Strong Volume Growth
STRONG VOLUME GROWTH Consistent and growing volumes support stability of cash flows 55 2010 - 2017 50.8 4000 50 12% Cargo CAGR 3500 45 7% Container CAGR 3000 40 35.7 35.8 35.5 35 33.8 2500 30 29 2476 26.7 2320 2147 2228 2000 25 22.5 2047 1767 1814 1500 20 1546 15 1000 10 500 5 0 0 2010 2011 2012 201
Slide 14: Growth Driven by Macroeconomic Tailwinds
GROWTH DRIVEN BY MACROECONOMIC TAILWINDS Strong macro economic growth indicators: FORECASTED AGGREGATE GROWTH • Latin American GDP to outpace Canadian GDP growth 16% • Chile has been one of Latin America’s fastest‐growing economies 14% averaging 3.5% GDP growth over the last 8 years. 12% • Global t
Slide 15: Growth Due to Rising Copper Global Demand
GROWTH DUE TO RISING COPPER GLOBAL DEMAND GLOBAL FORECASTED COPPER CONSUMPTION Exposure to Growing Copper Global Demand: 26 • Chile represents approximately 28% of global copper production and owns the largest copper reserves in the world. 25 • Copper supply deficit starting in 2020 is expected to M
Slide 16: 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
Slide 17: Growth by Acquisition and Construction
GROWTH BY ACQUISITION AND CONSTRUCTION Acquisition of Rio Estiba and Increased Awarded port Construction of participation in Tender of TPS TGN Montecon, Sagres and Ontur via the Construction of Awarded port Partnership takeover of Puerto Mejillones tender of TPA TPS/MSC Schandy 1995 1996 2000 2003 2
Slide 18: Dennis A. DeChamplain, SVP & Chief Financial Officer
DENNIS A. DECHAMPLAIN SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 19: Neltume Ports Investment Financial Highlights
NELTUME PORTS INVESTMENT FINANCIAL HIGHLIGHTS • The Neltume Ports investment is expected to be accretive to earnings per share in the first full year of ownership and thereafter. • Neltume Ports generated approximately $120 million CAD of EBITDA in 2017. • ATCO will fund its investment in Neltume Po
Slide 20: Nancy C. Southern, Chair & Chief Executive Officer
NANCY C. SOUTHERN CHAIR & CHIEF EXECUTIVE OFFICER
Slide 21: Structures & Logistics
STRUCTURES & LOGISTICS Modular Structures Workforce Housing & Space Rentals - Permanent modular camps - Mobile office trailers - Relocatable modular buildings Logistics and Facility O&M Services Lodging & Support Services - Facility operations - Lodging, catering - Maintenance services - Maintenance
Slide 22: Structures & Logistics
STRUCTURES & LOGISTICS Global Rental Utilization 2016 YE 57% Current 68% Total Increase 11% W Cda. E Cda. Utilization Utilization rate: 54% rate: 77% E Australia Chile W Australia Utilization Utilization Utilization rate: 75% rate: 77% rate: 47% 2018 INVESTOR DAY PRESENTATION 22
Slide 23: Structures & Logistics
STRUCTURES & LOGISTICS Diversifying the global customer base into non-traditional modular markets such as public education facilities, high density urban residential housing and correctional facilities $28M $16M Melbourne Girls Grammar Melbourne, Australia Q1 2018 Q2 2018 Revenue from Permanent Modu
Slide 24: 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 25: 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 segments and rebuilding our rental utilization long-term growth potential customer lead list 10,613 11,222 2016 Q2 2018 Tot
Slide 26: Commercial Real Estate
COMMERCIAL REAL ESTATE Calgary office space Edmonton industrial space • ATCO Investments Ltd. (AIL), a subsidiary of ATCO Ltd., currently owns 16 commercial real estate properties throughout Alberta • 417,000 Square footage of saleable or leasable office space • 90,000 square footage of saleable or
Slide 27: Siegfried W. Kiefer, President & Chief Strategy Officer
SIEGFRIED W. KIEFER PRESIDENT & CHIEF STRATEGY OFFICER
Slide 28: Regulated Utilities
REGULATED UTILITIES ELECTRIC TRANSMISSION ELECTRIC DISTRIBUTION $5,227M Rate Base $2,476M Rate Base NATURAL GAS DISTRIBUTION NATURAL GAS TRANSMISSION INTERNATIONAL NATURAL GAS $2,537M Rate Base $1,633M Rate Base DISTRIBUTION $1,177M Rate Base 2018 INVESTOR DAY PRESENTATION 28
Slide 29: Utilities Achieve Top Tier Returns on Equity
UTILITIES ACHIEVE TOP TIER RETURNS ON EQUITY 14% 13% CU Inc. ROE +2.33% on average above AUC 12% approved ROE from 11% 2007-2017 10% 9% 8% • Alberta Utility average is a simple average and includes: AltaGas, AltaLink, Enmax 7% Distribution, Enmax Transmission, EPCOR Distribution, EPCOR Transmission,
Slide 30: PBR 2.0 Highlights
PBR 2.0 HIGHLIGHTS PBR PBR 2.0 Efficiency Carry-over ECM up to 0.5% additional ROE for the years ECM up to 0.5% additional ROE for the years 2023 and 2024 Mechanism (ECM) 2018 and 2019 based on certain criteria based on certain criteria Productivity Adjuster 1.16% 0.30% (X Factor) Recovered through
Slide 31: Regulatory Update
REGULATORY UPDATE 2017 2018 2019 2020 Gas and Electric Decision Decision Decision Distribution 2018 to 2022 Received Expected Expected Performance Based Regulation (PBR) 2.0 2017 2018 2019 2020 2018 to 2020 Generic Decision Decision Decision Cost of Capital (GCOC) Received Expected Expected Electric
Slide 32: Cumulative Effects on Risk / Uncertainty / Costs
CUMULATIVE EFFECTS ON RISK / UNCERTAINTY / COSTS 2018 INVESTOR DAY PRESENTATION 32
Slide 33: Long-Term Contracted Capital Investment
LONG-TERM CONTRACTED CAPITAL INVESTMENT HYDROELECTRIC FORT MCMURRAY WEST HYDROCARBON STORAGE COGENERATION GENERATION 500 KV TRANSMISSION $1.0 BILLION (2018–2020) 2018 INVESTOR DAY PRESENTATION 33
Slide 34: Alberta PowerLine
ALBERTA POWERLINE Fort McMurray West 500 kV Transmission Project • The design and planning phases were completed and construction commenced in August 2017. • Land preparation and tower foundation installation and tower assembly is proceeding ahead of schedule. The target energization date of June 20
Slide 35: Coal to Gas Conversion Strategy
COAL TO GAS CONVERSION STRATEGY Battle River • Partial conversion (50%) completed on BR4 Mar 2018 • Proceeding with “Dual Fuel” conversion of BR5 with commercial operation date (COD) of Dec 2019 • Proceeding with increasing natural gas interconnection to the site to support the conversion work with
Slide 36: Mexico Expansion
MEXICO EXPANSION Mexico Attractiveness • Energy Reform offers opportunities for energy infrastructure investment • Attractive GDP growth forecast Gomez • Acquired and built a total of 46 MW of electricity Palacio generation, including hydroelectric generation; San Luis contacted to build 26 MW of na
Slide 37: Australia Success
AUSTRALIA SUCCESS ATCO Gas Australia ROE +3.34% on average above ERA approved ROE from 2015-2017 12% 11% 10% 9% 8% 7% 6% 5% 4% 3% 2015 2016 2017 Financial ROE Approved ROE 2018 INVESTOR DAY PRESENTATION 37
Slide 38: 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 39: Dennis A. DeChamplain, SVP & Chief Financial Officer
DENNIS A. DECHAMPLAIN SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER
Slide 40: Credit Ratings
CREDIT RATINGS 2018 INVESTOR DAY PRESENTATION 40
Slide 41: ATCO Deconsolidated Capital Structure
ATCO DECONSOLIDATED CAPITAL STRUCTURE December 31, 2017 After Neltume Investment Financing 2% 5% 93% 100% Equity Debt (net of cash) Hybrid Securities Equity 2018 INVESTOR DAY PRESENTATION 41
Slide 42: ATCO Financial Liquidity
ATCO FINANCIAL LIQUIDITY EXCELLENT LIQUIDITY POSITION $280M of readily $100M of available accessible cash on the lines of credit balance sheet * Amounts as at the second quarter ended June 30, 2018 2018 INVESTOR DAY PRESENTATION 42
Slide 43: Dividend Growth
DIVIDEND GROWTH $0.3766 per share 25 year track record of increasing common share dividends* 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 * On July 12, 2018, ATCO declared a third quarter dividend of $0.3766 per share, or $1.51 per share annualized. 2018 INVESTOR DAY PR
Slide 44: Nancy C. Southern, Chair & Chief Executive Officer
NANCY C. SOUTHERN CHAIR & CHIEF EXECUTIVE OFFICER
Slide 45: Key Highlights
KEY HIGHLIGHTS Geographic EPS Accretion Additional platform for Diversification continued growth Energy Real Estate Housing Logistics & Water Transportation Agriculture 2018 INVESTOR DAY PRESENTATION 45
Slide 46: 2018 Investor Day Presentation
2018 INVESTOR DAY PRESENTATION SEPTEMBER 14, 2018
Slide 47: Investor Relations Contact
www.ATCO.com www.canadianutilities.com Tel: 403.292.7500 Investor Relations 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada