Atlas Arteria · ASX:ALX
Atlas Arteria — H1 2022 Earnings Presentation
47 slides from Atlas Arteria's earnings presentation, Aug 31, 2022
Slide 1: H1 2022 Results Presentation
H1 2022 RESULTS PRESENTATION for the six months ending 30 June 2022 31 August 2022 Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 1
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: Contents
CONTENTS KEY HIGHLIGHTS FINANCIAL PERFORMANCE OUTLOOK APPENDICES Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 3
Slide 4: Key Highlights
KEYHIGHLIGHTS Strong financial performance and delivery on strategy driving value for securityholders Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 4
Slide 5: H1 2022 Highlights
H1 2022 HIGHLIGHTS Strong weighted average traffic up Reinstated distribution guidance for two Positively leveraged to 22.7% periods reflects high inflation which in H1 2022 vs H1 2021 sustained recovery in increases gross margins driven by continued traffic performance at APRR First stand alone APR
Slide 6: H1 2022 Financial Overview
H1 2022 FINANCIAL OVERVIEW Toll Revenue and EBITDA above 2019 levels as strong performance at APRR and ADELAC continues H1 2022 Traffic H1 2022 Toll Revenue1,2 H1 2022 EBITDA1,2 Revenue Contribution Atlas Arteria Business VS H1 2021 VS H1 2019 VS H1 2021 VS H1 2019 VS H1 2021 VS H1 2019 APRR 90.3% 2
Slide 7: Atlas Arteria Distributions
ATLAS ARTERIA DISTRIBUTIONS Record first half distribution for Atlas Arteria Distribution guidance for H1 2022 and H2 2022 Atlas Arteria distributions – by period earned (cps) H2 guidance • Distribution guidance of 20.0 cps for H1 2022 reflects the H1 guidance strong performance of both APRR and War
Slide 8: Positively Correlated to Inflation
POSITIVELY CORRELATED TO INFLATION Inflationary environment supports toll increases and earnings • Toll prices at APRR, ADELAC and Warnow are directly linked to inflation, with inflation rates in France and Germany reaching highest levels in over 10 years • Toll price increases at APRR/AREA are sche
Slide 9: Traffic Growth at APRR
TRAFFIC GROWTH AT APRR Traffic outperforms 2019 levels due to strong leisure demand and international trade APRR Traffic Excess household savings1 Healthy trade recovery2 Actual Forecast France Heavy vehicle VKT Light vehicle VKT Spain 200 APRR Heavy Vehicle VKT 180 130 160 12 month moving average,
Slide 10: Traffic Stabilising at Warnow Tunnel
TRAFFIC STABILISING AT WARNOW TUNNEL Traffic performance stable as most COVID restrictions now removed Warnow Tunnel Traffic Mobility and daily traffic1 Retail and Recreation Mobility Workplaces Mobility Trips 200 18,000 Google Mobility Index, seven--day average 1.4 180 16,000 1.3 1.3 1.2 1.3 160 14
Slide 11: Traffic Recovery Continues at Dulles Greenway
TRAFFIC RECOVERY CONTINUES AT DULLES GREENWAY Continued improvement in weekday traffic reflecting a gradual return to the office Dulles Greenway Traffic Mobility recovery1 Peak and off-peak traffic Retail and Recreation Mobility Peak trips Off-peak trips Workplaces Mobility Total trips - 4.7 4.5 120
Slide 12: Sustainability Priorities
SUSTAINABILITY PRIORITIES SAFETY OUR PEOPLE CUSTOMERS & ENVIRONMENTAL COMMUNITY STEWARDSHIP • Lost time injury frequency rate1 • Maintain our 40% commitment to • Establish a baseline customer • 25% reduction in scope 1 and 2 Headline target for large businesses ≤3; and a gender balance and evolve sa
Slide 13: First Standalone Sustainability Report
FIRST STANDALONE SUSTAINABILITY REPORT Increased focus on Environmental, Social and Governance matters reflected in 2021 Sustainability Report Download Sustainability Report Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 13
Slide 14: Financial Performance
FINANCIAL PERFORMANCE Strong financial performance in inflationary environment Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 14
Slide 15: Atlas Arteria Income Statement
ATLAS ARTERIA INCOME STATEMENT Improved profitability reflecting increase in share of net profits in associates A$m H1 2022 H1 20211 % Chg Revenue and other income Increase driven by Dulles Greenway toll revenue as a result of higher traffic and increased toll rates as well as the strengthening of —
Slide 16: Atlas Arteria Cash Flow for H1 2022
ATLAS ARTERIA CASH FLOW FOR H1 2022 APRR dividends to Atlas Arteria (€m) Corporate cash flows (A$m) Cash balance (A$m) Warnow income / distribution cash flow Dist. from NPAT /dividend from MAF2 Net corporate & FX translation APRR company Remove net Eiffarie debt Financière Eiffarie MAF2 taxes/ cash
Slide 17: APRR Financial Performance
APRR FINANCIAL PERFORMANCE Solid traffic throughout the half contributed to a strong first half profit €m1 H1 2022 H1 2021 % change • Revenues supported by increased traffic, toll price increases, and €17m contribution from the Fulli business (€6m in H1 2021) Traffic (VKTm) 11,828.2 9,588.0 23.4% •
Slide 18: APRR Capital Expenditure Program
APRR CAPITAL EXPENDITURE PROGRAM Investing to grow the footprint and improve customer experience APRR Capital Expenditure Program • Capex projects continued during the year • Ongoing major projects include: — All projects progressing well and on track for — A48/A480 project completion with minimal d
Slide 19: APRR Group Financial Position
APRR GROUP FINANCIAL POSITION APRR strong balance sheet rated A- with a stable outlook APRR Group debt maturity profile APRR has significant balance sheet as at 30 June 2022 (€m)1 flexibility to support growth Rating A- Stable Outlook (S&P and Fitch) Sources of Debt • In May 2022, Fitch Ratings plac
Slide 20: Warnow Tunnel Financial Overview
WARNOW TUNNEL FINANCIAL OVERVIEW Strong financial performance despite COVID-19 related movement restrictions • Traffic during the half was impacted by social and mobility €m1 H1 2022 H1 2021 % chg restrictions, although to a lesser extent than H1 2021 Traffic (m) 2.1 2.0 10.1% • Traffic remains lowe
Slide 21: Dulles Greenway Financial Overview
DULLES GREENWAY FINANCIAL OVERVIEW Gradual traffic recovery with toll increases driving stronger financial performance • Increased operating revenues reflect improved traffic US$m1 H1 2022 H1 2021 % chg performance and 5.0% increase in off-peak toll prices from Traffic (m) 5.9 5.2 12.3% January 2022
Slide 22: Capital Management
CAPITAL MANAGEMENT Disciplined balance sheet management for the benefit of securityholders Sustainable distribution growth Appropriate gearing across the Funding to support growth funded from operating business portfolio objectives cash flows • Strong traffic performance at APRR • Strong credit rati
Slide 23: Outlook
OUTLOOK Improving average portfolio concession life and generating sustainable cash flows from Dulles Greenway Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 23
Slide 24: How Is Atlas Arteria Executing Its Strategy?
HOW IS ATLAS ARTERIA EXECUTING ITS STRATEGY? Strategic Framework 1 Reduce legacy complexity to maximise our value H1 2022 Key Strategic Outcomes: • Ownership of A79 finalised 2 Maximise operational efficiencies in existing businesses • Review of ~€400 million Investment Plan by ART received in May •
Slide 25: Attractive Investment Proposition
ATTRACTIVE INVESTMENT PROPOSITION Positively leveraged to high inflation Sustainable distribution yield Strong growth potential within and external to the current portfolio A uniquely experienced team and culture, with a proven track record of executing complex multi-party transactions to unlock val
Slide 26: Growth of the APRR Business
GROWTH OF THE APRR BUSINESS The French Government compensates for capex investment through toll increases or concession extensions on a project by project basis 2006 2014 2016 2023 APRR Management Contract Maurice Lemaire Tunnel Investment Plan privatised merged with APRR Concession (in process)1 To
Slide 27: Dulles Greenway Update
DULLES GREENWAY UPDATE Engagement with key stakeholders in the region continues Engagement across the community • We have continued our engagement across the community to gather further support for the restructuring of Dulles Greenway — Ongoing active dialogue with key stakeholders and broader commu
Slide 28: Outlook for Growth
OUTLOOK FOR GROWTH Extending average concession life of Atlas Arteria business “During the half we have reviewed opportunities for growth both internal Focus on A rated, OECD countries and external to our business. Our balance sheet capacity remains strong, and we are well positioned to support Comp
Slide 29: Key Priorities and Outlook
KEY PRIORITIES AND OUTLOOK ATLAS ARTERIA APRR AND ADELAC WARNOW TUNNEL DULLES GREENWAY • Strategic priorities of • Traffic at APRR supported by • Traffic levels expected to • Continued return to office- improving the average excess household savings and stabilise as several major based work expected
Slide 30: 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 six months ending 30 June 2022 → 30
Slide 31: Appendix A: Additional Financial Information
APPENDIX A Additional Financial Information Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 31
Slide 32: Atlas Arteria Consolidated Balance Sheet
ATLAS ARTERIA CONSOLIDATED BALANCE SHEET As at As at Statutory accounts 30 June 2022 31 December 2021 A$m Current assets 206.5 245.2 Investments in associates 2,498.9 2,591.8 Tolling concessions 2,166.9 2,101.4 Goodwill 13.4 13.7 Other non-current assets 249.8 267.1 Total assets 5,135.5 5,219.2 Curr
Slide 33: Proportionate EBITDA by Business
PROPORTIONATE EBITDA BY BUSINESS APRR 100% Dulles Greenway 100% H1 2022 H1 2021 % change H1 2019 % change H1 2022 H1 2021 % change H1 2019 % change (€m) (US$m) Traffic (VKTm) 11,828.2 9,588.0 23.4% 11,561.9 2.3% Traffic (m) 5.9 5.2 12.3% 8.9 (34.0%) Operating revenue 1,348.4 1,113.0 21.1% 1,250.8 7.
Slide 34: Appendix B: About the Business
APPENDIX B About the Business Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 34
Slide 35: The Atlas Arteria Business
THE ATLAS ARTERIA BUSINESS Atlas Arteria Portfolio Virginia, United States Dulles Greenway Luxembourg APRR ADELAC DULLES GREENWAY WARNOW TUNNEL United States HQ European HQ Ownership: 31.14% Ownership: 31.17% Ownership: 100%2 Ownership: 100% Rostock, Germany 2,386km motorway 20km commuter road 22km
Slide 36: APRR Connecting Paris with Lyon and Central/Eastern France
APRR CONNECTING PARIS WITH LYON AND CENTRAL/EASTERN FRANCE 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 ARCOUR ALBEA ATLANDES SFTRF A'LIENOR APRR/AREA SANEF/SAPN A
Slide 37: APRR
APRR Historically strong traffic and EBITDA growth with market leading margins 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
Slide 38: APRR, AREA & ADELAC Tariff Formula
APRR, AREA & ADELAC TARIFF FORMULA Predictable cash flows underpinned by inflation-linked tolling and established regulatory regimes APRR & AREA tariff formula ADELAC tariff formula • Tolls escalate annually in February by a percentage of French CPI, plus supplemental increases • Under the concessio
Slide 39: French Tax Rates
FRENCH TAX RATES The Current Tax Situation Corporate Income Tax Motorway Specific Tax 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 t
Slide 40: Warnow Tunnel
WARNOW TUNNEL 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 AADT 11,000 Program of roadworks 4 in and around Rostock Rostock 10,000 3 5 1 9,000 CAGR 2008 – H1 2022 = 1.3%
Slide 41: Warnow Tunnel Tariff Formula
WARNOW TUNNEL TARIFF FORMULA 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 outl
Slide 42: 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 18.0
Slide 43: Dulles Greenway Earnings History
DULLES GREENWAY EARNINGS HISTORY 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 79.8 80.8 81
Slide 44: 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 §56-54
Slide 45: Atlas Arteria Summary Corporate Structure
ATLAS ARTERIA SUMMARY CORPORATE STRUCTURE as at 30 June 2022 Stapled ATLAX (Australia) ATLIX (Bermuda) 13.43% 86.57% economic interest (via loans)1 Dulles Greenway 100% Third Party Investors Eiffage MIBL 33.71% 4.00% 62.29% Eiffage MAF / MAF2 100% Warnow Tunnel 50% + 1 share 50% - 1 share Tax consol
Slide 46: Appendix C: References
APPENDIX C References Atlas Arteria → Results Presentation for the six months ending 30 June 2022 → 46
Slide 47: Glossary of Terms
GLOSSARY OF TERMS AADT Average annual daily trips Eiffarie Eiffarie SAS MIBL MIBL Finance (Luxembourg) S.à r.l. ADT Average daily trips ESG Environmental, Social and Corporate Governance n/a Not applicable ALX Atlas Arteria EU European Union RCEA Route Centre-Europe Atlantique ART Autorité de Régula