Atlas Arteria · ASX:ALX
Atlas Arteria — H1 2024 Earnings Presentation
59 slides from Atlas Arteria's earnings presentation, Aug 29, 2024
Slide 1: Atlas Arteria Results Presentation for the half year ended 30 June 2024
29 August 2024 ASX RELEASE Atlas Arteria Results Presentation for the half year ended 30 June 2024 Atlas Arteria (ASX:ALX) is pleased to release the attached results presentation for the half year ended 30 June 2024. ___________________________________________________________________________________
Slide 2: U.S. ownership restrictions
Atlas Arteria Limited 2 Atlas Arteria International Limited For further details of ownership restrictions that apply to residents of the United States and other U.S. Persons that are not Qualified Purchasers, please see our website. https://www.atlasarteria.com/stores/_sharedfiles/US_Ownership/Atlas
Slide 3: H1 2024 Results Presentation
H1 2024 RESULTS PRESENTATION for the six months ended 30 June 2024 29 August 2024 Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 1 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 4: 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 5: 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 6: Contents
CONTENTS KEY HIGHLIGHTS OPERATIONAL PERFORMANCE FINANCIAL PERFORMANCE OUTLOOK APPENDICES Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 4
Slide 7: Key Highlights: Growth in free cash flow supporting distributions
KEY HIGHLIGHTS Growth in free cash flow supporting distributions Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 5
Slide 8: H1 2024 Highlights
H1 2024 HIGHLIGHTS Toll Revenue1 Increasing free 2024 distribution guidance 3.8% cash flows from of 40 cps2 reaffirmed operating performance and with improved free cash Traffic1 APRR capital management flow support and reduced 0.4% initiatives reliance on cash on hand3 Awarded A412 On track to achie
Slide 9: Hugh Wehby appointed as incoming CEO and Managing Director
HUGH WEHBY APPOINTED AS INCOMING CEO AND MANAGING DIRECTOR • Hugh will join Atlas Arteria in late 2024 and there will be an orderly transition with Graeme Bevans • Hugh has extensive experience in the global listed infrastructure market. His experience spans infrastructure development, funding, M&A,
Slide 10: H1 2024 Financial Overview
H1 2024 FINANCIAL OVERVIEW Toll increases drive robust revenue growth, but EBITDA was negatively impacted by the new French tax (TEILD) 1 H1 2024 Traffic H1 2024 Toll Revenue4,5 H1 2024 EBITDA4,5 Business VS H1 2023 VS H1 2023 VS H1 2023 APRR Group2 (0.7%) 3.2% (2.9%) ADELAC 2.3% 8.1% 8.6% Warnow Tu
Slide 11: Distributions Overview
DISTRIBUTIONS OVERVIEW Distribution guidance for 2024 of 40.0 cps supported by higher free cash flows from APRR 2024 distribution guidance of 40.0 cps maintained1 Attractive distribution yield3 40 cps Atlas Arteria 7.8% 1 Free cash flows Reflecting increased APRR operating cash flows distributed to
Slide 12: Business Strategy – Clear Strategic Priorities
BUSINESS STRATEGY – CLEAR STRATEGIC PRIORITIES Focused on our existing businesses and opportunities related to them Business optimisation • Optimising business activities across operations, maintenance, toll management and revenue recovery • Innovation to enhance efficiency and lower costs Associate
Slide 13: Well-positioned for current macro-economic environment
WELL-POSITIONED FOR CURRENT MACRO-ECONOMIC ENVIRONMENT CPI-linked tolls boost earnings, while high EBITDA margins and primarily fixed-rate debt protect against interest rate risk Business Toll escalation Indicative toll H1 2024 EBITDA % of fixed rate Average debt unit formula escalation drivers Marg
Slide 14: Operational Performance: Traffic performance steadily improving
OPERATIONAL PERFORMANCE Traffic performance steadily improving through the half Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 12
Slide 15: APRR Group Traffic Update
APRR GROUP TRAFFIC UPDATE Traffic stabilising after the one-off impact of farmers’ strikes in Q1 2024 APRR Group Traffic1 Significant traffic disruption Trade from France and Spain with Europe Heavy vehicle VKT Light vehicle VKT Chemicals Raw materials 140 Agricultural Manufactured goods Toll revenu
Slide 16: APRR Group Operational Update
APRR GROUP OPERATIONAL UPDATE Focused on challenging the new French long-distance transportation infrastructure tax (TEILD) Two-step approach to fighting the new French tax Key near-term concession expiries Constitutional challenge Network Filed in March 2024 by APRR, along with the other toll road
Slide 17: A412 Project Update
A412 PROJECT UPDATE Eiffage and APRR consortium awarded A412 motorway project which is now awaiting final approvals and signing Project overview Project location • A412 Thonon-Machilly is a greenfield 16.5km motorway from Thonon-les-Bains to Machilly to the south of Lake Geneva and will operate unde
Slide 18: Chicago Skyway Traffic Update
CHICAGO SKYWAY TRAFFIC UPDATE Traffic recovered across the period after January’s cold weather but with anticipated elasticity impact of toll increases Chicago Skyway Traffic Chicago saw elevated snowfall in January1 LV traffic mostly in-line with historical average Heavy vehicle trips Light vehicle
Slide 19: Chicago Skyway Business Plan on Track
CHICAGO SKYWAY BUSINESS PLAN ON TRACK Will deliver long-term cost savings and enhancements to asset quality as well as capital efficiency H1 2024 progress on key workstreams Calumet River bridge - Chicago Skyway • Integration of asset management system and upgrade of Asset back-office system progres
Slide 20: Dulles Greenway Traffic Update
DULLES GREENWAY TRAFFIC UPDATE Continued gradual traffic improvement reflects rising trip times on the competing route Dulles Greenway Traffic Travel time savings – Dulles to Leesburg1 Return to work Total trips Toll revenue DGPeak DG peak Alternative Alt Peak peak Washington DC Average (US) 37.3 10
Slide 21: Dulles Greenway Operational Update
DULLES GREENWAY OPERATIONAL UPDATE SCC rate case outcome expected during H2 2024 H1 2024 progress on key workstreams Requested tolls, from 1 January 2024 ✓ SCC rate case filed by TRIP II1 in July 2023 39.7% 21.9% Submissions lodged with the SCC from stakeholders as part of the US$8.10 ✓ determinatio
Slide 22: Warnow Tunnel Traffic Update
WARNOW TUNNEL TRAFFIC UPDATE Robust traffic and revenue growth due to roadworks on the competing route driving travel time savings Warnow Tunnel Traffic Roadworks Total trips Toll revenue • Urban infrastructure around Rostock 7.6 frequently undergoes restorative roadworks and upgrades 7.0 • The city
Slide 23: Sustainability Priorities
SUSTAINABILITY PRIORITIES Key Targets LTIFR ≤3 at large businesses and LTI ≤1 at small Maintain 40/40/20 commitment to gender balance and 25% reduction in scope 1 and 2 emissions by 2025, and businesses1 evolve representation across and within specific teams 46% by 2030, compared to a 2019 baseline
Slide 24: Financial Performance: Growing Atlas Arteria free cash flows
FINANCIAL PERFORMANCE Growing Atlas Arteria free cash flows Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 22
Slide 25: Atlas Arteria Income Statement
ATLAS ARTERIA INCOME STATEMENT Profitability supported by stable traffic and higher tolls at APRR, but offset by the impact of the TEILD A$m H1 2024 H1 2023 % change Dulles Greenway toll revenue higher due to traffic growth and weakening Toll revenue 69.2 63.1 10% of the AUD against the USD and EUR
Slide 26: Atlas Arteria Cash Flow for H1 2024
ATLAS ARTERIA CASH FLOW FOR H1 2024 Net corporate cash flow increased by 12.7% compared to H1 20231 APRR dividends to Atlas Arteria (€m) Corporate cash flows (A$m) Cash balance (A$m) €200m of cash to be available at Financière Eiffarie (FE) as at September 2024 which will be used to fund FE debt amo
Slide 27: APRR Financial Performance
APRR FINANCIAL PERFORMANCE APRR financial performance supported by robust revenue growth, but negatively impacted by the TEILD €m (100%)1 H1 2024 H1 2023 % change • Growth in operating revenue despite lower traffic reflects higher tolls at APRR and Traffic (VKTm) 12,285.5 12,374.8 (0.7%) AREA of c.3
Slide 28: APRR Capital Expenditure Program
APRR CAPITAL EXPENDITURE PROGRAM Investing to grow the footprint and improve customer experience APRR capital expenditure in H1 2024 APRR Group and ADELAC network • Capex spend across the half was around €125m ‒ The majority of spend was on road improvements ‒ A6 Chalon Nord on/off ramp upgrade work
Slide 29: 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 2024 (€m)1 flexibility to support growth Rating A Stable Outlook (Fitch); A- Stable Outlook (S&P) Sources of Debt • APRR is
Slide 30: Chicago Skyway Financial Overview
CHICAGO SKYWAY FINANCIAL OVERVIEW Toll increases driving revenue outcomes US$m (100%)1 H1 2024 H1 2023 % change • Traffic fell by 2.7% compared to H1 2023, predominantly driven by extreme winter weather in January Traffic (m) 6.0 6.2 (2.7%) • As a result of toll increases implemented in January 2024
Slide 31: Dulles Greenway Financial Overview
DULLES GREENWAY FINANCIAL OVERVIEW Continued gradual traffic improvement driving higher revenue US$m (100%)1 H1 2024 H1 2023 % change • Increased revenue reflects improved traffic performance and higher violation revenue collection. Growth in traffic was Traffic (m) 6.7 6.4 4.6% largely driven by hi
Slide 32: Warnow Tunnel Financial Overview
WARNOW TUNNEL FINANCIAL OVERVIEW Toll increases and robust traffic driving higher revenue €m (100%)1 H1 2024 H1 2023 % change • Traffic was 0.9% higher vs H1 2023 as motorists opted for the travel time savings offered by the Warnow Tunnel given Traffic (m) 2.3 2.3 0.9% roadworks on the competing rou
Slide 33: Capital Management
CAPITAL MANAGEMENT Disciplined balance sheet and capital management Growing underlying Appropriate gearing Funding to support free cash flows across the portfolio strategic objectives • Capital management initiatives will • APRR credit rating of A/A- with a Stable • Strong underlying cash flows incr
Slide 34: Outlook: Delivering on our strategic priorities
OUTLOOK Delivering on our strategic priorities Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 32
Slide 35: The Atlas Arteria Value Proposition
THE ATLAS ARTERIA VALUE PROPOSITION Mature global toll road business with Geographically diverse, Strong progress on sustainability targets high-quality brownfield assets cash generative business of scale reflected in positive ESG ratings performance A unique investment opportunity Positively levera
Slide 36: Summary
SUMMARY ROBUST DELIVERING ON MAXIMISING PERFORMANCE THE STRATEGY DISTRIBUTIONS Stable APRR traffic Agreement reached to refinance 2024 full year distribution performance the FE debt facility in H1 2025 guidance of 40 cps reaffirmed Chicago Skyway toll revenue up 5.8% Awarded A412 which is now awaiti
Slide 37: Thank You / Q&A
THANK YOU Q&A Contact for investors Tess Palmer Director, Investor Relations +61 (0) 499 972 339 investors@atlasarteria.com Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 35
Slide 38: Appendix A: Additional Financial Information
APPENDIX A Additional Financial Information Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 36
Slide 39: Atlas Arteria Consolidated Balance Sheet
ATLAS ARTERIA CONSOLIDATED BALANCE SHEET As at As at Statutory accounts 30 June 2024 31 December 2023 A$m Current assets 272.4 345.1 Investments accounted for using the equity method 5,019.3 5,097.2 Tolling concessions 2,107.0 2,103.5 Goodwill 14.1 14.3 Other non-current assets 481.8 484.6 Total ass
Slide 40: Proportionate EBITDA by Business
PROPORTIONATE EBITDA BY BUSINESS APRR Group 100% Chicago Skyway 100% H1 2024 H1 2023 % change H1 2024 H1 2023 % change (€m)1 (US$m) Traffic (VKTm) 12,285 12,375 (0.7%) Traffic (m) 6.0 6.2 (2.7%) Total revenue 1,603.3 1,538.3 4.4% Total revenue 62.6 59.2 5.8% Total expenses (521.8) (420.9) (24.0%) To
Slide 41: Analyst Notes
ANALYST NOTES Key considerations APRR Capital Management Initiatives: FE refinancing in H1 2025 • Atlas Arteria and its co-investors have agreed to refinance the FE debt facility in H1 2025. A target amortisation profile was agreed, which consists of a materially reduced amortisation over the first
Slide 42: Reporting changes from H1 2024 - Centralised Costs
Reporting changes from H1 2024 - Centralised Costs • Atlas Arteria has provided notice that from H1 2024 centralised costs will be reported under a new classification methodology to provide greater consistency with market practice • Historically, Atlas Arteria has accounted for centralised employee
Slide 43: Appendix B: About the Business
APPENDIX B About the Business Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 41
Slide 44: The Atlas Arteria Business
THE ATLAS ARTERIA BUSINESS Ownership: 30.82% APRR 2,316km motorway network in Eastern France Virginia, United States 2035 concession expiry1 Dulles Greenway Luxembourg United States HQ European HQ Rostock, Germany Warnow Tunnel Ownership: 30.82% A79 88km east-west transversal link 2068 concession ex
Slide 45: ESG Investment Proposition
ESG INVESTMENT PROPOSITION Our purpose is to connect communities through transportation. At Atlas Arteria, we lead by example and actively address clima te change impacts, while striving to meet all our environmental, social and governance goals. This commitment is central to our values Key crucial
Slide 46: APRR - Overview
APRR - OVERVIEW APRR heavy and light vehicle traffic LV VKT HV 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) 86.5 87.1
Slide 47: 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 48: 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 • The French Tax Code stipulates that motorway companies must • The territorial economic contribution (Contribution table below pa
Slide 49: Warnow Tunnel - Overview
WARNOW TUNNEL - OVERVIEW Warnow tunnel traffic Program of roadworks in 14,000 and around Rostock 13,000 12,000 11,000 ADT 10,000 Post-COVID traffic 9,000 recovery 8,000 7,000 2008 2023 Warnow Tunnel EBITDA & EBITDA margin EBITDA EBITDA margin 76.8 75.3 71.3 73.1 73.3 74.9 71.1 68.3 69.0 68.9 • Warno
Slide 50: 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 51: Chicago Skyway - Overview
CHICAGO SKYWAY - OVERVIEW Chicago Skyway heavy and light vehicle traffic LV ADT HV ADT 50,000 5,000 40,000 4,000 30,000 3,000 LV ADT HV ADT 20,000 2,000 10,000 1,000 0 0 2008 2023 Chicago Skyway EBITDA & EBITDA margin EBITDA EBITDA margin 84.8 85.1 86.8 87.8 88.6 88.3 87.1 88.0 87.5 87.7 85.2 86.9 8
Slide 52: 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 53: Chicago Skyway - Toll Outcomes
CHICAGO SKYWAY - TOLL OUTCOMES 2016 2017 2018 2019 2020 2021 2022 Cumulative CAGR Toll drivers Variables Variables Variables Variables Variables Variables Variables 2016-22 2016-22 US nominal GDP per 2.1% 3.8% 5.2% 3.8% (3.0%) 10.9% 10.0% 36.8% 5.4% capita US CPI 2.1% 2.1% 1.9% 2.3% 1.4% 7.0% 6.5% 2
Slide 54: 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 55: Dulles Greenway - Overview
DULLES GREENWAY - OVERVIEW Dulles Greenway traffic 60,000 50,000 40,000 ADT 30,000 20,000 10,000 0 2008 2023 Dulles Greenway EBITDA & EBITDA margin EBITDA EBITDA margin 81.6 81.4 81.3 82.2 77.8 80.5 78.5 79.8 80.8 79.8 78.7 73.8 77.1 70.1 71.7 73.1 EBITDA Margin (%) • Dulles Greenway is a 22km tolle
Slide 56: 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 57: Atlas Arteria Summary Corporate Structure
ATLAS ARTERIA SUMMARY CORPORATE STRUCTURE as at 30 June 2024 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 58: Appendix C: References
APPENDIX C References Atlas Arteria → Results Presentation for the six months ending 30 June 2024 → 56
Slide 59: Glossary of Terms
GLOSSARY OF TERMS ADT Average daily traffic EBITDA Earnings before interest, taxes, depreciation, and amortisation M Millions ADELAC The concessionaire of the A41 north motorway Eiffarie Eiffarie SAS MIBL MIBL Finance (Luxembourg) S.à r.l. n.a. Not applicable ALX Atlas Arteria E&P Earnings & Profit