2q 2020 investors’ briefing...q1 2018 q2 2018 q3 2018 q4 2018 q1 2019* q2 2019* q3 2019* q4 2019*...
TRANSCRIPT
2Q 2020Investors’ Briefing August 6, 2020
COVID 19 Update
Ensuring strength and resiliency: our response to COVID-19
Areas of Focus (4Cs)
▪ Cash Preservationo Focus on cash collection
o Accelerate and maximize upstream of cash
▪ Capital Expenditure Re-assessmento Stringent review of groupwide capex budget
▪ Capital Structure Strength and Flexibilityo Strengthen capital structure and create flexibility to take advantage of
market opportunities
▪ Cost Controlo Rebase OPEX
2
Highlights
Volume
-5%Revenues
-4%
Net income
attributable to
equity holders
-12%EBITDA
-2%EBITDA
Margin
57%
▪ Volume and revenues lower in 1H2020 due to continuing impact of COVID19 on global trade in 2Q2020 as stricter quarantine measures took effect
▪ Less percentage decline in EBITDA compared to volume and revenues due to successful cost optimization measures
▪ Net Income down mainly due to reduction in operating income and COVID19 related expenses
Financial and Operational Performance
3
MoM Segment Performance
Volume(lowest month)
Revenues(lowest month)
2020Jan Feb Mar Apr May Jun
Asia
EMEA
AMERICAS
Total
Consolidated
4
Q1
2018
Q2
2018
Q3
2018
Q4
2018
Q1
2019*
Q2
2019*
Q3
2019*
Q4
2019*
Q1
2020
Q2
2020
Volume (in TEU ‘000) 2,326 2,389 2,438 2,584 2,479 2,563 2,548 2,588 2,509 2,291
Gross Revenue 325 336 344 380 384 368 356 374 376 348
Yield per TEU (in US$) 140 141 141 147 155 144 140 145 150 152
Port Fees 48 48 49 57 49 46 46 46 45 40
Operating Expenses 129 137 132 142 112 120 110 123 119 104
EBITDA 148 152 162 180 223 202 200 206 212 204
EBITDA Margin 45% 45% 47% 47% 58% 55% 56% 55% 56% 59%
Net Income 44 54 56 68 72 56 56 (84) 60 54
Quarterly Highlights
*2019 EBITDA and Net Income include IFRS 16 adjustments
(In US$ million except Volume,
Yield per TEU & EBITDA margin)
Geographical diversification, stringent cost management and our rapid response to the COVID19
pandemic mitigated potential adverse effects on operating results
5
Agenda
Recent Financial Performance01
Liquidity and Capital Resources02
Other Matters03
Questions and Answers04
Appendix05
01Recent Financial Performance
1,253,784 (52%) 1,354,478 (53%)1,152,022 (50%)
750,123 (31%)752,389 (29%)
711,602 (31%)
384,809 (16%)456,377 (18%)
427,155 (19%)
2Q 2018 2Q 2019 2Q 2020
4,714,255 5,041,916 4,799,765
2,495,093 (53%) 2,653,248 (53%)2,416,663 (50%)
1,446,973 (31%)1,498,004 (30%)
1,499,549 (31%)
772,190 (16%)
890,664 (18%)883,553 (18%)
1H 2018 1H 2019 1H 2020
Asia Americas EMEA
Volume
First Half(in TEUs)
+15%
+4%
+6%
-1%
+0.1%
-9%
7% -5%
Second Quarter(in TEUs)
+19%
+0.3%
+8%
-6%
-5%
-15%
7% -11%
2,388,715 2,563,244 2,290,779
Asia Americas EMEA
▪ 1H2019 vs 1H2020 consolidated volume down 5%; Organic volume down 6%
▪ Volume decrease was mainly due decline in trade activities due to the impact of COVID-19 pandemic on global trade and lockdown restrictions
8
161,698 (48%) 182,711 (50%) 173,971 (50%)
103,226 (31%)106,537 (29%) 101,090 (29%)
71,460 (21%)78,753 (21%)
73,424 (21%)
2Q 2018 2Q 2019 2Q 2020
661,764 751,785 724,261
316,736 (48%)378,959 (50%) 354,381(49%)
204,590 (31%)
218,552 (29%)221,536 (31%)
140,439 (21%)
154,274 (21%)148,344 (20%)
1H 2018 1H 2019 1H 2020
Asia Americas EMEA
Revenues
Yield:TEU(in US$)
▪ Consolidated revenues 4% lower in 1H2019 vs 1H2020; Organic revenues decreased 6%
▪ Consolidated 1H2020 yield to TEU at US$151
First Half(in US$ ‘000)
+10%
+7%
+20%
-4%
+1%
-6%
Second Quarter(in US$ ‘000)
+10%
+3%
+13%
-7%
-5%
-5%
14% -4%9% -5%
336,384 368,001 348,485
Asia Americas EMEA
119
125 127 130
135
143
135 130
136
142 146
151
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 20201H 9
Consolidated P&L Highlights
(In US$ 000, except Volume and EPS) 1H 2019 1H 2020 % Change
Volume (in TEU) 5,041,916 4,799,765 -5%Volume slightly decreased 5% as trade activities declined due to the impact of COVID-19 pandemic on global trade and
lockdown restrictions; partially tapered by the contribution of ICTSI Rio, a new terminal in Rio de Janeiro in Brazil.
Organically, volume down 6%
Gross Revenues from Port
Operations751,785 724,261 -4%
Revenues were 4% lower as trade activities declined due to the impact of COVID-19 pandemic and lockdown
restrictions; partially tapered by the contribution of ICTSI Rio; and new services at certain terminals.Organically, revenues were 6% less
Cash Operating Expenses 232,043 222,834 -4%Cash Opex 4% lower due to the continuous group-wide cost reduction and optimization measures and favorable
translation impact of BRL, AUD, MXN & PKR; partially tapered by the cost contribution of ICTSI Rio
EBITDA 424,399 416,370 -2%EBITDA 2% lower mainly due to lower operating revenues, partially tapered by lower cash operating expenses
resulting from continuous cost reduction and optimization measures, and positive contribution of ICTSI Rio.
EBITDA margin increased to 57% from 56%
EBIT 309,174 305,360 -1%
Financing Charges and Other
Expenses59,623 67,677 +14%
Financing charges and other expenses increased 14% primarily due to COVID19-related expenses and the absence of
capitalized borrowing cost related to the Phase 2 expansion project in Basra, Iraq in 2019
Net Income Attributable
to Equity Holders128,470 113,379 -12%
Net income attributable to equity holders down 12% due to lower operating income, increase in interest on concession
rights payable and COVID-19 related expense; partially tapered by a reduction in net loss in VICT and lower equity in
net loss in SPIA
Fully Diluted EPS 0.048 0.043 -10%
10
Consolidated P&L Highlights
(In US$ 000, except Volume and EPS) 2Q 2019 2Q 2020 % Change
Volume (in TEU) 2,563,244 2,290,779 -11%Volume decreased 11% as trade activities declined due to the impact of COVID-19 pandemic on global trade and
lockdown restrictions; partially tapered by the contribution of ICTSI Rio, a new terminal in Rio de Janeiro in Brazil.
Organically, volume down 12%
Gross Revenues from Port
Operations368,001 348,485 -5%
Revenues were 5% lower as trade activities declined due to the impact of COVID-19 pandemic and lockdown
restrictions; partially tapered by the contribution of ICTSI Rio; higher revenues from ancillary services, and new services at certain terminals. Organically, revenues were 8% less
Cash Operating Expenses 120,015 103,793 -14%Cash Opex 14% lower due to the decline in volume and continuous group-wide cost reduction and optimization
measures and favorable translation impact of BRL, AUD, MXN & PKR; tapered by mandated and contracted salary rate
adjustments at certain terminals and the cost contribution of ICTSI Rio
EBITDA 201,856 204,218 +1%EBITDA 1% higher mainly due to lower cash operating expenses resulting from continuous group-wide cost reduction
and optimization measures and positive contribution of ICTSI Rio. EBITDA margin increased to 59% from 55%
EBIT 144,023 148,938 +3%
Financing Charges and Other
Expenses31,301 34,496 +10%
Financing charges and other expenses increased 10% primarily due to COVID19-related expenses and the absence of
capitalized borrowing cost related to the Phase 2 expansion project in Basra, Iraq in 2019
Net Income Attributable
to Equity Holders56,067 53,782 -4%
Net income attributable to equity holders down 4% due to increase in interest on concession rights payable and COVID-
19 related expense; partially tapered by lower equity in net loss in SPIA
Fully Diluted EPS 0.020 0.020 -
11
Financing Charges & Other Expenses
(In US$’ 000)
1H 2019 1H 2020 % Change
Financing Charges & Other Expenses 59,623 67,677 +14%Increased primarily due to COVID19-related expenses and the absence of capitalized
borrowing cost related to the Phase 2 expansion project in Basra, Iraq in 2019
▪ Interest Expense on Loans/Bonds
▪ Capitalized Borrowing Cost
▪ Amortization of Debt Issue Cost
▪ Other Expenses
51,090
(1,331)
3,980
5,884
48,151
-
3,820
15,706
-6%
-100%
-4%
+167%
Average Outstanding Debt Balance 1,712,864 1,812,554 +6%Increased due to the US$300M term loan facility, US$530M short term and 18-month
loans of ICTSI and ICTSI Global Finance B.V. tapered by the prepayment of the Euro-
loan
Average Remaining Tenor 4.8 yrs 5.7 yrs Longer tenor due to newly issued US$400M Senior Notes
Average Cost of Debt (post CIT) 4.2% p.a. 4.0% p.a.
12
Proactive FX Risk Management
ICTSI’s revenue and cash expenses are favourably matched, which provides a natural currency hedge that mitigates against volatility attributable to FX movements
Revenue Currency by Subsidiary Cash Expense Currency by Subsidiary
Expenses favourably Matching Revenues(1H 2020 Revenue Breakdown by Currency)
US$ Revenues from Port Operations(1H 2020 Revenue Breakdown by Currency)
Note
*Total Cash Expense includes Cash Opex, Port Fees, Realized FX losses, Interest
Cost, Perp Distribution, IFRIC Interest, Other “cash” expenses and Income tax paid
Subsidiaries USD EUR Local Currency
MICT 38% 62% PHP
PTMTS 100% IDR
YICT 100% CNY
OJA 73% 27% IDR
PICT 80% 20% PKR
SBITC/ISI 45% 55% PHP
SCIPSI 100% PHP
DIPSSCOR 100% PHP
HIPS 100% PHP
MICTSI 100% PHP
BIPI 100% PHP
LGICT 11% 89% PHP
VICT 100% AUD
SPICTL/MITL 100% PGK
BCT 66% 10% 24% PLN
MICTSL 100%
BICT 100%
AGCT 79% 21% HRK
ICTSI Iraq 81% 19% IQD
IDRC 100%
TSSA 100% BRL
CGSA 100%
OPC 100%
CMSA 36% 64% MXN
TECPLATA 100%
ICTSI RIO 49% 51% BRL
Subsidiaries USD EUR Local Currency
MICT 29% 71% PHP
PTMTS 4% 96% IDR
YICT 100% CNY
OJA 18% 82% IDR
PICT 24% 76% PKR
SBITC/ISI 25% 75% PHP
SCIPSI 100% PHP
DIPSSCOR 100% PHP
HIPS 100% PHP
MICTSI 100% PHP
BIPI 1% 99% PHP
LGICT 100% PHP
VICT 100% AUD
SPICTL/MITL 100% PGK
BCT 7% 1% 92% PLN
MICTSL 2% 37% 62% MGA
BICT 15% 85% GEL
AGCT 6% 94% HRK
ICTSI Iraq 21% 79% IQD
IDRC 95% 5% CDF
TSSA 2% 98% BRL
CGSA 100%
OPC 49% 51% HNL
CMSA 2% 98% MXN
TECPLATA 9% 91% ARS
ICTSI RIO 100% BRL
Gross Revenues
US$724M
Cash Expenses*
US$507M
Asia
EM
EA
Am
eri
ca
s
Asia
EM
EA
Am
eri
ca
s
USD47%
PHP22%
AUD7%
MXN6%
BRL5%
EUR5%
Others8%
USD 39%
PHP 19%
AUD 9%
BRL 7%
MXN 7%
IQD 3%
Others 16%
13
FX Movement
90
110
130
150
170
190
Jan
-18
Fe
b-1
8
Ma
r-1
8
Ap
r-18
Ma
y-1
8
Jun
-18
Jul-
18
Au
g-1
8
Se
p-1
8
Oct-
18
Nov-1
8
Dec-1
8
Jan
-19
Fe
b-1
9
Ma
r-1
9
Ap
r-19
Ma
y-1
9
Jun
-19
Jul-
19
Au
g-1
9
Se
p-1
9
Oct-
19
Nov-1
9
Dec-1
9
Jan
-20
Fe
b-2
0
Ma
r-2
0
Ap
r-20
Ma
y-2
0
Jun
-20
14
CurrencyBRL COP MXN PKR AUD RMB EUR PHP
Average
1H 2020 4.93 3,697.33 21.66 159.78 0.66 7.04 0.91 50.64
1H 2019 3.84 3,188.99 19.15 143.43 0.71 6.79 0.89 52.22
Growth (%) 21.95% 13.75% 11.56% 10.23% 7.34% 3.53% 2.49% -3.11%
Yield/TEU and EBITDA Margin
Yield/TEU Evolution
EBITDA Margin Evolution
56.04%
57.49%
1.63%
-0.49%
0.31%
55%
56%
57%
58%
EBITDA Margin %Dec 2019
Organic New Terminal Forex EBITDA Margin %June 2020
145.55150.90
6.55
2.13-3.34
120
130
140
150
160
Yield/TEUDec 2019
Organic New Terminals Forex Yield/TEUJune 2020
15
Yield/TEU Analysis
2Q
2019
2Q
2020%
change
1H
2019
1H
2020%
change
2,563 2,291 -11% Volume (TEU ‘000) 5,042 4,800 -5%
368 348 -5% Revenues (US$ million) 752 724 -4%
144 152 +6% Yield/TEU (US$) 149 151 +1%
202 204 +1% EBITDA (US$ millions) 424 416 -2%
55% 59% EBITDA Margin 56% 57%
Higher mainly due to favorable volume mix at
certain terminals and contribution of new terminal
ICTSI Rio, partially tapered by lower ancillary
services
FX due to unfavorable translation impact of AUD,
BRL, MXN, partially tapered by favorable
translation impact of PHP
+6
-4
Higher mainly due to increase in ancillary services,
and favorable volume mix at certain terminals and
contribution of new terminal ICTSI Rio
FX due to unfavorable translation impact of AUD,
BRL, MXN, partially tapered by favorable translation
impact of PHP
+13+8
-5
+2
(In US$ million)
16
02Liquidity and Capital Resources
Fixed94%
Floating6%
Parent86%
Subsidiary14%
USD85%
AUD11%
EUR2%
Others2%
Balance Sheet Summary
(In US$ millions) Dec 31, 2019 June 30, 2020
Intangible and Property and Equipment 3,590 3,403
Lease Assets 576 544
Cash and Cash Equivalents 235 297
Other Current and Non-current Assets 1,351 1,335
Total Assets 5,751 5,579
Total Short-term and Long-term Debt 1,663 1,769
Concession Rights Payable 661 633
Lease Liabilities 1,189 1,108
Other Current and Non-current
Liabilities604 585
Total Liabilities 4,116 4,095
Total Equity 1,635 1,484
Gearing: Debt/SHE 1.02 1.19
Current Ratio:
Current Assets/Current Liabilities0.72 1.16
Covenant Leverage Ratio:
Debt/EBITDA2.10 2.18
DSCR: EBITDA/(Interest + Scheduled
Principal Payments)4.61 2.38
Financial Ratios
Dec 31, 2019 June 30, 2020
Debt Breakdown
As of June 30, 2020
Rate Currency Subsidiary
18
Principal Redemption Profile
Notes:
(1) Callable in 2021 with rate reset and 250–bp step–up in 2021
(2) Callable in 2024 with rate reset and 250–bp step–up in 2024
(3) Callable in 2022
(4) Callable in 2026 with rate reset and 250–bp step–up in 2026
As of March 31, 2020(US$ millions)
Proforma August 6, 2020
Perp NC24 (2)
Perp NC22 (3)
Perp NC21 (1)
267 333
77 86 26 19
280
5 5 3 -
394
400
265
400
375
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Perp NC26 (4)
16 45 80 9527 20
285
5 5 4
394
400 400
198
400
375
300
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Relationship Banks Bonds Perp
Perp NC24 (2)
Perp NC22 (3)
Perp NC21 (1)
19
2019A 2020B (ORIGINAL) 2020B (REVISED)
2019 CAPEX mainly for:
EXPANSIONARY: Manila, Honduras, Mexico & Iraq
2020B CAPEX mainly for:
EXPANSIONARY: Manila, Mexico & DR Congo
NEW: Rio
Expansionary Maintenance New ProjectsGreenfield Investment (SPIA)
(In US$ millions)
Capital Expenditures
$210m77%
$54m20%
$7m3%
US$270m
$215m
89%
$25m 10%
$1m 1%
US$241m
20
US$160m
$136m85%
$23m14%
$1m 1%
03Other Matters
ICTSI Sustainability Reports
22
2019 Sustainability Report
23
Recent Events
2020
July
ICTSI concluded the Tender Offer relating to Senior Guaranteed Perpetual Securities of Royal Capital B.V.
ICTSI signed the concession contract to develop, operate and manage the Multi-Purpose Terminal of the Port of Kribi in Cameroon
ICTSI successfully issued a new USD300 Million senior perpetual capital securities callable in May 2026
June ICTSI successfully issued US$400 Million fixed rate senior unsecured notes with a 10-year maturity
Mar ICTSI declared a regular cash dividend in the amount of Php3.31 per share which was paid on April 16, 2020
Feb South Pacific International Terminal Limited (“SPICTL”) entered into agreements with the local communities - Ahi and Labu, to each acquire a 15% stake of SPICTL
2019
Dec
ICTSI received from the Sudanese Government a second partial repayment of the Upfront Fee in the amount of AED110,190,000 (equivalent to approximately EUR27million).
ICTSI continues productive discussions with the Ministry of Finance and Economic Planning of the Republic of the Sudan for the refund of the remaining balance of the
Upfront Fee under the terms of the Refund Bond.
ICTSI took over the facilities and started to operate Libra Terminal Rio S.A. in the port of Rio de Janeiro City, Federative Republic of Brazil after completing all conditions
precedent and required regulatory approvals.
Contecon Guayaquil, S.A. (CGSA) Concession Agreement, which was to end on July 31, 2027, was extended for approximately 19 ½ more years to December 31, 2046
NovFederal jury verdict in Portland, Oregon, USA rendered in favor of ICTSI Oregon Inc. with a total sum of $93,635,000 in a case it filed against the International Longshore and
Warehouse Union (ILWU) and ILWU Local 8 for unlawful labor practices
Aug
ICTSI received a letter from the Sudanese Ministry of Finance & Economic Planning confirming the remittance of EUR195.2 million as partial repayment of the EUR410
million upfront fee in accordance with a refund bond, and that the balance will be repaid as soon as possible. ICTSI continues to reserve its rights under the Concession
Agreement
Motukea International Terminal Limited (MITL) entered into agreements with the local Tatana and Baruni communities for the latter to acquire a 30% stake of MITL, in line with
the Terminal Operating Agreement entered by ICTSI and the PNG Ports Authority
Jul
ICTSI Americas B.V, signed a Share Purchase Agreement with Boreal Empreendimentos e Participações S.A. to acquire one hundred per cent (100%) of the shares of Libra
Terminal Rio S.A. located in the port of Rio de Janeiro City, Federative Republic of Brazil. Transfer of the facilities to ICTSI expected to take place late 2019, once all
conditions precedent and required regulatory approvals have been obtained
Jun ICTSI declared preferred bidder for the concession to develop, operate and manage the Multi-Purpose Terminal of the Port of Kribi in Cameroon
MayComplied with the last of the Conditions Precedent (CPs) needed prior to the transfer a further 15.17% MNHPI shares to ICTSI; ICTSI's shareholdings in MNHPI has been
increased from 34.83% to 50%
24
Concluding Remarks
▪ Safety and wellbeing of the ICTSI team and other stakeholders remains our number one priority
▪ Focused on prudent cash preservation and management
▪ Strengthened our capital structure to capitalise on opportunities
▪ Agile and able to respond swiftly to changing situations
▪ Measures taken mean we are well positioned to navigate an uncertain and challenging H2
25
04Questions and Answers
05Appendix
COVID-related community support projects
Organization Beneficiaries
Coalition of Services for the Elderly
o Provided immunopacks to
indigent senior citizens.
Immunopacks contain face
masks, milk, vitamins rice and
other food items
Project Liwanag Ph, Inc
o 1,600 Aeta families in Capas,
Tarlac; distributed rice,
vegetables, canned goods
Financial assistance to Foundation
partners:
Parola Ecopatrols and Parola Day
Care Workers in Manila, Scholars
and School Coordinators, garbage
haulers in MICT
o 78 Parola Ecopatrols
o 11 Day Care Workers
o 162 scholars and coordinators
o 8 garbage personnel
Donation of Thermal Scanners
o Parola Brgy. 20 and Brgy.
275 (each barangay received 5
units)
Donation of 50 sacks of rice o Parola Brgy. 20
Donation of 60 sacks of rice to
Community Organizers Multiversityo 300 families in Delpan, Binondo
ICTSI Foundation and Sustainable and Development Unit
28
COVID-related community support projects
Organization Beneficiaries
Donation of Php5M for the purchase
of COVID-19 testing machines o City of Manila
Donation of 50,000 face masks o Residents of Parola Brgy. 20 and
Brgy. 275 and Isla Puting Bato
Donation of personal protective
equipment (PPEs)
o Philippine Association of Social
Workers, Inc –NCR. This donation
benefitted 14 institutions including
all the Manila District Social
Welfare Offices and selected
hospitals.
Donation of 900 grocery packs
o Parola Brgy frontliners and
families of identified COVID-19
patients
Donation of 5 kilos rice each
o 700 PAROLA Toda and ASPT
TODA (tricycle operators and
drivers association) and MTPB
Task Force Parola
Donation to the Philippine Commission for the Urban Poor
ICTSI Foundation and Sustainable and Development Unit
29
COVID-19: Supporting our Stakeholders
▪ Php355m to national and local government agencies,
communities, employees and port stakeholders
▪ Donated personal protective equipment, ventilators,
test kits, face masks and disinfectants to local
hospitals and stakeholders
▪ Mass rapid antibody testing of our employees
▪ Logistical support for hospitals, and mental health
support for employees for those in need of it
▪ Php100m donation to Project Ugnayan, a feeding
programme for the economically vulnerable
30
Thank you!