1Q 2020 Investors’ Briefing · 2020-05-07 · Consolidated P&L Highlights (In US$ 000, except Volume and EPS) 1Q 2019 1Q 2020 % Change Volume (in TEU) 2,478,6472 2,508,986 +1% Volume

1Q 2020Investors’ Briefing May 7, 2020

Our Response to COVID-19: Four Areas of Focus

§ Protecting lives and livelihoods, our people remain our No.1 priority

§ Continuing to provide excellent services to our customers

§ Living by our values: providing support and care for our host communities

§ Implementing measures to ensure ICTSI’s continued agility and financial resilience

Swift and significant action taken to protect our people and our business

2

COVID-19 UPDATE

§ ICTSI terminals around the world remain fully operational

§ Volumes reduced in March due to lower business activity and demand for non-essential goods; further weakness is expected

§ Certain ports have yet to feel the impact of COVID-19 related lockdowns

Diverse revenue streams

Focused on gateway cargo

Sound capital structure

Strong government

relations

Development of safety protocols

Shift to online transactions

Tactical capex review Opex rebase

Enhanced liquidity

management

Driving operational efficiency

Swift action taken to protect our people and ensure business continuity

A strong and resilient business

Agility

3

Highlights

Financial and Operational Performance

§ Volume flattish due to decline in trade activities caused by the impact of COVID-19 pandemic on global trade

§ EBITDA and EBITDA Margin lower due to lower operating revenues§ Net income down due to lower operating income, higher interest on concession rights payable

with the acquisition of the new terminal in Rio De Janeiro, Brazil and COVID-19 related expenses

Volume

+1%Revenues

-2%

Net income attributable toequity holders

-18%EBITDA

-5%EBITDA Margin

56%

4

Agenda

Recent Financial Performance01Liquidity and Capital Resources02Other Matters03Questions and Answers04Appendix05

5

01Recent Financial Performance

+27%

+11%

+9%

-8%

+8%

-1%

325,380 383,784 375,776

68,978 (21%) 75,521 (20%) 74,920 (20%)

101,364 (31%) 112,015 (29%) 120,446 (32%)

155,038 (48%)

196,248 (51%) 180,410 (48%)

1Q 2018 1Q 2019 1Q 2020

Asia Americas EMEA

2,325,540 2,478,672 2,508,986

387,381 (17%) 434,287 (18%) 456,398 (18%)

696,850 (30%) 745,615 (30%) 787,947 (31%)

1,241,309 (53%)1,298,770 (52%) 1,264,641 (50%)

1Q 2018 1Q 2019 1Q 2020

Asia Americas EMEA

Volume and Revenue

Revenue(in US$ ‘000)

Volume(in TEU)

+5%

+7%

+12%

-3%

+6%

+5%

18% -2%7% 1%

7

Consolidated P&L Highlights

(In US$ 000, except Volume and EPS) 1Q 2019 1Q 2020 % Change

Volume (in TEU) 2,478,6472 2,508,986 +1%Volume slightly increased 1% primarily due to contribution of ICTSI Rio, a new terminal in Rio de Janeiro in Brazil, and new services at certain terminals; tapered by decline in trade activities due to the impact of COVID-19 pandemic on global trade; Organically, volume decreased 1%

Gross Revenues from Port Operations 383,784 375,776 -2%Revenues were 2% lower as trade activities declined due to the impact of COVID-19 pandemic and lockdown restrictions; and lower revenues from storage; partially tapered by the contribution of ICTSI Rio; tariff adjustments and new services at certain terminals; Organically, revenues were 5% lower

Cash Operating Expenses 112,028 119,040 +6%Cash Opex 6% higher due to the cost contribution of ICTSI Rio; government-mandated and contracted salary rate adjustments at certain terminals; increase in information technology-related expenses and unfavorable translation impact of PHP; partially tapered by continuous cost optimization measures and favorable translation impact of BRL, AUD, MXN & PKR

EBITDA 222,543 212,153 -5% EBITDA 5% lower mainly due to lower operating revenues, partially tapered by positive contribution of ICTSI Rio;EBITDA margin decreased to 56% from 58%

EBIT 165,151 156,423 -5%

Financing Charges and Other Expenses 28,322 33,182 +17% Financing charges and other expenses increased 17% 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 Attributableto Equity Holders 72,403 59,597 -18%

Net income attributable to equity holders down 18% due to lower operating income, increase in interest on concession rights payable and COVID-19 related expense; partially tapered by decrease in equity in net loss of joint ventures and an associate

Fully Diluted EPS 0.028 0.023 -19%

8

Financing Charges & Other Expenses

(In US$’ 000)1Q 2019 1Q 2020 % Change

Financing Charges & Other Expenses 28,322 33,182 +17% 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

24,664

(665)

1,764

2,559

24,711

-

1,800

6,671

+0.2%+100%+2%

+161%

Average Outstanding Debt Balance 1,601,501 1,699,309 +6% Increased due to the US$300M term loan facility and US$110M 18-month loan of ICTSI Global Finance B.V. tapered by the prepayment of the Euro-loan

Average Remaining Tenor 4.7 yrs 4.3 yrs

Average Cost of Debt (post CIT) 4.4% p.a. 4.3% p.a.

9

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(1Q 2020 Revenue Breakdown by Currency)

US$ Revenues from Port Operations(1Q 2020 Revenue Breakdown by Currency)

NoteTotal 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 CurrencyMICT 41% 59% PHPPTMTS 100% IDRYICT 100% CNYOJA 68% 32% IDRPICT 82% 18% PKRSBITC/ISI 49% 51% PHPSCIPSI 100% PHPDIPSSCOR 100% PHPHIPS 100% PHPMICTSI 100% PHPBIPI 100% PHPLGICT 25% 75% PHPVICT 100% AUDSPICTL/MITL 100% PGKBCT 65% 12% 23% PLNMICTSL 100%BICT 100%AGCT 79% 21% HRKBGT 80% 20% IQDIDRC 100%TSSA 100% BRLCGSA 100%OPC 100%CMSA 34% 66% MXNTECPLATA 100%RIO 34% 66% BRL

Subsidiaries USD EUR Local CurrencyMICT 30% 70% PHPPTMTS 100% IDRYICT 100% CNYOJA 18% 82% IDRPICT 22% 78% PKRSBITC/ISI 27% 73% PHPSCIPSI 100% PHPDIPSSCOR 100% PHPHIPS 100% PHPMICTSI 100% PHPBIPI 4% 96% PHPLGICT 100% PHPVICT 100% AUDSPICTL/MITL 100% PGKBCT 8% 1% 91% PLNMICTSL 2% 40% 58% MGABICT 15% 85% GELAGCT 6% 94% HRKBGT 19% 81% IQDIDRC 96% 4% CDFTSSA 3% 97% BRLCGSA 100%OPC 53% 47% HNLCMSA 5% 95% MXNTECPLATA 5% 95% ARSRIO 2% 98% BRL

Gross RevenuesUS$376M

Cash ExpensesUS$245M

Asia

EMEA

Amer

icas

Asia

EMEA

Amer

icas

USD48%

PHP20%

AUD7%

MXN7%

BRL6%

EUR4%

Others8%

USD 33%

PHP 20%

AUD 9%

BRL 9%

MXN 7%

IQD 4%

Others 18%

10

90

110

130

150

170

190

210

Jan-

15

Mar

-15

May

-15

Jul-1

5

Sep-

15

Nov

-15

Jan-

16

Mar

-16

May

-16

Jul-1

6

Sep-

16

Nov

-16

Jan-

17

Mar

-17

May

-17

Jul-1

7

Sep-

17

Nov

-17

Jan-

18

Mar

-18

May

-18

Jul-1

8

Sep-

18

Nov

-18

Jan-

19

Mar

-19

May

-19

Jul-1

9

Sep-

19

Nov

-19

Jan-

20

Mar

-20

BRL COP PKR AUD MXN RMB EUR PHP

Currency BRL COP PKR AUD MXN RMB EUR PHP

Ave1Q 2020 4.47 3,551.71 156.02 0.66 20.00 6.98 1.10 50.83Ave1Q 2019 3.77 3,134.00 139.69 0.71 19.20 6.75 1.14 52.37Growth (%) 15.8% 11.8% 10.5% 8.2% 4.0% 3.4% 3.0% -3.0%

FX Movement

FX Movement since January 2015 and bottom line effect on ICTSI’s margins

Janu

ary-

Mar

ch

11

Yield/TEU and EBITDA Margin

Yield/TEU Evolution

EBITDA Margin Evolution

56.04%56.46%

0.70%

-0.40%0.12%

55%

56%

57%

EBITDA Margin %Dec 2019

Organic New Terminal Forex EBITDA Margin %Mar 2020

145.55149.77

3.81

2.23-1.82

140

145

150

155

Yield/TEU Dec 2019 Organic New Terminal Forex Yield/TEU Mar 2020

12

Yield/TEU Comparison

1Q 2019 1Q 2020 % Change

Volume (TEU ‘000) 2,479 2,509 +1%

Revenues (US$ millions) 384 376 -2%

Yield/TEU (US$) 155 150 -3%

EBITDA (US$ millions) 223 212 -5%

EBITA Margin 58% 56%

-5-2

-3

FX: Negative impact of AUD, BRL, MXN,tapered by positive impact of PHP

Lower revenues from storage and ancillary services, partially tapered by tariff adjustments at certain terminals

and contribution of new terminal ICTSI Rio

13

02Liquidity and Capital Resources

Balance Sheet Summary

(In US$ millions)0 Dec 31, 2019 Mar 31, 2020

Intangible and Property and Equipment 3,590 3,373

Lease Assets 576 483

Cash and Cash Equivalents 235 450

Other Current and Non-current Assets 1,351 1,326

Total Assets 5,751 5,633

Total Short-term and Long-term Debt 1,663 1,833

Concession Rights Payable 661 634

Lease Liabilities 1,189 1,006

Other Current and Non-current Liabilities 604 692

Total Liabilities 4,116 4,164

Total Equity 1,635 1,468

Gearing: Debt/SHE 1.02 1.25

Current Ratio: Current Assets/Current Liabilities 0.72 0.80

Covenant Leverage Ratio:Debt/EBITDA 2.10 2.36

DSCR: EBITDA/(Interest + Scheduled Principal Payments) 4.61 2.36

Financial Ratios

Dec 31, 2019 Mar 31, 2020

15

Floating31%

Fixed69%

USD86%

AUD10%

EUR2%

Others2%

Parent87%

Subsidiary13%

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) Perpetual Securities are not included

As of March 31, 2020(US$ millions)

Debt Breakdown(4)

Currency SubsidiaryRate

Perp NC24 (2)

Perp NC22 (3)Perp NC21 (1)

$267 $303$77 $86 $26 $19

$280

$5

$394$400

$265$400

$375

-

200

400

600

2020 2021 2022 2023 2024 2025 2026 2027

Relationship Banks Bonds Perp

16

US$380m

$335m88%

$45m12%

2019B 2019A 2020B

2019 CAPEX mainly for:EXPANSIONARY: Manila, Honduras, Mexico & Iraq

2020B CAPEX mainly for:EXPANSIONARY: Manila, Mexico & DR CongoNEW: Rio

Expansionary Maintenance New ProjectsGreenfield Investment (SPIA)

(In US$ millions)

Capital Expenditures

$210m77%

$54m20%

$7m3%

US$270m

$215m

89%

$25m 10%

$1m 1%

US$241

17

03Other Matters

ICTSI Sustainability Reports

19

Recent Events

2020Apr ICTSI 2020 Annual Stockholders’ Meeting rescheduled to Thursday, June 18, 2020 at 10:00am at The Tent at Solaire Resort & Casino

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

Nov Federal 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

JulICTSI 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

May Complied 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%

AprICTSI Global Finance B.V. availed of US$300M Guaranteed Term Loan

ICTSI declared a regular cash dividend in the amount of Php2.92 per share, alongside a special cash dividend in the amount of Php2.08 per share. The total dividend (regular and special) of Php5.00 per share was paid on May 7, 2019

20

Concluding Remarks

§ Proud of the dedication and determination of the ICTSI people across the world

§ Our ports are key to social and economic improvement in host countries; resilience and agility even more relevant

§ Living by our values and social purpose: focused on supporting our people and host communities

§ Continue to provide excellent services to our customers

§ Financial and operational measures taken to improve efficiency and continued resilience

§ Monitoring the situation carefully so that we can adapt our responses

§ Solid financial position – capital structure stable and good liquidity

§ Well-positioned to navigate through the pandemic review

21

COVID-19: Supporting our Stakeholders

§ Php350m to national and local government agencies, communities, employees and port stakeholders

§ Donated personal protective equipment, ventilators, test kits 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

22

04Questions and Answers

05Appendix

§ IMF projects global growth to contract 3%§ Some regions more affected than others; DM vs EM§ Bounce back in 2021

IMF Global Growth Forecast - Silver Lining

25

COVID-related community support projects

• The Razon Group has contributed a significant amount to this fight against the spread of COVID19 in all the jurisdictions in which we operate; Donations are coursed through ICTSI Foundation and Bloomberry Cultural Foundation, Inc.ü Php100 million to the Philippine Disaster Resilience Foundation (PDRF), as part of the business community-led Project Ugnayanü ICTSI Foundation donated sacks of rice and thermal scanners to the immediate communities of the Manila International Container Terminalü ICTSI Foundation has provided financial assistance to project partners including eco-patrols and day-care workers within the same communitiesü ICTSI Foundation scholars continue to receive financial aid despite the closure of schools ü ICTSI Foundation reached out to two other needy sectors, the elderly and the indigenous people; Php1 million donation to the Coalition of Services for the Elderly Inc.

(COSE) to augment the meager supplies of more than 10,000 senior citizens in Metro Manilaü ICTSI Foundation donated Php1 million to Project Liwanag to assist 2,000 Aeta families in the mountains of Capas, Tarlacü ICTSI continues to provide salaries and benefits to employees who report onsite to run the terminal and those who work from home

• In Manila, Philippines, the Razon Group has retro-fitted the Rizal Memorial Sport Complex (RMSC) into a COVID-19 emergency facility. ü Phase 1 : Retrofitted the common areas of the Ninoy Aquino Stadium into a healthcare facility with 116 beds for patients, 2 nurses’ stations, drywall partition wall and temporary furniture.ü Phase 2 : To commence once final advice from the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases and the Department of Health is given; Phase

2 will provide an additional 108 beds for patients at the Ninoy Aquino Stadium

• Donation of testing kits and medical supplies to local hospitals and government agencies (Inter-Agency Task Force “IATF”) are forthcoming

• Additional safety and security measures have been adopted at our terminals aimed at protecting the welfare of our employees and stakeholders, and to minimize the risk of spreading the virus within our global network

ü WFH protocols across all terminals where possibleü Enforcing commercial policies to minimize face to face contact with personnel, both internal and externalü Across our global portfolio, terminals are sanitized and disinfected, including regular disinfection for all work spaces and shuttle services, especially high foot traffic areas (disinfection of

touch points like door knobs, rails, kiosks, biometric areas, and turnstiles) ü For those employees who are able to work from home, they are well-equipped and have the necessary tools and technology to continue to support our customers. Our investment in

operational technologies ensures that we are able to provide highly efficient services ü We continue to heed government advice in each jurisdiction and employees are regularly briefed on current guidance

PHILIPPINES

26

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, Inco 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 Ecopatrolso 11 Day Care Workerso 162 scholars and coordinatorso 8 garbage personnel

Donation of Thermal Scanners to Parola Brgy. 20 and Brgy. 275

o Each barangay received 5 units

Donation of 50 sacks of rice to Brgy. 20 (by Sustainable Development Unit)Donation of 60 sacks of rice to Community Organizers Multiversity

o 300 families in Delpan, Binondo

ICTSI Foundation

27

Thank you!