International Container Terminal Services, Inc. · PSE:ICT

International Container Terminal Services — Q3 2009 Earnings Presentation

59 slides from International Container Terminal Services's earnings presentation, November 2009

  1. Slide 1: Investor Presentation 3Q 2009 Results

    Investor Presentation 3Q 2009 Results November 2009

  2. Slide 2: Agenda

    AGENDA Company and Industry Overview Recent Financial Performance Liquidity and Capital Resources Outlook Questions & Answers Appendices

  3. Slide 3: Company and Industry Overview

    Company and Industry Overview

  4. Slide 4: Company Overview

    Company Overview ƒ Founded in 1987 to acquire the Manila International Container Terminal (MICT) from the Philippine government in a competitive privatization tender ƒ Unique strategy focused on acquiring underperforming small and mid- sized terminals, mostly in government privatizations ƒ Highly su

  5. Slide 5: Ownership Structure

    Ownership Structure ICTSI Warehousing, Other directors and Inc., 1.74% officers, 1.22% Public (net), 46.30% Enrique Razon Jr., 50.74% Number of Outstanding S hares = 1,923,935,360 Number of Listed S hares = 1,992,066,860 Number of Foreign-Owned S hares = 713,705,561 Foreign Ownership Lev el (%) = 35

  6. Slide 6: ICTSI Milestones

    ICTSI Milestones Secondary Offering Syria Subic-NCT Misamis Oriental 50 Davao China Argentina Sale of IIHC PSE Listing ICTSI share price (PhP) 43 Indonesia Ecuador Subic-NSD Brazil Japan Colombia 36 South Cotabato Madagascar Georgia 29 Manila Batangas Poland Brunei 22 Mexico Saudi Arabia Tanzania 15

  7. Slide 7: Diversified Global Operations

    Diversified Global Operations SPIA Buenaventura, Colombia TECPLATA La Plata, Argentina 7

  8. Slide 8: Terminal Details

    Terminal Details Major terminals MICT MICT TSSA TSSA BCT BCT MICTSL MICTSL YRDICT YRDICT CGSA CGSA Manila, Manila, Philippines Philippines Suape, Suape, Brazil Brazil Gdynia, Gdynia, Poland Poland Toamasina, Toamasina, Madagascar Madagascar Yantai, Yantai, China China Guayaquil, Guayaquil, Ecuador E

  9. Slide 9: Evolution of Capacity

    Evolution of Capacity Handling Capacity (in TEUs) 2004 2005 2006 2007 2008 2009E 2010E MICT (Philippines) 1,600,000 1,600,000 1,600,000 1,600,000 1,600,000 1,900,000 2,400,000 TSSA (Brazil) 200,000 200,000 400,000 400,000 400,000 400,000 600,000 BCT (Poland) 400,000 400,000 700,000 700,000 700,000 7

  10. Slide 10: Global Customer Base

    Global Customer Base ICTSI’s International Carrier Customers MICT TSSA BCT MICTSL CGSA Shipping Lines (Manila) (Brazil) (Poland) (Madagascar) (Ecuador) 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 10

  11. Slide 11: Business Strategy

    Business Strategy To develop, acquire, own and operate common user container terminals in the 50,000 – 1,500,000 TEU range in markets with superior growth and profit potential. 1 Maintain Maintain leadership leadership position position in in existing existing markets markets 2 Pursue Pursue new new

  12. Slide 12: Numerous Potential Targets

    Numerous Potential Targets Large number of international and government-operated ports available in ICTSI’s acquisition space, including 185 state-run ports No. of ports where % of total Port size Total no. of container handling is no. of (TEU throughput) ports % exclusively state run* ports < 100K

  13. Slide 13: Recent Industry Consolidation

    Recent Industry Consolidation Industry Transactions Buyer Target Year Geography Dubai Ports CSX 2004 Global Dubai Ports P&O 2006 Global PSA Hutchison Ports (20%) 2006 Global Financial Investor Transactions Buyer Target Year Geography Babcock & Brown PD Ports 2006 UK Goldman Sachs ABP 2006 UK Deutsch

  14. Slide 14: Strategy Drives Yields

    Strategy Drives Yields Consolidated yield / TEU (in US$) Comparison with PSA (in US$) 120 120 114 114 108 103 108 103 88 91 91 57 49 44 45 45 2003 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 ICTSI ICTSI PSA Source: Company information Source: PSA audited financials, UBS Research 14

  15. Slide 15: Key Volume Drivers

    Key Volume Drivers Consumer Goods, Electronics (raw materials), Electronic components, Commodities, Fur MICT (Philippines) Construction Material niture, Housing Fixtures, Paper Paper, Agriculture (wheat flour, rice, meat), Aluminum, Steel, Cement, Consumer Goods, TSSA (Brazil) Refractory Material, H

  16. Slide 16: Impressive Financial Performance

    Impressive Financial Performance Revenues (in US$’000) EBITDA & EBITDA Margin Net income (in US$’000) 2% 4% 28% =4 =4 = AGR AGR AGR C C 44.6% 44.5% C 42.4% 40.9% 463,118 39.9% 71,258 64,282 194,347 324,933 129,675 39,031 - 230,861 352,253 94,402 299,254 52,391 154,926 129,058 37,174 2006 2007 2008 2

  17. Slide 17: Recent Financial Performance

    Recent Financial Performance

  18. Slide 18: Accounting Changes

    Accounting Changes ƒ Shift from PhP to US$ functional and reporting currency beginning January 1, 2009 in accordance with PAS 21 – “The Effects of Change in Foreign Exchange Rates” ƒ Regrouping of geographic segments from Domestic and Foreign to Asia, EMEA, and Americas in line with PFRS 8 – “Operat

  19. Slide 19: Revenue Profile By Currency

    Revenue Profile By Currency Revenue Currency by Subsidiary Revenue Breakdown by Currency Subsidiaries USD/EUR Local Currency RMB Others (PLN, 1% JPY,IDR) MICT 47% USD 53% PHP EUR 3% 7% BCT 92% USD 8% PLN BRL USD 12% 50% TSSA 100% BRL MICTSL 100% EUR PTMTS 100% IDR YRDICTL 100% RMB CGSA 100% USD PHP

  20. Slide 20: 3Q09 Volume down 8% YoY

    3Q09 Volume down 8% YoY Volume by port (in TEU) Volume by segment 20% 59% 3Q 2007 21% 811,049 1,021,499 943,805 18% 3Q 2008 59% 23% - 8% 189,436 12% 202,482 25% 3Q 2009 63% 98,939 148,213 98,962 32,746 161,665 34,486 27,626 28,482 89,675 46,747 67,814 37,820 A s ia A m e ric a s EM EA 126,156 70,934

  21. Slide 21: 9M09 Volume down 9% YoY

    9M09 Volume down 9% YoY Volume by port (in TEU) Volume by segment 21% 65% 13% 9M 2007 2,095,798 2,776,973 2,533,951 -9% 445,187 18% 59% 23% 9M 2008 543,012 435,668 275,170 91563 12% 98,962 102,423 452,679 25% 99,366 63% 9M 2009 75,588 211,721 111863 182,978 92,622 344,749 173,731 366,857 163,056 A s

  22. Slide 22: 3Q09 Revenues 12% lower YoY

    3Q09 Revenues 12% lower YoY Revenues by port (in US$ ’000) Average revenue yield/TEU 120 123 114 117 103 108 115 91,020 125,080 110,469 91 - 12% 8,822 2004 2005 2006 2007 2008 1Q 2Q 3Q 19,447 10,576 2009 2009 2009 1,373 3,812 8,812 23,265 10,953 18,986 1,624 ¾ Consolidated 3Q2009 average revenue yie

  23. Slide 23: 9M09 Revenues 15% lower YoY

    9M09 Revenues 15% lower YoY Revenues by port (in US$ ’000) Average revenue yield/TEU 120 118 114 225,160 352,253 299,254 103 108 91 20,462 -15% 58,194 25,471 2004 2005 2006 2007 2008 9M 3,610 2009 27,236 68,138 10,461 10,953 49,199 1,847 4,166 ¾ Consolidated 9M2009 average revenue yield per 16,601 2

  24. Slide 24: Organic Volume from Port Operations

    Organic Volume from Port Operations 2,776,973 2,533,951 -13% 110,805 1,021,499 943,805 2,240,223 -16% 1,879,076 -8% - 799,317 -13% 694,576 3Q 2008 3Q 2009 9M 2008 9M 2009 Existing New Terminals Big 5 ¾ Volume from existing terminals down 8% in 3Q2009; 13% lower in 9M2009 ¾ “BIG 5” ports - Manila, Br

  25. Slide 25: Organic Revenue from Port Operations

    Organic Revenue from Port Operations 352,253 299,254 -17% 6,112 125,080 110,469 328,182 -18% 269,617 -13% 1,726 114,885 -15% 98,269 3Q 2008 3Q 2009 9M 2008 9M 2009 Existing New Terminals Big 5 ¾ Revenues from existing terminals down by 13% in 3Q2009; 17% lower in 9M2009 ¾ “BIG 5” ports - Manila, Bra

  26. Slide 26: 3Q09 Consolidated P&L Highlights

    3Q09 Consolidated P&L Highlights (in US$’000, except EPS) 3Q 2008 3Q 2009 % change Revenues down 12% due to lower Gross Revenues from 125,080 125,080 110,469 110,469 - 12% volume and US$ appreciation against Port Operations emerging market currencies Cash opex down 13% due mainly to lower Cash Opera

  27. Slide 27: 9M09 Consolidated P&L Highlights

    9M09 Consolidated P&L Highlights (in US$’000, except EPS) 9M 2008 9M 2009 % change Revenues down 15% due to lower Gross Revenues from 352,253 352,253 299,254 299,254 - 15% volume and US$ appreciation against Port Operations emerging market currencies Cash opex down 15% due mainly to lower levels Cas

  28. Slide 28: Improving Q-o-Q Performance

    Improving Q-o-Q Performance In US$’000 except Volume, Yield/TEU, and EBITDA Margin 1Q 2009 2Q 2009 3Q 2009 755,958 10% 834,188 12% Volume 755,958 834,188 943,805 943,805 Consolidated 123 6% 115 2% 123 115 117 117 Yield/TEU Revenues 92,797 92,797 3% 95,988 95,988 15% 110,469 110,469 Cash Opex 41,918

  29. Slide 29: Liquidity and Capital Resources

    Liquidity and Capital Resources

  30. Slide 30: Consolidated Balance Sheets

    Consolidated Balance Sheets International Container Terminal Services, Inc. and Subsidiaries September 30, 2009 September 30, 2009 December 2008 In USD '000 In USD '000 In Php '000 ASSETS Noncurrent Assets Property and equipment - net 305,555 274,146 13,027,414 Intangibles - net 601,833 562,547 26,7

  31. Slide 31: Debt Maturity Profile

    Debt Maturity Profile as of Dec 31, 2008 as of Sept 30, 2009 (in US$ million) (in US$ million) 300 300 250 250 200 200 150 150 100 100 50 50 0 0 CASH 2009 2010 2011 2012 2013 2014 2015 2016 CASH 2009 2010 2011 2012 2013 2014 2015 2016 LT Loans ST Loans Cash level LT Loans ST Loans Cash level ƒ US$25

  32. Slide 32: Group Debt Profile

    Group Debt Profile (as of September 30, 2009) Breakdown by Tenor Breakdown by Currency 11% 100% 8% 92.6% 80% 60% 40% 81% 20% US$ PhP RMB 7.4% 0% Short Term Long Term Breakdown by Entity ƒ Long term debt comprises 92.6% of total debt; average life of 4.10 years 11% 3% ƒ US$ debt comprises 81% of cons

  33. Slide 33: Financial Highlights - Key Ratios

    Financial Highlights - Key Ratios 9M2009 YE2008 Yield per TEU (US$) 118 120 Profitability Ratios Reported EBITDA Margin 43% 42% Net Profit Margin 12% 14% Leverage Ratios Debt/Equity 0.90 1.02 Debt Cover Ratio: Debt*/EBITDA 2.69 2.66 Liquidity Ratios Current Ratio: Current Asset/Current Liability 1.5

  34. Slide 34: 2009 Capital Expenditure Plans

    2009 Capital Expenditure Plans ƒ FY 2009 Capex estimated at PhP7.2B (US$147M) 9 only US$77M (52%) disbursed as of end-September 2009 ¾ MICT Berth 6 estimated at PhP2.5B (US$51M) 9 only US$17M (33%) disbursed as of end-September 2009 ¾ CGSA rehabilitation & new equipment estimated at PhP2.7B (US$55M)

  35. Slide 35: Outlook

    : | . —— toh Outlook — Services, Inc. ec: UNCONTAINED

  36. Slide 36: Outlook

    Outlook ƒ Notable improvement in 3Q2009 performance relative to 1Q2009 and 2Q2009 ƒ Yield per TEU slightly decreased to US$118 in 9M2009 from average of US$120 in 2008 ƒ EBITDA Margins stable due to cost cutting ¾ 3Q2009 EBITDA Margin = 44.5% vs 44.6% in 3Q2008 ¾ 9M2009 EBITDA Margin = 43.1% vs 44.0

  37. Slide 37: Questions & Answers

    - | Questions & Answers

  38. Slide 38: Appendices: Terminal Summaries

    Appendices Terminal Summaries

  39. Slide 39: MICT - Manila, Philippines

    MICT - Manila, Philippines Manila International Container Terminal ƒ Annual capacity of 1.9 million TEUs. Berth 6 expansion will increase annual capacity to 2.4 million TEUs ƒ MICT has a 65% market share for international containers in the Port of Manila ƒ Exclusively handles "end destination" cargo

  40. Slide 40: TSSA - Suape, Brazil

    TSSA - Suape, Brazil Tecon Suape S.A. ƒ Annual capacity of 400,000 TEUs ƒ 3-phase development plan ¾ Take over Recife volumes ¾ Become “relay hub” for Northeast Brazil ¾ International trans-shipment ƒ Concession period until April 2031 ƒ Fixed fee of BRL 8.2M adjusted yearly based on IGPM (General I

  41. Slide 41: BCT - Gdynia, Poland

    BCT - Gdynia, Poland Baltic Container Terminal Ltd. ƒ Annual capacity of 700,000 TEUs ƒ Largest container terminal in Poland ƒ Exclusive focus on "end destination" cargo ƒ Containerization rate in Poland well below European average ƒ Concession period until May 2023 ƒ EUR20M investment commitment ov

  42. Slide 42: MICTSL - Toamasina, Madagascar

    MICTSL - Toamasina, Madagascar Madagascar International Container Terminal Services Ltd. ƒ Annual capacity of 220,000 TEUs ƒ Commenced operations in October 2005 ƒ 90% market share in Madagascar container market ƒ Concession period until June 2025 ƒ Fixed fee schedule: ¾ 2005-2007 1.0M Euros ¾ 2008-

  43. Slide 43: YRDICT - Yantai, China

    YRDICT - Yantai, China Yantai Rising Dragon International Container Terminals Ltd. ƒ Annual capacity of 1,000,000 TEUs. ƒ Acquired in March 2007 a 60% stake for PhP2,439 million (US$50.5 million); 40% partners are SDIC Communications Co. and Yantai Port Group Co. Ltd. ƒ Commenced operations in April

  44. Slide 44: CGSA - Guayaquil, Ecuador

    CGSA - Guayaquil, Ecuador Contecon Guayaquil S.A. ƒ Annual capacity of 900,000 TEUs. ƒ Commenced operations on August 1, 2007 ƒ 20-year concession of the Container and Multipurpose Terminal at the Port of Guayaquil ƒ Concession period until 2027, renewable for another 20 years ƒ Fixed fee of US$2.1M

  45. Slide 45: TICT - Tartous, Syria

    TICT - Tartous, Syria Tartous International Container Terminal , JSC ƒ Annual capacity of 250,000 TEUs. ƒ Commenced commercial operations on October 28, 2007 ƒ One of two international ports in Syria ƒ First port in Syria to introduce foreign expertise ƒ ICTSI plans to invest US$39 million on the de

  46. Slide 46: BICTL - Batumi, Georgia

    BICTL - Batumi, Georgia Batumi International Container Terminal LLC . ƒ Annual capacity of 150,000 TEUs ƒ 48-year lease agreement to develop and operate two container berths and one ferry terminal ƒ Commenced commercial operations on Nov 2, 2007 ƒ The Port of Batumi is considered one of the main tra

  47. Slide 47: SPIA - Buenaventura, Colombia

    SPIA - Buenaventura, Colombia Sociedad Puerto Industrial Aguadulce , S.A. ƒ Concluded agreements to commence development of a new container terminal at the Port of Buenaventura, Colombia in July 2007 ƒ Port of Buenaventura is located on the Pacific coast of Colombia ƒ Estimated annual capacity is 70

  48. Slide 48: TECPLATA - La Plata, Argentina

    TECPLATA – La Plata, Argentina TECPLATA S.A. ƒ Geographical advantage – TECPLATA will be located at the head waters of the River Santiago Este in the Port of La Plata, which serves the Buenos Aires market ƒ Strategic partner – have joined Loginter S.A. (Ricardo Roman), who have valuable experience r

  49. Slide 49: Appendices: IFRICs & Summaries

    Appendices IFRICs 4 & 12 Summaries

  50. Slide 50: What are IFRIC 12 and IFRIC 4?

    What are IFRIC 12 and IFRIC 4? ƒ IFRIC 12 - Accounting for Service Concession Agreements ¾ Do assets revert to port authority at end of concession? ¾ Is the price of the services subject to regulation? ƒ If “yes” to both, then IFRIC 12 applies ƒ Otherwise, IFRIC 4 - Determining whether an Arrangemen

  51. Slide 51: IFRIC 4 vs IFRIC 12 at ICTSI's Major Terminals

    IFRIC 4 vs IFRIC 12 at ICTSI’s Major Terminals IFRIC 4 IFRIC 12 No FX Exposure Others BCT (Poland) CGSA (Ecuador) MICT (Manila) TSSA (Brazil) SBITC (Subic) MICTSL (Madagascar) BICTL (Georgia) TICT (Syria) SPIA (Colombia) MICTSI (Misamis) DIPSSCOR (Davao) SCIPSI (Gen. Santos) Note : YRDICT – out of s

  52. Slide 52: Summary Impact of IFRIC

    Summary Impact of IFRIC 12 ƒ Balance Sheet: ¾ PPE reclassified to Intangible Assets ¾ Present Value of future fixed concession fees capitalized as Intangible Assets ¾ Present Value of future fixed concession fees also capitalized as a liability – “Concession Rights Payable” ƒ Income Statement: ¾ Fix

  53. Slide 53: Appendices

    International Container Terminal Services, Inc. Appendices i tarnations Ne < in ~ ~, ' a eae <= Ries Sn S- — » sees, We. , — ae Ri = em —— EXCELLENCE UNCONTAINED — a . ¥ > — a eee ante =~ > : ~~ _ Sivwee

  54. Slide 54: Revenues & Net Income by Segment (3Q)

    Revenues & Net Income by Segment (3Q) Revenues (in US$‘000) Net income (in US$’000) 91,020 125,080 110,469 15,618 14,700 14,013 10% 17% 29% 31% 35% 30% 53% 37% 23% 22% 15% 60% 48% 47% 51% 46% 55% -8% 3Q 2007 3Q 2008 3Q 2009 3Q 2007 3Q 2008 3Q 2009 ASIA EMEA AMERICAS 54

  55. Slide 55: Revenues & Net Income by Segment (9M)

    Revenues & Net Income by Segment (9M) Revenues (in US$‘000) Net income (in US$’000) 225,160 352,253 299,254 43,000 52,391 37,174 15% 21% 25% 30% 35% 51% 25% 38% 22% 14% 32% 54% 51% 47% 46% 62% 43% -13% 9M 2007 9M 2008 9M 2009 9M 2007 9M 2008 9M 2009 ASIA EMEA AMERICAS 55

  56. Slide 56: 1Q Traditionally the Weakest

    1Q Traditionally the Weakest VOLUME 40% 26% 26% 35% 30% 23% 25% 25% 20% 15% 10% 21% 24% 24% 23% 24% 25% 26% 24% 24% 25% 27% 25% 25% 26% 26% 26% 25% 27% 27% 25% 5% 0% Q1 Q2 Q3 Q4 2004 REVENUE 40% 35% 25% 26% 26% 2005 30% 23% 25% 20% 15% 2006 10% 21% 23% 23% 23% 22% 24% 26% 24% 24% 25% 26% 26% 25% 27%

  57. Slide 57: Container Volumes Reflect GDP Growth Trends

    Container Volumes Reflect GDP Growth Trends 16% 14% Avg. Container 12& Growth = 9.1% 10% 8% Avg. World GDP 6% Growth = 2.8% 4% 2% 0% 2001 2003 2002 1993 1994 1992 2000 1981 1983 1984 1985 1986 1987 1988 1989 1990 1982 1999 1997 1991 1998 1995 1996 Container growth (%) World GDP growth (%) Source: CS

  58. Slide 58: New Opportunities

    New Opportunities 1 Buenaventura, Buenaventura, Colombia Colombia (SPIA) (SPIA) –– Under Under Development Development 2 La La Plata, Plata, Argentina Argentina (TECPLATA) (TECPLATA) -- Under Under Development Development 3 Sydney, Sydney, Australia Australia -- Bid Bid Submitted Submitted 4 Manzani

  59. Slide 59: International ;

    International ; Container Terminal Services, Inc. ExCELLENCE UNCONTAINED

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