ICTSI 9M2022 Net Income up 47% to US$465.1M; Globally diversified O&D portfolio drove strong performance

7 November 2022

Throughput grew 7% to 8.9 million TEUs
Revenues increased 20% to US$1.6 billion
EBITDA 25% higher to US$1.0 billion
Diluted EPS surged 63% to US$0.215

Enrique K. Razon, Jr., ICTSI Chairman and President said: “I am pleased to announce further significant progress across the Group delivering strong growth in revenues of 20 percent to US$1.64 billion and EBITDA of US$1.04 billion, 25 percent higher than the previous year. We have delivered seven consecutive quarters of double-digit consolidated revenue growth which has helped offset inflationary pressure with our excellent performance being driven by volume growth, cost control and operating discipline.

“We remain mindful of the macro-economic environment and the potential impact this may have on our business but remain confident that we are well-positioned to navigate these headwinds through our agility, diversified portfolio and strong balance sheet. Our highly disciplined and talented team continues to work resolutely for the benefit of our stakeholders – all the time guided by our purpose, to make ports around the world a driver for positive and sustainable growth.”

International Container Terminal Services, Inc. (ICTSI) today reported unaudited consolidated financial results for the nine months of 2022 posting revenue from port operations of US$1.64 billion, an increase of 20 percent from the US$1.37 billion reported for the same period in 2021; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$1.04 billion, 25 percent higher than the US$829.4 million generated the first three quarters last year; and net income attributable to equity holders of US$465.1 million, 47 percent more than the US$316.4 million earned in the first nine months of 2021 primarily due to higher operating income, net foreign exchange gain, equity share in net profit of joint ventures, and interest income; partially tapered by increase in interest on loans, lease liabilities and concession rights payable, and depreciation and amortization charges. Diluted earnings per share for the first nine months of 2022 was 63 percent higher at US$0.215 compared to US$0.132 in the same period in 2021.

For the quarter ended September 30, 2022, revenue from port operations increased 20 percent from US$482.4 million to US$576.7 million; EBITDA was 23 percent higher at US$365.9 million from US$296.9 million; and net income attributable to equity holders was at US$170.7 million, 43 percent more than the US$119.7 million in the same period in 2021. Diluted earnings per share for the third quarter of 2022 was 55 percent higher at US$0.080 compared to US$0.052 the same period in 2021.

ICTSI handled consolidated volume of 8,856,303 twenty-foot equivalent units (TEUs) in the first nine months of 2022, seven percent more than the 8,266,621 TEUs handled in the same period in 2021. The increase in volume was primarily due to volume growth and improvement in trade activities as economies continue to recover from the impact of the COVID-19 pandemic and lockdown restrictions; new shipping lines and services at certain terminals; the contribution of Manila North Harbour Port, Inc. (MNHPI) in Manila, Philippines and International Container Terminal Services Nigeria Ltd. (ICTSNL), the company’s new terminal in Port of Onne, Nigeria. Excluding the consolidation of MNHPI, ICTSNL, and Davao Integrated Port and Stevedoring Services Corporation (DIPSSCOR) in Davao, Philippines, which was terminated last June 30, 2022, consolidated volume would have increased by six percent. For the quarter ended September 30, 2022, total consolidated throughput was 11 percent higher at 3,103,721 TEUs compared to 2,807,098 TEUs in 2021.

Gross revenues from port operations for the first nine months of 2022 was 20 percent higher at US$1.64 billion compared to the US$1.37 billion reported in the same period in 2021 mainly due to volume growth and market recovery from the impact of the pandemic; favorable container mix; tariff adjustments at certain terminals; new contracts with shipping lines and services; higher revenues from ancillary services; contribution of MNHPI and the new terminals Manila Harbor Center Port Services, Inc. (MHCPSI) in the Philippines, ICTSNL in Nigeria and IRB Logistica in Brazil; partially tapered by decline in trade activities at certain terminals; and unfavorable translation impact mainly due to the depreciation of Philippine Peso (PHP)- and Australian Dollars (AUD)- based revenues at Philippine terminals and Victoria International Container Terminal (VICT) in Melbourne, Australia, respectively; and Euro (EUR)-based revenues at Madagascar International Container Terminal Services Ltd. (MICTSL) and Adriatic Gate Container Terminal (AGCT), in Madagascar and Croatia respectively. For the third quarter of 2022, gross revenues increased 20 percent from US$482.4 million to US$576.7 million.

Consolidated cash operating expenses in the first nine months of 2022 was 14 percent higher at US$438.1 million compared to US$383.2 million in the same period in 2021. The increase in cash operating expenses was mainly due to the cost contribution of MNHPI, the new businesses, mainly MHCPSI, ICTSNL and IRB Logistica; the increase in equipment and facilities-related expenses, mainly fuel; government-mandated and contracted salary rate adjustments, including benefits; contracted services in relation to volume; and the unfavorable foreign exchange impact of the Brazilian Reais (BRL)-based expenses at ICTSI Rio and Tecon Suape S.A. (TSSA) in Brazil; partially tapered by continuous cost optimization measures implemented; and the favorable foreign exchange effect mainly of Philippine Peso (PHP)-, Pakistani Rupee (PKR)-, Australian Dollar (AUD)-, Polish Zloty (PLN)- and Argentine Peso (ARS)-based expenses at Philippine, Pakistan, Australia, Poland and Argentina terminals, respectively.

Consolidated EBITDA increased 25 percent to US$1,038.0 million for the first nine months of 2022 from US$829.4 million in the same period in 2021 mainly due to higher revenues, partially tapered by the increase in cash operating expenses. Consequently, EBITDA margin increased to 63 percent in the first nine months of 2022 from 61 percent the previous year.

Consolidated financing charges and other expenses for the first nine months of 2022 increased by 24% to US$130.8 million from US$105.5 million in 2021 mainly due to higher interest and financing charges on borrowings primarily due to the issuance of US$300 million senior notes in November 2021 which funded the redemption of US$183.8 million worth of 5.875 percent and US$85.2 million of 4.875 percent senior guaranteed perpetual capital securities with call dates in 2022 and 2024, respectively; availment of short-term loans; the consolidation of the outstanding loan of the Company’s new terminal in the Philippines; and higher COVID-19 related expenses.

Capital expenditures, excluding capitalized borrowing costs, for the nine months ended September 30, 2022 amounted to US$281.3 million. These were mainly for ongoing expansion projects at Manila International Container Terminal (MICT) in the Philippines, VICT in Melbourne, Australia, ICTSI DR Congo S.A. (IDRC) in Matadi, Democratic Republic of Congo, Contecon Manzanillo S.A. de C.V. (CMSA) in Manzanillo, Mexico, and the acquisition of land in the Philippines and in Brazil for new projects. The Group’s capital expenditure budget for 2022 is approximately US$330.0 million. This will be utilized mainly for the payment of the concession extension upfront fees at Madagascar International Container Terminal Services Ltd. (MICTSL); ongoing expansion at the Company’s terminals in Democratic Republic of Congo, Australia, Mexico and Philippines; equipment acquisitions and upgrades; and for various maintenance requirements.

ICTSI is a leading global developer, manager and operator of container terminals in the 50,000 to 3.5 million TEU/year range. ICTSI operates in six continents and continues to pursue container terminal opportunities around the world.