ICTSI Net Income Up 29% to US$184.9M in 9M2019; Diluted EPS climbed 48% to US$0.069

12 November 2019

Throughput grew 6% to 7.6 million TEUs
Revenues increased 10% to US$1,107.3 million
EBITDA 14% higher at US$624.3 million

Enrique K. Razon, Jr., Chairman and President of ICTSI said: “ICTSI has continued to deliver strong financial performance driven by organic volume growth, diligent cost management, and the continued ramp up of newer terminals. Positive progress has been made across the business which in part has been enabled by the prudent investments we make in our brownfield terminals.”

“While we remain conscious of the current geopolitical trade tensions, we are well-positioned to deliver value for all our stakeholders.”

International Container Terminal Services, Inc. (ICTSI) today reported unaudited consolidated financial results for the first nine months of 2019 posting revenue from port operations of US$1.1 billion, an increase of 10 percent over the US$1.0 billion reported for the same period in 2018; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$624.3 million was 14 percent higher than the US$546.4 million generated in the first three quarters of 2018. Net income attributable to equity holders of US$184.9 million grew by 29 percent compared to the US$142.9 million earned in the same period last year mainly due to strong operating income contribution from the terminals in Democratic Republic of Congo, Iraq, Mexico, and Manila and Subic in the Philippines; new contracts with shipping lines and services at Victoria International Container Terminal (VICT) in Melbourne, Australia; continuing ramp-up at the new terminals in Papua New Guinea; and a decrease in equity in net loss at Sociedad Puerto Industrial Aguadulce S.A. (SPIA), its joint venture container terminal project with PSA International Pte Ltd. (PSA) in Buenaventura, Colombia. The growth was partially tapered by the acceleration of debt issue costs associated with the partial prepayment of Euro-denominated term loan in July 2019 and the non-recurring gain from the interest rate swap related to the prepayment of the project finance loan at its terminal operations in Manzanillo, Mexico in 2018. Excluding the non-recurring items, consolidated net income attributable to equity holders would have increased by 34 percent in 2019. Diluted earnings per share climbed 48 percent to US$0.069 from US$0.047 in the same period in 2018.

For the quarter ended September 30, 2019, revenue from port operations increased three percent from US$344.0 million to US$355.6 million; EBITDA was five percent higher at US$199.9 million from US$190.3 million; and net income attributable to equity holders was up seven percent from US$52.6 million in 2018 to US$56.4 million in the same period in 2019. Diluted earnings per share for the quarter was 21 percent higher at US$0.022 compared to US$0.018 in 2018.

ICTSI handled consolidated volume of 7,590,090 twenty-foot equivalent units (TEUs) in the first nine months of 2019, six percent more than the 7,152,392 TEUs handled in the same period in 2018. The increase in volume was mainly due to continuing ramp-up at ICTSI’s new terminals in Lae and Motukea in Papua New Guinea; improvement in trade activities in Subic, Philippines, Matadi, Democratic Republic of Congo and Basra, Iraq; new contracts with shipping lines and services at Victoria International Container Terminal (VICT) in Melbourne, Australia, Baltic Container Terminal (BCT) in Gdynia Poland, Adriatic Gate Container Terminal (AGCT) in Rijeka, Croatia and Contecon Manzanillo S.A. (CMSA) in Manzanillo, Mexico. For the quarter ended September 30, 2019, total consolidated throughput was five percent higher at 2,548,175 TEUs compared to 2,438,137 TEUs in 2018.

Gross revenues from port operations for the first nine months of 2019 increased 10 percent to US$1.1 billion compared to US$1.0 billion reported in the same period in 2018. The increase in revenues was mainly due to volume growth; tariff adjustments at certain terminals; new contracts with shipping lines and services; increase in revenues from storage and ancillary services; and the contribution from the Company’s new terminals in Lae and Motukea in Papua New Guinea. For the third quarter of 2019, gross revenues increased three percent to US$355.6 million from US$344.0 million last year.

Consolidated cash operating expenses in the first nine months of 2019 was three percent higher at US$341.6 million compared to US$331.6 million in the same period in 2018. The increase in cash operating expenses was mainly due to higher volume; government-mandated and contracted salary rate adjustments at certain terminals; and the full nine months cost contribution of the new terminals in Lae and Motukea in Papua New Guinea. This was partially tapered by continuous monitoring of cost optimization measures and favorable translation impact of Pakistani Rupee expenses at Karachi, Pakistan, Australian dollar expenses at Melbourne, Australia and Brazilian Reais expenses at Suape, Brazil.

Consolidated EBITDA for the first nine months of 2019 increased 14 percent to US$624.3 million from US$546.4 million in 2018 mainly due to strong revenue growth and minimal cash operating expense increase. Consequently, EBITDA margin increased to 56 percent in the first nine months of 2019 from 54 percent in the same period in 2018.

Consolidated financing charges and other expenses for the first nine months increased seven percent from US$89.2million in 2018 to US$95.2 million in 2019 primarily due to the acceleration of debt issue costs associated with the partial prepayment of Euro-denominated term loan in July 2019.

Capital expenditures excluding capitalized borrowing costs for the first nine months of 2019 amounted to US$177.7 million, approximately 47 percent of the US380.0 million capital expenditures budget for the full year 2019. The estimated capital expenditure budget will be utilized mainly for the ongoing expansion projects in Manila, Mexico and Iraq; equipment acquisitions and upgrades; and for maintenance requirements.

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