10-11-2017

ICTSI 9M2017 net income up 5% to US$149.3M

International Container Terminal Services, Inc. (ICTSI) today reported unaudited consolidated financial results for the first nine months of 2017 posting revenue from port operations of US$918.3 million, an increase of 10 percent over the US$835.0 million reported for the first nine months of 2016; Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of US$434.9 million, 11 percent higher than the US$390.3 million generated in the first three quarters of 2016; and net income attributable to equity holders of US$149.3 million, up five percent from the US$141.9 million earned in the same period last year due to the continuing ramp-up at the new terminal in Matadi, Democratic Republic of Congo (DRC); strong operating income contribution from the terminals in Iraq, Mexico, Honduras, Brazil and Madagascar; and the one-time gain on the termination of the sub-concession agreement in Lagos, Nigeria. 

The increase in net income was tapered by higher interest and financing charges, higher depreciation and amortization, start-up costs at the Company’s terminal in Melbourne Australia and increase in the Company’s share in the 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, which increased from US$4.7 million in the first three quarters of 2016 to US$25.6 million for the same period in 2017 as the company started full commercial operations at the beginning of the year.  Excluding the one-time gain on the termination of the sub-concession agreement in Nigeria, consolidated net income attributable to equity holders would have been flat in the first nine months of 2017.  Diluted earnings per share for the period was 12 percent higher at US$0.058 from US$0.052 in 2016. 

For the quarter ended September 30, 2017, revenue from port operations increased 11 percent from US$284.2 million to US$314.6 million; EBITDA was nine percent higher at US$145.1 million from US$132.9 million; and net income attributable to equity holders was down 16 percent from US$54.6 million in 2016 to US$45.7 million in 2017 mainly due to higher interest and financing charges, higher depreciation and amortization, start-up costs at the Company’s terminal in Melbourne, Australia which started commercial operations in the second quarter of 2017 and increase in the Company’s share in the net loss at its joint venture container terminal project in Buenaventura, Colombia.  Diluted earnings per share for the quarter was 19 percent lower at US$0.017 from US$0.021 in 2016. 

ICTSI handled consolidated volume of 6,836,611 twenty-foot equivalent units (TEUs) in the first nine months of 2017, six percent more than the 6,435,192 TEUs handled in the same period in 2016.  The increase in volume was primarily due to continuing improvement in global trade activities particularly in the emerging markets, continuing ramp-up at ICTSI’s operations in Basra, Iraq, new services at Manzanillo, Mexico and contribution of new terminals in Matadi, DRC and Melbourne, Australia.  Excluding the new terminals, consolidated volume would have increased by five percent. 

For the quarter ended September 30, 2017, total consolidated throughput was six percent higher at 2,291,207 TEUs compared to 2,170,559 TEUs in 2016.  Excluding the new terminals, consolidated volume would have increased by three percent in the third quarter of 2017. 

Gross revenues from port operations for the first nine months of 2017 increased 10 percent to US$918.3 million from the US$835.0 million reported in the same period in 2016.  The increase in revenues was mainly due to volume growth, tariff rate adjustments at certain terminals, new contracts with shipping lines and services, and the contribution from the Company’s new terminals in Matadi, DRC and Melbourne, Australia.  Excluding the new terminal in DRC and Australia, consolidated gross revenues would have increased by six percent. 

For the third quarter of 2017, gross revenues increased 11 percent from US$284.2 million to US$314.6 million.  The strong revenue growth in the third quarter was driven by the volume growth and tariff rate adjustments at certain terminals, new contracts with shipping lines and services and contribution from the new terminals.  Excluding the new terminals, consolidated gross revenue for the third quarter would have increased six percent. 

Consolidated cash operating expenses in the first three quarters of 2017 was 11 percent higher at US$343.4 million compared to US$310.1 million in the same period in 2016.  The increase in cash operating expenses was mainly due to the cost contribution of the new terminal operations in Matadi, DRC and Melbourne Australia, higher throughput and  increase in fuel prices and power rates at certain terminals; and unfavorable translation impact of the BRL appreciation at Suape, Brazil.  The increase was tapered by the additional benefits of the on-going group-wide cost optimization initiatives and the favorable translation impact of Philippine Peso and Mexican Peso denominated expenses at the various terminals in the Philippines and in Manzanillo, Mexico, respectively. 

For the quarter ended September 30, 2017, total cash operating expenses of the Group increased 15 percent to US$121.7 million from US$105.9 million in 2016. 

Consolidated EBITDA for the first nine months of 2017 increased 11 percent to US$434.9 million, from US$390.3 million in 2016 mainly due to strong volume and revenue growth combined with the additional benefits of the on-going group-wide cost optimization initiatives and positive contribution of the new terminal in Matadi, DRC tapered by start-up costs and fixed port lease expense at Melbourne, Australia. 

Consequently, EBITDA margin improved to 47.4 percent in the first nine months of 2017 from 46.7 percent in the same period in 2016.  Consolidated EBITDA for the third quarter of 2017 increased by nine percent to US$145.1 million from US$132.9 million in the same period in 2016.  EBITDA margin, on the other hand, was slightly lower at 46.1 percent in 2017 compared to the 46.8 percent margin in 2016. 

Consolidated financing charges and other expenses for the first nine months increased 30 percent from US$66.8 million in 2016 to US$86.9 million in 2017 primarily due to higher average loan balance, lower capitalized borrowing cost on qualifying assets as the Company completed the development of the initial stage of the port facilities at VICT, ICTSI Iraq and IDRC and the acceleration of the debt issue cost due to the termination of the Company’s revolving credit facilityFor the third quarter, consolidated financing charges and other expenses increased 33 percent from US$21.0 million in 2016 to US$27.9 million in 2017. 

Capital expenditure for the first three quarters of 2017 amounted to US$113.5 million, approximately 47 percent of the US240.0 million capital expenditure budget for the full year 2017.  The established budget is mainly allocated for the completion of the initial stage development of the Company’s greenfield projects in Democratic Republic of Congo and Iraq; the second stage development of the Company’s project in Australia; continuing development of the Company’s container terminals in Mexico and Honduras; and capacity expansion in its terminal operations in Manila. 

In addition, ICTSI invested US$25.2 million in SPIA in Buenaventura, Colombia to fund the completion of the initial phase and to finance the start-up operations of its joint venture container terminal project with PSA International. 

Source: Press Release

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