NELTUME PORTS INVESTMENT INVESTOR PRESENTATION SEPTEMBER 12, 2018 - PowerPoint PPT Presentation

NELTUME PORTS INVESTMENT INVESTOR PRESENTATION SEPTEMBER 12, 2018

LEGAL DISCLAIMER Statements made by representatives for ATCO Ltd. and Canadian Utilities Limited and information provided in this presentation may be considered forward-looking statements. By their nature, such statements are subject to numerous known and unknown risks and uncertainties and therefore actual results differ materially from those currently anticipated. ATCO Ltd. and Canadian Utilities Limited disclaim any intention or obligation to update or revise such statements. Due to the nature of the Corporation’s operations, quarterly revenues and earnings are not necessarily indicative of annual results. NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 2

NANCY C. SOUTHERN CHAIR & CHIEF EXECUTIVE OFFICER

INVESTMENT SUMMARY ATCO is purchasing a 40 per cent interest in Neltume Ports for approximately $450M CAD. 40% 60% • 16 port operations & 3 stevedoring businesses • In 4 countries: Chile, Uruguay, Argentina and Brazil NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 4

ORGANIZATIONAL STRUCTURE 100% 52.4% 40% 100% Structures & Logistics Energy Ports and Real Estate Infrastructure Transportation The Neltume investment represents a fourth pillar in ATCO’s global portfolio. NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 5

ATCO FOCUS: GLOBAL ESSENTIAL SERVICES Energy Real Estate Housing Logistics & Water Transportation Agriculture NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 6

STRATEGIC RATIONALE Investment with a Exposure to Strong macro Portfolio, industry, trusted long-term growing global factors and and geographic partner with trade and economic diversification shared values transportation tailwinds NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 7

SIEGFRIED W. KIEFER PRESIDENT & CHIEF STRATEGY OFFICER

NELTUME PORTS OVERVIEW • Neltume Ports is a leading port operator and developer with a diversified range of terminals across South America and is headquartered in Santiago, Chile o 16 port terminals in 4 countries: Chile, Uruguay, Argentina and Brazil o 2 stevedoring companies in Chile, 1 in Uruguay o Approximately 3,900 employees o Approximately 51 M of tonnes transported annually. • Diversified volumes – minerals, consumer goods, pulps, agriculture, etc. • Diversified cargo types – containers, bulk, break-bulk NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 9

NELTUME PORTS OPERATIONS BY CARGO TYPE BY GEOGRAPHY 5% 11% Brazil Container 33% 20% Approx. Approx. Uruguay 48% Break Bulk 51 M 51 M Chile Tonnes Tonnes Bulk 64% Argentina 19% *Based on 100% of volumes of ports where Neltume Ports has an ownership stake NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 10

NELTUME PORTS DIVERSIFIED EARNINGS BY APPROXIMATE EARNINGS MIX Minerals & Multi- Resources Purpose Containers NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 11

PORT OVERVIEW Puerto Angamos (PANG) Montecon (MON) PERCENT TERMINAL PORT COUNTRY KEY CARGO OWNERSHIP TYPE Terminal Puerto Arica 35% CHL Container Mixed Terminal Puerto Angamos 40% CHL Multi Copper Terminal Graneles del Norte 40% CHL Dry Bulk Coal Puerto Mejillones 50% CHL Dry Bulk Coal/Copper Terminal Mejillones 50% CHL Liquid Bulk Sulfuric Acid Terminal Puerto Coquimbo 70% CHL Multi Copper Terminal Pacifico Sur (TPS) Terminal Pacifico Sur 60% CHL Container Fruit/Wine Puerto Coronel 17% CHL Multi Pulp/Wood Terminal Puerto Rosario 50% ARG Multi Roll-on Roll-off Montecon 100% URY Container Mixed Terminales Graneleras 33% URY Dry Bulk Soy Beans Uruguayas Terminal Ontur 20% URY Multi Agri./Pulp Sagres - Four Ports (TLRG, TLP, 86% BRA Multi Pulp/Wood TPP, TLG) NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 12

STRONG VOLUME GROWTH Consistent and growing volumes support stability of cash flows 2010 - 2017 55 4000 50.8 50 12% Cargo CAGR 3500 45 7% Container CAGR 3000 40 35.7 35.8 35.5 33.8 35 2500 29 2476 30 26.7 2320 2228 2000 2147 2047 25 22.5 1814 1767 1500 20 1546 15 1000 10 500 5 0 0 2010 2011 2012 2013 2014 2015 2016 2017 Cargo (M tonnes) Containers (k TEUs) *Based on 100% of volumes of ports where Neltume Ports has an ownership stake NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 13

GROWTH DRIVEN BY MACROECONOMIC TAILWINDS Strong macro economic growth indicators: FORECASTED AGGREGATE GROWTH • 16% Latin American GDP to outpace Canadian GDP growth 14% • Chile has been one of Latin America’s fastest‐growing economies averaging 3.5% GDP growth over the last 8 years. 12% • ​Global trends in electrification and energy will drive continued 10% demand to copper and other energy products. 8% 6% Correlation between GDP and cargo throughput growth: 4% • In South America, independent studies have shown that container 2% port throughput grows by a multiple of 1.6x - 3x of GDP growth. 0% • 2018F 2019F 2020F 2021F Neltume Ports has several container ports whose level of activity is highly correlated with GDP and well positioned to capture the South & Central America Canada Cargo Throughput continued growth in the region. Source: IMF World Economic Outlook, April 2018 Cargo Throughout Forecast: Drewry Economic Intelligence Research; Independent third party studies NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 14

GROWTH DUE TO RISING COPPER GLOBAL DEMAND GLOBAL FORECASTED COPPER CONSUMPTION Exposure to Growing Copper Global Demand: 26 • Chile represents approximately 28% of global copper production and owns the largest copper reserves in the world. 25 • Copper supply deficit starting in 2020 is expected to M TONNES spur new copper mine investment. The Wood Mckenzie Group Estimates that global copper demand will grow 24 by nearly 2% annually. • Several of Neltume’s ports ( Angamos, Mejillones and 23 Coquimbo) are focused on the Chilean copper industry and well positioned to capture this future export activity as they have some of the lowest average cash costs in the world. 22 2017 2018F 2019F 2020F 2021F 2022F 2023F NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 15

BROWNFIELD GROWTH POTENTIAL • A portion of ATCO’s investment may be used for berth expansions or additions of multi- purpose berths. • Berth expansions create increased draft that allows terminals to receive bigger ships & larger volumes. • Berth extensions or adding berths create additional growth potential. NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 16

GROWTH BY ACQUISITION AND CONSTRUCTION Acquisition of Rio Estiba and Increased Awarded port Construction of participation in Tender of TPS TGN Montecon, Sagres and Ontur via the Awarded port Construction of takeover of Partnership tender of TPA Puerto Mejillones Schandy TPS/MSC 1995 1996 2000 2003 2004 2006 2010 2012 2016 2017 2018 Acquisition of Increased Acquisition Puerto Coronel participation in TGU of Montecon Construction of TPR Construction of and Awarded Port Puerto Angamos Tender of TPC NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 17

DENNIS A. DECHAMPLAIN SENIOR VICE PRESIDENT & CHIEF FINANCIAL OFFICER

NELTUME PORTS INVESTMENT FINANCIAL HIGHLIGHTS • The Neltume investment is expected to be accretive to earnings per share in the first full year of ownership and thereafter. • Neltume generated approximately $90 million USD of EBITDA in 2017. • ATCO will fund its investment in Neltume with a combination of cash on-hand and funds from committed credit facilities. ATCO will later refinance a portion of this initial financing through a capital markets transaction. The transaction will not include a common equity issuance. • Funds from ATCO’s investment in Neltume will be used by the partnership to finance opportunities for growth. NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 19

KEY HIGHLIGHTS Additional platform for Geographic EPS Accretion continued growth Diversification Energy Real Estate Housing Logistics & Water Transportation Agriculture NELTUME PORTS INVESTMENT INVESTOR PRESENTATION 20

NELTUME PORTS INVESTMENT INVESTOR PRESENTATION SEPTEMBER 12, 2018