Investors Update 407 International Inc. June 17 & 18, 2019 Di - PowerPoint PPT Presentation

Investors Update 407 International Inc. June 17 & 18, 2019

Di Disclaimer/Dis isclosure  This presentation has been prepared by 407 ETR.  The financial information presented is taken from quarterly and year-end statistics that have been disclosed publicly.  All financial amounts are shown in Canadian dollars unless otherwise indicated.  Additional information relating to 407 ETR and / or 407 International, including the 2018 Annual Information Form dated February 7, 2019, can be accessed on SEDAR.  The statements about expected future events and financial and operating results are forward- looking. Forward-looking statements may include words such as anticipate, believe, could, expect, goal, intend, may, outlook, plan, strive, target and will. These statements reflect internal projections, expectations, future growth, performance and business prospects and opportunities, and, as they are subject to a number of risks and uncertainties, you are cautioned not to put undue reliance upon such statements as they may differ from actual results and developments. 2

Sh Sharehold lders

40 407 7 In International l Sh Sharehold lders, May 31 31, , 20 2019 19 SNC Lavalin: 16.77%* Engineering, construction and investor in infrastructure projects. Developer Cintra: 43.23% and Initial Investor. 100% subsidiary of Ferrovial. Owns and operates toll roads worldwide. Developer and Initial Investor. CPPIB: 10% + 30% Canada Pension Plan Investment Board. Over $368.5B under mgmt. Bought 10% of Cintra Controlled by CPPIB interest and Intoll in 2010. * SNC-Lavalin announced that it will sell 10.01% of the shares of the Company. 4

2018 Hig ighli lights

20 2018 18 Hig ighli lights 2018 2017 % Variance Traffic/Trips (in millions) 126.625 125.738 0.7% Average Workday Number of Trips (in thousands) 415.429 413.381 0.5% VKTs (in millions) 2,747.482 2,708.588 1.4% Average Trip Length (kilometres) 21.70 21.54 0.7% Operations Unbillable Trips (percent) 2.36 2.26 4.4% Average Revenue per Trip ($) 10.86 9.96 9.0% Transponder Penetration Rate (percent) 82.1 82.1 0.0% Transponders in Circulation as at December 31 1,525,396 1,434,485 6.3% 2018 2017 % Variance $ millions Revenues 1,390.3 1,267.7 9.7% Financials Operating Expenses 179.7 163.9 9.6% EBITDA 1,210.6 1,103.8 9.7% Net Income 539.0 470.1 14.7% Cash Balance (December 31) 308.1 763.1 -59.6% 6

20 2018 18 EBIT ITDA Hig ighli lights EBITDA and EBITDA/Revenues ($Millions) 1,300 87.08% + $106.8 million 87.08% 87.08% 1,200 87.07% +9.7% 87.07% 1,100 87.07% 9.7% 87.07% increase to EBITDA 1,000 87.07% 900 87.07% 2017 2018 7

20 2018 18 Operatin ing Expenses 2017 2018 3% 5% 14% 6% 11% 21% 14% 13% Systems Operations 15% Customer Operations $163.9 Highway Operations $179.7 19% million General & Administration 20% million Contract 44% 47% 46% 8

Financial Fin l Performance CAGR 9.8% Operating Expenses ($Millions) ($Millions) CAGR 3.1% Revenues (2008-2018) 9.7% 1300 (2008-2018) 1300 1200 1200 1100 1100 1000 1000 900 900 800 800 700 700 600 600 500 500 400 400 9.6% 300 300 200 200 100 100 0 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 EBITDA Revenue/Trip, Expenses/Trip and Toronto CPI ($Millions) ($) CAGR 11.3% 12 12.00% 1300 (2008-2018) 9.7% 1200 10 10.00% 1100 CAGR 8.5% 1000 8 8.00% 900 (2008-2018) 800 700 6 6.00% 600 500 CAGR 2.0% 4 4.00% 400 (2008-2018) CAGR 1.6% 300 CPI 2 (2008-2018) 2.00% 200 Expenses/Trip 100 0 0 0.00% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 9

Traffic ic Perf rform rmance

20 2018 18 Traffic Performance Millions of Millions of Traffic Results 1.4% Trips VKT 800 34 traffic growth in VKT 33 750 32 0.7% 700 31 30 increase in trips 650 29 600 28 0.7% 27 550 increase in average 26 500 25 trip length Q1 Q2 Q3 Q4 2017 VKT 2018 VKT 2017 Trips 2018 Trips 11

2018 20 18 Traffic Performance – Weather Precipitation in High Traffic Periods (Major Events) Precipitation in Low Traffic Periods (Major Events) mm mm mm Cumulative mm Cumulative 2018 2017 100 600 80 350 2018 2017 70 300 500 80 60 250 400 50 60 200 300 40 150 40 30 200 100 20 20 100 50 10 0 0 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec  2018 experienced more adverse weather events impacting high traffic periods compared to 2017 and fewer events in low traffic periods.  2018 experienced extreme weather events including record low temperatures in April 2018 and major flooding in August 2018. 12 ℃ 12

Traffic Performance CAGR 0.99% CAGR 0.68% Million (2007-2018) KM (2007-2018) Total Trips Average Trip Length 130 22.00 +0.7% +0.7% 21.50 125 21.00 120 20.50 115 20.00 110 19.50 105 19.00 18.50 100 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 CAGR 1.67% CAGR 0.87% Total VKT Average Workday Trips Million (2007-2018) (2007-2018) Thousands 3,000 +1.4% 425 +0.5% 2,500 410 2,000 395 1,500 380 1,000 365 500 0 350 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 13

Tran ansponder Usa sage Transponders in Circulation Transponder Penetration Thousands +6.3% 82% 84% 1,550 1,450 1,350 82% 1,250 1,150 1,050 80% 950 850 750 78% 650 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Light Heavy 1.5 million transponders in circulation 14

Unbill illable le Traffic Management works actively on strategies to reduce unbillable traffic  Deployment of CMOS and Front Plate cameras to reduce Unbillable/Unreadable Trips unreadable trips 5.0%  Installation of Seeker to improve transponder detection 4.0%  Enhanced matching algorithm  Reduced unreadable trips through improved VEP 3.0% 2.4%  Vehicle fingerprinting technology 2.0%  Toll evasion enforcement strategies 1.0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 15

Typic ical l Workday Traffic ic Dis Distrib ibution Hourly Transactions (on Hour) 100,000 90,000 80,000 70,000 Peak Period Number of Transactions 60,000 Peak Hours 50,000 Transponder 40,000 30,000 Video 20,000 Total 10,000 0 12:00am 1:00am 2:00am 3:00am 4:00am 5:00am 6:00am 7:00am 8:00am 9:00am 10:00am 11:00am 12:00pm 1:00pm 2:00pm 3:00pm 4:00pm 5:00pm 6:00pm 7:00pm 8:00pm 9:00pm 10:00pm 11:00pm Time 16

Co Constructio ion

Curr rrent an and Ulti ltimate Nu Number of of Lan Lanes 18

Remain inin ing Lan Lane Expansion E1 W1-W3 C1 C2 C3-C6 C7 E2 One additional lane Two additional lanes One additional lane One additional lane Maximum lane One additional lane Two additional lanes in each direction in each direction in each direction in each direction in each direction capacity reached in each direction 19

Additional Lan Lanes in in th the Eas ast 20

Operations Yar ards an and Build ildin ings – 20 2018 18 Im Improvements New OPP Detachment New East Patrol Yard Rebuild of Steeles Patrol Yard 21

Operations Yar ards an and Build ildin ings – 20 2018 18 Im Improvements Rebuild of Steeles Patrol Yard New East Patrol Yard 22

Hig ighway Operations by y th the Nu Numbers 198 gantries 1,218 km of lanes across 108 km 68 km of concrete pavement (central) 40 km of asphalt (east and west) 40 interchanges (seven 400-series highways) 212 bridges

2019 Toll ll Rates

20 2019 Toll ll Ra Rates $6.96 2013 average revenue per trip $10.86 2018 average revenue per trip 25

40 407 7 ETR Com ompared to o Alt lternate Routes 26