Atlas Arteria (ALX) Q2 2024 earnings summary

Executive summary

• Proportionate toll revenue grew 3.8% year-over-year, driven by CPI/inflation-linked toll increases, despite minor traffic declines from events like French farmers' strikes.

• Net profit after tax was $114.2 million, down 16% year-over-year, mainly due to the new French TEILD tax impacting APRR.

• 2024 distribution guidance reaffirmed at 40.0 cps, supported by strong free cash flow and capital management initiatives, with reduced reliance on cash on hand.

• CEO transition announced, with Hugh Wehby appointed as incoming CEO, expected to start late 2024.

• On track to achieve 2025 emissions reduction target and advanced ESG initiatives, including gender balance and modern slavery commitments.

Financial highlights

• Toll revenue increased 10% to $69.2 million; total revenue up 10% year-over-year.

• Net corporate cash flow/free cash flow increased 12.7% to A$257.7 million in H1 2024.

• APRR operating revenue up 3.2% despite a 0.7% traffic decline, with tolls up ~3% from February.

• Group EBITDA impacted by TEILD, with APRR EBITDA down 2.9% and margin (excl. construction) at 72.3%.

• Segment revenues grew across Chicago Skyway, Dulles Greenway, and Warnow Tunnel, with traffic and revenue increases in most assets.

Outlook and guidance

• 2024 distribution guidance reaffirmed at 40.0 cps, with future distributions targeted at the same level, supported by growing free cash flow and capital management.

• CapEx at APRR expected to remain below €350 million per annum for the remainder of the concession.

• Chicago Skyway and APRR expected to have stronger H2 performance due to seasonal traffic patterns.

• Dulles Greenway SCC rate case outcome expected in H2 2024.

• Guidance subject to business performance, tax changes, FX movements, and other events.