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Edited Transcript of SMSAAM.SN earnings conference call or presentation 12-Aug-19 3:00pm GMT

Q2 2019 Sociedad Matriz SAAM SA Earnings Call

LAS CONDES Aug 16, 2019 (Thomson StreetEvents) -- Edited Transcript of Sociedad Matriz SAAM SA earnings conference call or presentation Monday, August 12, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Macario Valdés Raczynski

Sociedad Matriz SAAM S.A. - CEO & GM

* Paula Raventós

Sociedad Matriz SAAM S.A. - IR Officer

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Presentation

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Paula Raventós, Sociedad Matriz SAAM S.A. - IR Officer [1]

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Good morning, everyone, this is Paula Raventos, SAAM's Head of Investor Relations. Thank you for joining us today for our results conference call for the second quarter of 2019. I'm here with Macario Valdés, SAAM CEO; and Hernán Gómez, SAAM CFO. We would like to inform you that this call is being recorded. After the company's remarks are completed, there will be a question-and-answer section through the webcast platform.

Before proceeding, let me mention that the information discussed today may include forward-looking statements regarding the company's financial and operating performance. We undertake no obligation to update and maintain updated any such forward-looking statements after the date of this conference call. All projections are subject to risks, uncertainties and other factors that could cause actual results to differ materially from our current expectations. Furthermore, please refer to the detailed note in the company's presentation disclaimer regarding forward-looking statements.

I will now turn the call over to Macario Valdés, SAAM CEO. Please go ahead.

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Macario Valdés Raczynski, Sociedad Matriz SAAM S.A. - CEO & GM [2]

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Thank you, Paula. Good morning, and thanks to all for joining us today. I would like to start with some top line highlights, then we'll move on to financial results, and finally, I'll close with an outlook for the rest of the year.

Let's start with Page 4. For the 6 months ended June 30, 2019, the company reported a net income of $31 million, a 55% rise over the same period last year. For the second quarter, SAAM reported net income of $13.1 million, up 10% from the same period in 2018. During this period, we have capitalized on our new operating model. Our Port Terminal have renewed several commercial contracts. The Towage Division reported improved results from special services at foreign operations, and the Logistics Division now has a more efficient structure, which leave us in a better position to face the retail industry's current sluggish business cycle.

Some highlights in the Towage Division during the quarter include starting operations at the new AltaGas propane gas export terminal in Canada, where SAAM provides towage services and closed a long-term contract with RIPET that included a construction of a new tugboat. Within our fleet, this new tug is the first one with ecological certification for emissions control. Another 2 tugs from our Canadian fleet will be relocated to provide additional vessel support to this terminal. This long-term agreement is a big milestone for our company.

Also, in Guatemala, the division signed a contract for a second tug to be put into operation. The new high-powered tug will meet requirements set by Quetzal Port Authority in its contract with SAAM for berthing and unberthing services.

The Port Terminals Division began work at Terminal Portuario Guayaquil, TPG, to expand the dock by 180 meters and deepen it to 13 meters. This will give us 660 meters of dock, which will allow us to receive vessels of 367 meters in length.

Also, at Antofagasta Terminal Internacional, we're signing a contract to refinance all of the company's debt.

In labor relations, we will continue to promote trust-based relationships and have made progress toward concluding collecting bargaining processes at our 3 divisions. However, several processes still lie ahead.

In the Logistics Division, Aerosan opened a new distribution center at the Santiago international airport.

Now let's move on to Page 6 and review the company's aggregate results. Sales for the quarter totaled $124 million and consolidated EBITDA was $40.5 million or up 9% when compared to the same quarter last year. We have successfully dealt with competitive conditions present in our industry, including pressure on rates and low volumes. Estimates for the year 2019 predict global container trade growth of 3.4% versus 5.2% in 2018. In Chile, according to government statistics from public and concession ports, container movements for the first half of this year were up only 0.12%.

From the next page, we can see the net income reached $31 million for the first half of 2019. By business division, the Port Terminals Division accounted for close to 66% of the improvements in earnings as a result of greater efficiencies and increased business with particularly strong performances from terminals outside Chile.

Our Logistics Division once again saw a substantial improvement in earnings mainly due to cost and expense efficiencies. Corporate expenses were also down because of efficiencies and lower project expenses.

Broken down by business divisions, in the next page, we can see that results were stable in our Towage Division. Despite a slight decrease of numbers of maneuvers, we maintained stable results, where lower volumes from Central America were offset by increased activity in North America because of special maneuvers and reduced cost and expenses.

Regarding the acquisition of Boskalis interest in our joint ventures, we have moved forward with this conception, and hope to close the deal in the third quarter of 2019.

On Slide 10, we can see that the business -- how the business will look like post-acquisition, with an exceptional coverage at over 60 ports in 9 countries, the fleet of 155 tugs and an annual operating volume of more than 100,000 maneuvers per year. This acquisition will give us a privileged position to take advantage of the consolidation within the towage industry, where we believe that we can play a leading role.

Now if we turn to Slide #11, in the Port Terminals Division, the lower volume of import and warehousing services in some of our foreign terminals was offset by efficiencies from the new operating model and a rise in container and bulk volumes at Chilean port terminals. All in all, we were able to achieve stable results despite this increasingly dynamic and competitive environment.

Now the Logistics Division reported a drop in sales during the quarter due to a sluggish retail industry and discontinuation of some of our business lines. Nevertheless, we've been able to improve our results due to a more efficient structure and greater volumes of our port services. In Chile, we are facing a challenging environment for the retail sector with stagnant domestic consumption.

I would like now to conclude this presentation with an outlook by business area for the next months of this year. For the remaining part of this year, we're forecasting stable results. Today, we have a more resilient structure that will help us confront an ever-challenging context with strong competition that has been further strengthened by this freight work. We've already made major investments. In the last 4 years, we have invested over $500 million to equip our principal port operations and tugs with state-of-the-art infrastructure and equipment to increase their competitiveness and capacity to grow.

In the Towage Division, we hope to conclude the agreement to acquire the remaining interest of the joint venture with Boskalis in the coming months, which will enable us to consolidate operations in Canada, Mexico, Brazil and Panama. Also

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Questions and Answers

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Paula Raventós, Sociedad Matriz SAAM S.A. - IR Officer [1]

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We are sorry. Now the (inaudible) is open for questions. If you have any questions, please send it through the webcast. Please hold while we wait for questions.

We have no questions, so this concludes today's presentation. Thank you very much for joining us today on this conference call. And we look forward to talking to many of you over the coming days. Thank you. Bye.