VTTI ENERGY PARTNERS LP INVESTOR PRESENTATION

June 2016
MLP ENERGY CONFERENCE
ORLANDO
VTTI ENERGY PARTNERS LP
INVESTOR PRESENTATION
1
DISCLAIMER
Forward Looking Statements
This presentation contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. You are cautioned not to rely on these forwardlooking statements, which speak only as the date of this presentation. All statements, other than statements of historical facts, that address activities, events or developments
that the Partnership expects, projects, believes or anticipates will or may occur in the future, including, without limitation, future operating or financial results and future
revenues and expenses, future, pending or recent acquisitions, general market conditions and industry trends, the financial condition and liquidity, cash available for
distribution and future capital expenditures are forward-looking statements. These statements often include the words “could,” “believe,” “anticipate,” “intend,” “estimate,”
“expect,” “project” and similar expressions and are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying
words. These statements are based on current expectations of future events, are not guarantees of future performance and are subject to risks, uncertainties and other factors,
some of which are beyond the Partnership’s control and are difficult to predict. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual
results could vary materially from our expectations and projections. In addition to other factors described herein that could cause VTTI’s actual results to differ materially from
those implied in these forward-looking statements, negative capital market conditions, including a persistence or increase of the current yield on common units, which is higher
than historical yields, could adversely affect VTTI’s ability to meet its distribution growth guidance. Risks and uncertainties include, but are not limited to, such matters as:
future operating or financial results and future revenues and expenses; our future financial condition and liquidity; significant interruptions in the operations of our customers;
future supply of, and demand for, refined petroleum products and crude oil; our ability to renew or extend terminaling services agreements; the credit risk of our customers; our
ability to retain our key customers; including Vitol; operational hazards and unforeseen interruptions, including interruptions from terrorist attacks, hurricanes, floods or severe
storms; volatility in energy prices; competition from other terminals; changes in trade patterns and the global flow of oil; future or pending acquisitions of terminals or other
assets; business strategy, areas of possible expansion and expected capital spending or operating expenses; the ability of our customers to obtain access to shipping, barge
facilities, third party pipelines or other transportation facilities; maintenance or remediation capital expenditures on our terminals; environmental and regulatory conditions,
including changes in such laws relating to climate change or greenhouse gases; health and safety regulatory conditions, including changes in such laws; costs and liabilities in
responding to contamination at our facilities; our ability to obtain financing; restrictions in our credit facilities and debt agreements, including expected compliance and effect
of restrictive covenants in such facilities and debt agreements; fluctuations in currencies and interest rates; the adoption of derivatives legislation by Congress; our ability to
retain key officers and personnel; the expected cost of, and our ability to comply with, governmental regulations and self-regulatory organization standards, as well as standard
regulations imposed by our customers applicable to our business; risks associated with our international operations; compliance with the U.S. Foreign Corrupt Practices Act or
the U.K. Bribery Act; risks associated with our potential business activities involving countries, entities, and individuals subject to restrictions imposed by U.S. or other
governments; and tax liabilities associated with indirect taxes on the products we service. A further list and description of these risks, uncertainties and other factors can be
found in our Annual Report filed on Form 20-F which was filed with the United States Securities and Exchange Commission on April 29, 2016 and is available via the SEC’s
website at www.sec.gov. VTTI undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this
presentation.
Non-GAAP Financial Measures
Adjusted EBITDA and distributable cash flow are non-GAAP financial measures provided in this presentation. Adjusted EBITDA and distributable cash flow reconciliations to
the nearest GAAP financial measure are included in the Appendix to this presentation. Adjusted EBITDA and distributable cash flow are not defined by GAAP and should not
be considered in isolation or as an alternative to net income attributable to VTTI or other financial measures prepared in accordance with GAAP.
VTTI INVESTMENT HIGHLIGHTS
VTTI is a unique global terminal MLP, well differentiated from its peers
Cash flow
stability
Attractive growth
characteristics
Positive long-term
trends
Premium
portfolio
1099 filer
▪ Long-term, take or pay contracts with no direct commodity price exposure
▪ Reflected in cash flow performance since IPO
▪ Dropdown inventory approximately 3x existing MLP capacity
▪ Active in highly fragmented international terminal market
▪ Driven by supply-demand imbalances and product demand growth
▪ Not dependent on upstream investment in US (or elsewhere)
▪ High quality, strategically located assets with leading customer service
▪ Resilient financial performance in different market pricing structures
▪ VTTI unitholders receive an annual 1099
▪ No K-1s
3
HISTORY OF VTTI B.V.
VTTI B.V. has grown rapidly to become one of the largest global
independent storage companies
• Created to own, operate,
develop and acquire refined
petroleum product and crude
oil terminals, and related
energy infrastructure
~40% CAGR
• Today comprises 12 terminals
in 5 continents with ~1,000
employees
54.0
MMBbls
Acquisitions
2015
34.3
MMBbls
• Demonstrated track record of
rapid growth through
expansions and acquisitions
• Fee-based, growth-oriented
company with large global
portfolio in strategic locations
16.8
MMBbls
2.9
MMBbls
2006
Organic
(greenfield & brownfield
expansions)
3 Terminals
3 Continents
12 Terminals
5 Continents
4
VTTI Operating Assets
VTTI B.V. ASSET GROWTH
ETT
FTL 2
Rotterdam,
The Netherlands
Fujairah,
UAE
ETT 3
Rotterdam,
The Netherlands
Florida, USA
ETA
FTL
ETA 2
ETT 2
ATPC
ATB
ATPC 2
Amsterdam,
The Netherlands
Fujairah,
UAE
Amsterdam,
The Netherlands
Rotterdam,
The Netherlands
Antwerp,
Belgium
Johore,
Malaysia
Antwerp,
Belgium
2007
2008
2009
2010
2012
2013
BNK
VNT
Vitco 2
Navgas
VTTI Kenya
Vitco 3
VTTV
Kaliningrad,
Russia
Ventspils,
Latvia
Zarate,
Argentina
Lagos,
Nigeria
Mombasa,
Kenya
Zarate,
Argentina
Vasiliko,
Cyprus
2006
ROFO Assets
Seaport
Canaveral
Vitco
Zarate,
Argentina
2011
2014
6
ACQUISITIONS
6
GREENFIELD
9
BROWNFIELD
2015
ATB 2
Johore,
Malaysia
FTL 3
Fujairah,
UAE
5
VTTI GROUP ASSET SUMMARY
Ownership
Interest
Gross
Capacity
Capacity
in MLP
at 42.6%
Remaining
ROFO
Capacity
Europe / Amsterdam
100%
8.4
3.6
4.8
Europe / Rotterdam
90%
7.0
3.0
4.0
Europe / Antwerp
100%
4.2
1.8
2.4
Middle East / Fujairah
90%
7.6
3.2
4.4
Asia / Malaysia
100%
5.6
2.4
3.2
North America / Florida
100%
2.8
1.2
1.6
35.6
15.2
20.4
Region / Location
Wor ld: Eur ope Cent er ed
VTTI Terminal Locations (2)
MLP Opco
OpCo Capacity
VTTI BV Topco
Europe / Latvia
49%
7.5
̶
7.5
Europe / Russia
100%
0.3
̶
0.3
Europe / Cyprus
100%
3.4
̶
3.4
South America / Argentina
100%
1.3
̶
1.4
Africa / Kenya
100%
0.7
̶
0.7
Africa / Nigeria
50%
0.1
̶
0.1
Asia / Malaysia terminal expansion
100%
1.7
̶
1.7
Middle East / Fujairah expansion (COD 2016)
90%
2.7
̶
2.7
Cape Town (COD 2017)
100%
0.8
̶
0.8
TopCo Capacity (1)
18.5
̶
18.5
Total VTTI Capacity
54.1
15.2
38.9
<1.0
MMBbls
(1)
(2)
~8.5
MMBbls
Includes Fujairah expansion and Cape Town projects under construction
Circles denote relative terminal size
6
VTTI EP TERMINALS
• Portfolio currently comprises six terminals
located in four major global energy market hubs
• Well interconnected to sea, road, pipelines and
railroads
• ~400 tanks, comprising 35.5 million barrels of
capacity
• Newly constructed/retrofitted and fully
automated infrastructure with extremely efficient
operations
• Highly flexible, industry leading customer
service and responsiveness
• Significant opportunities for expansion
Europe
Locations
Middle East
Asia
North America
Amsterdam
Rotterdam
Antwerp
Fujairah
Johore (Malaysia)
Florida
Gross Capacity (MMBbls)
8.4
7.0
4.2
7.4
5.6
2.8
No. of Tanks
211
28
45
47
41
24
Refined products
Refined products
Refined products
Crude oil
Refined products
Crude oil
Refined products
Refined products
Products
Maximum draft (feet)
Connectivity
46
69
46
54
56
39
Ship
Barge
Road
Railroad
Ship
Barge
Road
Railroad
Pipeline
Ship
Barge
Road
Railroad
Pipeline
Ship
Barge
Road
Pipeline
Ship
Barge
Road
Ship
Barge
Road
Pipeline
7
SPONSORED BY THE WORLD’S LARGEST INDEPENDENT ENERGY TRADER
Vitol is the largest mover of physical oil in the world, for which VTTI provides critical infrastructure.
• Founded in Rotterdam, with primary operations in Houston, Geneva, London and Singapore
• 49 consecutive years of profitability with private investment grade credit rating since 1994
• Employee owned, with over 350 employee shareholders
• 2015 Revenues and Net Income of US$168Bn and US$1,600mm, respectively
World: Europe Centered
VITOL VOLUMES
6+ MMBbls
Riga, Latvia
Ventspils, Latvia
OF CRUDE OIL AND REFINED PRODUCTS
MARKETED BY VITOL DAILY
Kaliningrad, Russia
Amsterdam, Netherlands
Rotterdam, Netherlands
Calgary, Canada
Moscow, Russia
London, UK
Kiev, Ukraine
Belgium
Vancouver, Canada
Beijing, China
Tulsa, USA
Hamilton, Bermuda
El Segundo, USA
Houston, USA
Casablanca,
Morocco
Cape Canaveral, USA
Bogota, Colombia
30+
Lima, Peru
Cyprus
Bahrain
Taipei City, Taiwan
Dubai, UAE
Fujairah, Mumbai, India
UAE
Singapore
Karachi, Pakistan
Nairobi, Kenya
Jakarta, Indonesia
Tripoli, Libya
Accra, Ghana
Lagos, Nigeria
Abuja, Nigeria
Luanda, Angola
3 MMBbls
OF CRUDE DAILY
3 MMBbls
OF REFINED PRODUCT DAILY
Rio de Janeiro, Brazil
OFFICES
WORLDWIDE
Almaty, Kazakhstan
Mazeikiai, Lithuania
Geneva, Switzerland
Buenos Aires, Argentina
Cape Town, South Africa
200
SHIPS ON THE SEA AT ANY TIME
VTTI IS CRITICAL TO THE GLOBAL ENERGY VALUE CHAIN
Vitol’s Crude Oil & Oil Products Volumes (MMbpd)
4.0
2006
4.4
2007
4.0
2008
6.0
5.1
5.2
5.0
2010
2011
2012
5.3
5.1
2013
2014
4.4
2009
2015
Source: Public Filings
9
LONG-TERM TRENDS SUPPORTIVE OF INTERNATIONAL TERMINAL DEMAND
~125%
~37%
~55%
Source: BP Statistical Review
• 55% increase in oil demand in
last 30yrs...
Source: BP Statistical Review
• ...whilst regional flows have
increased at much faster rate
Source: IEA
• Strong growth in demand
forecast, with continued
positive benefit to VTTI
10
REGIONAL IMBALANCES AND GROWING OVERALL DEMAND
•
•
•
•
Product Balances
390
(947)
2014
Diesel/Gasoil
2020
Gasoline
1,960
1,850
2014
2020
Gasoline
Diesel
Fuel Oil
Mbpd
VTTI Terminals
Middle East
Diesel/Gasoil Balances
Product Balances
Mbpd
Mbpd
416
(406)
Malaysia / Australia
Mbpd
United States Gulf Coast
Northwest Europe
International oil trade flows have and continue to grow steadily, driving need for midstream infrastructure
Ongoing refinery closures in OECD countries and new worldscale refineries in non-OECD countries
Differential quality specifications between and within regions
New centres of demographic and GDP growth
713
471
188
(324)
2014
2020
Diesel/Gasoil
Gasoline
625
41
2014
2020
Diesel/Gasoil Balances
Source: Wood Mackenzie
11
STRONG PERFORMANCE THROUGH COMMODITY PRICE CYCLES
Contango
Brent Spot Price
Brent 12m Contango
Contango
Backwardation
(1)
Data shown is for VTTI B.V. as a whole, 2010 and 2011 utilization impacted by acquisition and upgrade of new terminal.
Cumulative rate increase is shown relative to 2007
Source: Bloomberg for price data
12
STABLE FEE-BASED REVENUES
Storage Fees
•
Fixed monthly fee paid for storage or
throughput
•
"Take-or-pay" basis independent of actual
usage, i.e. zero volume risk and no direct
commodity price risk
Ancillary Services
• Ancillary fees are paid for services including
blending, heating, and transferring products
between tanks or to rail or truck
• No direct commodity price risk
Excess Throughput
• Excess throughput fees are paid if total
number of "tank turns" for the year exceed the
contractually agreed threshold
• No direct commodity price risk
13
FINANCIAL PERFORMANCE SINCE IPO
• Average: c.$50m per quarter
• Top quartile distribution growth
• Average c.1.15x vs Target 1.10x
14
VTTI GROUP TERMINAL CAPACITY (MMBbls)
60
54.0
50
18.5
40
30
20.4
20
15.1
12.8
2.3
10
0
Q2 2015
1.
2.
Dropdown
Q3 2015
VTTI Operating
VTTI BV
Total
Numbers shown are on gross ownership basis
Includes greenfield Cape Town project
15
GROWTH OPPORTUNITIES
Multiple sources of significant growth
Drop downs
Organic growth
Acquisitions
ROFO on all current and future VTTI
B.V. assets
Continuously evaluating organic
development opportunities
Highly fragmented international
terminaling market provides
opportunity for additional consolidation
Assets outside of MLP:
5.0 MMBbls of organic projects
completed 2015 (Cyprus, 3.4
MMbls, Malaysia Phase II, 1.6
MMbls)
20.4 MMBbls gross storage capacity
(57.4% proportional) in VTTI Operating
18.5 MMBbls gross storage capacity at
VTTI B.V. (including assets under
construction)
Progressing number of other
projects including Fujairah (2.7
MMBbls) and Cape Town (0.8
MMBbls storage)
~40MMbls
~10MMbls
of gross terminal storage capacity
available for dropdowns
of terminal storage capacity recently
completed, under construction or
planned
~3 Bn of capacity globally vs ~1 Bn US
Top 10 independents own 16% outside
US vs 53% in US
NON U.S. STORAGE CAPACITY
Top 10
independents
16%
3.3
BNBbls
Balance of
capacity
84%
Source: PortStorage Group-OPIS/STALSBY TankTerminals.com
Database
16
Q1 2016 CORPORATE AND OPERATING REVIEW
• Annual Report on Form 20-F 2015 filed
Corporate
Update
• Shelf Registration Statement on Form F-3 filed, registering $500m of common
units
• RCF was reduced from €359m to €300m in January 2016
• Top quartile distribution growth rate maintained
• Portfolio utilization levels approximately 100% excluding maintenance
Operating
Highlights
• Strong ancillary revenue performance in Q1 2016
• Throughput increased versus Q1 2015 prior year
• Maintenance capex spending levels below run rate levels due to timing of spend
17
Q1 2016 FINANCIAL AND DEVELOPMENT REVIEW
• Malaysia Phase 2 assets performing well since commissioning in 2015 (1)
Growth
Projects
• Fujairah expansion undergoing commissioning in Q2 2016 adding further
2.7MMbls to drop down inventory - on time and on budget
• Cape Town project construction well underway
• Continuing to assess opportunities within and outside existing business
• Adjusted EBITDA for Q1 2016 of $49.9m positively impacted by non-rental
revenue outperformance
Financial
Highlights
• Increased distribution by 3.1% over prior quarter in line with mid-teen annual
distribution growth target from $0.3015 to $0.31085 per unit
• Net debt implies a net debt to annualized Adjusted EBITDA ratio of 2.6x(2)
• Extension of hedging program to Malaysian terminal
(1)
(2)
Malaysian Phase 2 assets are economically for the benefit of VTTI B.V.
Excludes affiliate debt and restricted cash
18
Q1 2016 SUMMARY FINANCIALS
Reconciliation of Adjusted EBITDA to Distributable Cash Flow
(in US$ millions)
Q1 2016
Q4 2015
Adjusted EBITDA
49.9
47.6
Cash interest expense
(7.7)
(4.9)
0.0
0.0
(3.8)
(4.7)
(24.1)
(24.3)
Distributable cash flow
14.3
13.7
Total distribution
12.8
12.4
Coverage ratio
1.12x
1.10x
Cash income tax expense
Maintenance capital expenditures
Cash flow attributable to non-controlling interest
• Adjusted EBITDA of $49.9m benefited from
ancillary revenue outperformance
• Maintenance capex below run rate
quarterly level due to timing of spend
• Interest increase reflects combined cost of
new debt instruments and historic interest
rate swaps
• Coverage ratio of 1.12x above stated target
of 1.10x
19
BALANCE SHEET AND HEDGING UPDATE
VTTI Energy Partners LP
(in US$ millions)
Actual
March 31, 2015
Cash
VIP
Cash and cash equivalents(1)
39.3
Debt(2)
$270mm RCF
~$180mm undrawn
VTTI B.V.
$75m
Loan
VTTI MLP
PARTNERS B.V.
VTTI Operating Revolving Credit Facility
106.2
US Private Placement
449.8
Net debt
516.7
Net debt / annualized Adjusted EBITDA
2.6x
Hedging Update
PUBLIC
€300mm RCF(3)
~$235mm undrawn
•
USD/EUR hedging program previously expired mid-2019
◦
VTTI MLP B.V.
(VTTI OPERATING)
•
USPP $245mm/€180mm
(1) Excluding restricted cash
(2) Excluding affiliate debt and debt issuance costs
(3) Facility reduced during Q1 from €359m to €300m
USD/MYR cost hedging program effective for Q2
◦
•
Extended at c.50% coverage to end of 2020
Match profile and tenor of Euro hedge
Hedging program expansion addresses remaining
material non-USD FX exposures
20
OUTLOOK
• Regional product imbalances and product demand growth continue to drive
fundamental requirement for storage
Market
Dynamics
• Contango market in certain products boosting demand, although financial
impact for VTTI limited due to largely contracted portfolio
• Strong ancillary revenue performance in Q1 reflects changes in specific
customer mix and behavior
• Opportunity to grow existing footprint and enter new markets through
development projects at the VTTI B.V. level
Growth
• Actively monitoring several ongoing processes and have ROFO on all current
and future VTTI B.V. terminaling assets
• Liquidity available to finance further growth
• Next dropdown expected in Q2/Q3 2016
Dropdowns
• Financing alternatives under consideration
• Q1 distribution growth in line with stated target
21
VTTI ENERGY PARTNERS LP
THANK YOU
22
VTTI ENERGY PARTNERS LP
APPENDIX
23
FINANCIAL DETAIL Q1 2016
Income Statement (unaudited)
(in US$ millions)
Three Months
Ended
March 31, 2016
Revenues
76.6
Operating expenses (incl. D&A)
Other operating income
Total operating income
Total other expense, net
Income before income tax expense
44.8
—
31.8
(7.7)
24.1
Income tax expense
Net income
(7.3)
16.8
Interest expense, including affiliates
Other items(1)
Depreciation and amortization
Income tax expense
Adjusted EBITDA
7.8
(0.2)
18.2
7.3
49.9
(1) Other items comprise primarily the impact of FX and related derivatives, other non-cash items on our financial results and the removal of the net
contribution of the ATB Phase 2 assets of our Malaysian terminal which is attributable to VTTI B.V.
24
FINANCIAL DETAIL Q1 2016
Balance Sheet (unaudited)
(in US$ millions)
Cash and cash equivalents(1)
Property, plant & equipment
March 31, 2016
39.3
1,244.4
Other assets
263.2
Total assets
1546.9
Long-term Debt(2)
552.9
Other liabilities
331.1
Total equity
662.9
Total liabilities and equity
Net debt
Net debt / Annualized adjusted EBITDA ratio
(1)
(2)
1,546.9
516.7
2.6x
Cash and cash equivalents excludes restricted cash
Debt excludes affiliate debt and includes debt issue costs
25
VTTI BV TOPCO ASSET OVERVIEW
Region
Europe
South America
Africa
Location
• Ventspils, Latvia
• Kaliningrad, Russia (2)
• Vasiliko, Cyprus
• Buenos Aires, Argentina • Mombasa, Kenya
• Lagos, Nigeria
VTTI Ownership
Interest
49% (3)
100%
100%
100%
100%
50% (4)
Gross Capacity (1)
(MMBbls)
7.5
0.3
3.4
1.3
0.7
0.1
2015 Capacity
Utilization
100%
NM (5)
73%
100%
NM (5)
NM (5)
# of Tanks
105
7
28
24
10
2
Products
• Refined products
• Crude oil
• Refined products
• Refined products
• Refined products
• Refined products
• Refined products
Maximum Draft (ft)
49
29
59
34
43
36
• Ship / Barge / Road
• Ship / Barge / Road
• Ship / Barge / Pipeline
• Ship / Barge / Road
Connectivity
• Ship / Road / Railroad • Ship / Barge / Road /
/ Pipeline
Railroad
Note: Does not include Johore and Fujairah expansions and Cape Town project under construction.
(1) Capacity statistics for 2015.
(2) VTTI in process of monetizing terminal in Russia.
(3) Remaining 51% owned by JSC Ventspils Nafta.
(4) Remaining 50% owned by Nidogas.
(5) Primarily throughput based contracts.
MISC-VITOL INVESTMENT PARTNERSHIP ("VIP") TRANSACTION
Vitol Contract Extensions (1)
Terminal
Country
Omnibus
Guarantee
Revised
Expiration
Capacity
Amsterdam Netherlands
Jun 19
Dec 19
2.9
Rotterdam
Netherlands
Jun 19
Sep 19
5.1
Fujairah
UAE
Jun 19
Jun 19
7.4
Antwerp
Belgium
Jun 17
Dec 18
2.3
Seaport
US
Jun 17
Mar 19
2.8
acquired the MISC 50% stake in VTTI B.V.
20.5
(1)
▪ VIP, an investment vehicle sponsored by Vitol, has
▪ Completed on 9 November 2015
▪ Two new VIP Board representatives replacing MISC
representatives
▪ Vitol contract extensions have replaced the VTTI
B.V. rate guarantee provided in the Omnibus
Agreement
Johore Malaysia terminal was not included in the Omnibus Guarantee; contract expiration is September 2019
27