7e supp
ITEM NO: 7e_Supp_1_____ DATE OF MEETING: May 17, 2016 Port of Seattle Q1 2016 Financial Performance Report May 17, 2016 Q1 2016 Operating Income Summary Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Yea-End Projection Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Aeronautical Revenues 56,781 56,797 57,668 (872) -1.5% 253,100 261,019 (7,919) -3.0% SLOA III Incentive (894) (894) (894) - 0.0% (3,576) (3,576) - 0.0% Other Operating Revenues 69,298 73,434 69,708 3,725 5.3% 331,871 327,135 4,736 1.4% Total Operating Revenues 125,185 129,336 126,483 2,854 2.3% 581,395 584,578 (3,183) -0.5% Total Operating Expenses 67,108 69,740 80,420 10,680 13.3% 329,206 335,943 6,737 2.0% NOI before Depreciation 58,077 59,597 46,063 13,534 29.4% 252,189 248,635 3,554 1.4% Depreciation 40,771 41,085 40,737 (348) -0.9% 162,451 162,451 - 0.0% NOI after Depreciation 17,306 18,512 5,326 13,186 247.6% 89,738 86,184 3,554 4.1% Excluding Aeronautical revenues, other operating revenues were $73.4M, $3.7M, or 5.3%, higher than budget in Q1; and we are anticipating $4.7M above budget for the full year. Total Operating Expenses were $69.7M, $10.7M below budget in Q1; and we are forecasting a favorable budget variance of $6.7M for the full year. NOI before Depreciation is forecasting to be $252.2M, $3.5M over budget for the year. Net Operating Income before Depreciation $13.5M or 29.4% above Budget. 2 Q1 2016 Major Revenue Variances Fav (UnFav) Incr (Decr) 2015 YTD 2016 Year-to-Date Budget Variance Change from 2015 $ in 000's Actual Actual Budget $ % $ % Aeronautical Revenues 56,781 56,797 57,668 (872) -1.5% 16 0.0% SLOA III Incentive (894) (894) (894) - 0.0% - 0.0% Public Parking 14,726 16,286 15,723 563 3.6% 1,561 10.6% Rental Cars - Operations 5,833 6,159 5,586 573 10.3% 326 5.6% Rental Cars - Operating CFC 1,737 615 744 (129) -17.3% (1,121) -64.6% Airport Dining and Retail 11,003 11,794 11,828 (35) -0.3% 790 7.2% Employee Parking 1,904 2,298 1,992 305 15.3% 394 20.7% Ground Transportation 1,996 2,582 2,143 438 20.5% 585 29.3% Airport Properties 1,596 2,287 2,792 (505) -18.1% 691 43.3% Airport Utilities 1,647 1,812 1,830 (18) -1.0% 165 10.0% Fishing & Commercial Vessels 712 731 717 14 1.9% 19 2.7% Maritime Operations 979 1,369 1,050 319 30.4% 390 39.9% Recreational Boating 2,355 2,528 2,546 (18) -0.7% 173 7.4% Cruise 49 48 43 5 12.0% (1) -2.9% Grain 1,403 1,486 1,560 (75) -4.8% 82 5.9% Marina Office & Retail 995 1,028 957 72 7.5% 33 3.4% Maritime Industrial 1,409 1,531 1,587 (56) -3.5% 123 8.7% Central Harbor Management 1,472 1,585 1,594 (9) -0.5% 114 7.7% Conference & Event Centers 2,014 1,895 1,684 211 12.5% (120) -5.9% Licensed NWSA Assets - 15,242 13,106 2,137 16.3% 15,242 0.0% Other 17,468 2,155 2,223 (68) -3.0% (15,312) -87.7% Total Operating Revenues (w/o Aero) 69,298 73,434 69,708 3,725 5.3% 4,135 6.0% TOTAL 125,185 129,336 126,483 2,854 2.3% 4,152 3.3% Operating Revenues without Aeronautical $3.7M or 5.3% favorable to Budget. 3 Q1 2016 Major Expense Variances Fav (UnFav) Incr (Decr) 2015 YTD 2016 Year-to-Date Budget Variance Change from 2015 $ in 000's Actual Actual Budget $ % $ % Salaries & Benefits 23,458 25,674 27,169 1,494 5.5% 2,216 9.4% Wages & Benefits 22,890 23,554 25,067 1,513 6.0% 664 2.9% Payroll to Capital Projects 5,572 4,712 6,726 2,014 29.9% (860) -15.4% Equipment Expense 1,079 1,324 1,343 19 1.4% 245 22.7% Supplies & Stock 1,520 1,705 1,770 65 3.7% 185 12.1% Outside Services 9,556 9,779 18,333 8,554 46.7% 223 2.3% Utilities 4,878 5,280 5,588 308 5.5% 402 8.2% Travel & Other Employee Exps 911 746 1,595 849 53.2% (165) -18.1% Promotional Expenses 120 176 181 6 3.1% 55 46.1% Other Expenses 5,225 3,576 4,200 624 14.8% (1,648) -31.5% Charges to Capital Projects (8,101) (6,786) (11,553) (4,766) 41.3% 1,315 -16.2% TOTAL 67,108 69,740 80,420 10,680 13.3% 2,632 3.9% Operating expenses were $10.7M below budget mainly due to savings in Payroll, Outside Services, and Travel & Other Employee expenses. Operating Expenses $10.7M favorable to Budget. 4 Capital Spending by Division 2016 YTD 2016 2016 Budget Variance $ in 000's Actual Forecast Budget $ % Aviation 25,142 206,422 245,241 38,819 15.8% Maritime 947 14,496 15,660 1,164 7.4% Economic Development 1,179 7,866 8,751 885 10.1% Corporate & Other (note 1) 1,052 10,717 12,396 1,679 13.5% TOTAL 28,320 239,501 282,048 42,547 15.1% Note: (1) "Other" includes Street Vacation projects and Storm Water Utility Small Capital projects. Forecasted to spend $239.5M or 85% of the capital budget. 5 Aviation Division Q1 2016 Financial Performance Report May 17, 2016 Business Events New Air Service: Spirit Airlines initiated service New ground transportation options: transportation network companies began service Planning progress: presented commission analysis of key components of Sustainable Airport Master Plan Capital project milestones: Began design of International Arrivals Facility Received airline approval North Satellite expansion project Environmental initiatives: issued RFP for biofuels study Customer service: TSA agreed to reinstate local training for Sea-Tac TSA officers Progress on major initiatives 7 Airport Activity YTD 2015 YTD 2016 % Change Passengers: Enplaned Passengers (000's) Alaska +9% Domestic 3,880 4,272 10.1% Delta +20% International 471 512 8.5% Southwest +13% Total 4,352 4,783 9.9% United -4% Operations 81,668 91,480 12.0% Landed Weight (million lbs.) 2016 YTD Load Factor Cargo 394 369 -6.3% down 2.5 points from All other 4,888 5,452 11.5% last year Total 5,283 5,821 10.2% Cargo - metric tons 2016 YTD International Domestic freight 37,165 35,988 -3.2% Freight tons trailing International freight 26,418 22,341 -15.4% prior year due to peak Mail 12,979 14,396 10.9% volume in 2015 during Total 76,562 72,725 -5.0% Port shutdown. Increase in enplanements driven by Delta and Alaska 8 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2015 2016 2016 Budget Variance Change from 2015 $ in 000's Actual Forecast Budget $ % $ % Operating Revenues: Aeronautical Revenues 229,624 253,100 261,019 (7,919) -3.0% 23,476 10.2% SLOA III Incentive Straight Line Adj (3,576) (3,576) (3,576) - 0.0% - 0.0% Non-Aeronautical Revenues 196,844 211,885 208,321 3,564 1.7% 15,041 7.6% Total Operating Revenues 422,892 461,409 465,764 (4,355) -0.9% 38,517 9.1% Total Operating Expense 238,140 262,379 267,803 5,423 2.0% 24,239 10.2% Net Operating Income 184,752 199,030 197,962 1,068 0.5% 14,278 7.7% Aeronautical revenues are largely based on cost recovery formulas and are net of revenue sharing. Negative variance vs. budget actually reflects lower costs to airlines and thus indicates good performance. 2016 NOI forecast to be $14.3M higher than 2015 9 Key Performance Measures Fav (UnFav) Incr (Decr) 2015 2016 2016 Budget Variance Change from 2015 Actual Forecast Budget $ % $ % Performance Metrics Cost per Enplanement (CPE) 10.12 10.63 11.00 0.36 3.3% 0.52 5.1% O&M Cost per Enplanement 11.28 11.81 12.06 0.24 2.0% 0.53 4.7% Non-Aero Revenue per Enplanement 9.33 9.54 9.38 0.16 1.7% 0.21 2.3% Debt per Enplanement 119 112 111 (1) -0.9% (7) -5.9% Debt Service Coverage 1.49 1.49 1.46 0.03 2.2% 0.00 0.3% Days cash on hand (10 months = 304 days) 468 363 309 53 17.2% (105) -22.5% Aeronautical Revenue Sharing ($ in 000's) 29,450 31,995 28,055 (3,940) -14.0% 2,545 8.6% Activity (in 000's) Enplanements 21,109 22,214 22,214 0 0.0% 1,106 5.2% 2016 enplaned passengers forecasted to be up 5.2% above 2015. This reflects new scheduled flights, primarily by Delta and Alaska. Reduction in CPE reflects lower airline costs due to higher revenue sharing (driven by increased non-airline revenues), and increased enplaned passengers. Improved debt service coverage compared to budget reflects increased cash flow from growth in enplanements. Enplanement growth drives improved performance 10 Aviation Expense Summary Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year-End Projection Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Operating Expenses: Payroll 23,067 24,196 25,842 1,646 6.4% 103,274 106,659 3,386 3.2% Outside Services 6,264 6,548 9,324 2,776 29.8% 40,466 39,915 (551) -1.4% Utilities 3,305 3,646 3,839 193 5.0% 14,665 14,686 21 0.1% Other Airport Expenses 3,386 4,570 3,589 (981) -27.3% 17,320 16,911 (410) -2.4% Total Airport Direct Charges 36,022 38,960 42,594 3,634 8.5% 175,725 178,171 2,445 1.4% Environmental Remediation Liability - - - - n/a 3,246 3,246 - 0.0% Capital to Expense 0 - - - n/a 13 - (13) 0.0% Total Exceptions 0 - - - n/a 3,259 3,246 (13) -0.4% Total Airport Expenses 36,023 38,960 42,594 3,634 8.5% 178,984 181,417 2,433 1.3% Corporate 9,218 11,012 13,010 1,998 15.4% 52,043 52,424 381 0.7% Police Costs 3,857 4,327 4,634 307 6.6% 18,581 18,728 147 0.8% Capital Development 1,149 1,461 2,346 885 37.7% 9,283 11,746 2,463 21.0% Maritime/Economic Development 668 548 875 327 37.4% 3,488 3,488 - 0.0% Total Charges from Other Divisions 14,891 17,349 20,865 3,517 16.9% 83,395 86,386 2,991 3.5% Total Operating Expense 50,914 56,309 63,460 7,151 11.3% 262,379 267,803 5,423 2.0% Planning to implement 100% employee screening later in 2016. Costs not included in forecast. 2016 total expenses forecasted to be favorable by $5.4M 11 Non-Aeronautical Business Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year-End Projection Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Non-Aero Revenues Rental Cars - Operations 5,833 6,159 5,586 573 10.3% 36,209 35,398 810 2.3% Rental Cars - Operating CFC 1,737 615 744 (129) -17.3% 12,855 12,767 88 0.7% Public Parking 14,726 16,286 15,723 563 3.6% 67,779 66,847 932 1.4% Ground Transportation 1,996 2,582 2,143 438 20.5% 10,300 8,327 1,974 23.7% Airport Dining & Retail 11,003 11,794 11,828 (35) -0.3% 53,381 53,419 (38) -0.1% Commercial Properties 1,565 1,904 2,511 (607) -24.2% 10,175 10,251 (76) -0.7% Utilities 1,647 1,812 1,830 (18) -1.0% 7,074 7,626 (552) -7.2% Other 2,605 3,718 3,353 365 10.9% 14,111 13,686 426 3.1% Total Non-Aero Revenues 41,112 44,871 43,720 1,151 2.6% 211,885 208,321 3,564 1.7% Total Non-Aero Expenses 17,979 19,470 23,339 3,869 16.6% 93,656 97,454 3,798 3.9% Net Operating Income 23,133 25,401 20,382 5,019 24.6% 118,229 110,867 7,362 6.6% Less: CFC (Surplus) / Deficit (617) 1,121 1,052 69 6.6% (5,867) (5,146) (721) -14.0% Adjusted Non-Aero NOI 22,517 26,523 21,434 5,089 23.7% 112,362 105,721 6,641 6.3% Debt Service (43,570) (43,494) (76) -0.2% Net Cash Flow 68,793 62,227 6,565 10.6% Revenue growth driven by increased enplanements 12 Aeronautical Business Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year-End Projection Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Revenues: Movement Area 18,173 21,004 20,095 909 4.5% 95,245 95,220 25 0.0% Apron Area 2,825 2,464 3,026 (563) -18.6% 13,735 14,120 (385) -2.7% Terminal Rents 35,906 36,634 36,933 (299) -0.8% 155,977 159,593 (3,616) -2.3% Federal Inspection Services (FIS) 2,724 2,284 2,295 (11) -0.5% 10,689 10,836 (147) -1.4% Total Rate Base Revenues 59,628 62,385 62,349 36 0.1% 275,645 279,768 (4,123) -1.5% \ Commercial Area 2,024 2,154 2,333 (180) -7.7% 9,450 9,306 144 1.5% Subtotal before Revenue Sharing 61,652 64,539 64,682 (143) -0.2% 285,095 289,074 (3,979) -1.4% Revenue Sharing (4,872) (7,742) (7,014) (728) -10.4% (31,995) (28,055) (3,940) -14.0% Total Aeronautical Revenues 56,781 56,797 57,668 (872) -1.5% 253,100 261,019 (7,919) -3.0% Total Aeronautical Expenses 32,935 36,839 40,121 3,282 8.2% 168,724 170,349 1,625 1.0% Net Operating Income 23,845 19,958 17,547 2,411 - 13.7% 84,376 90,670 (6,294) -6.9% Debt Service (89,867) (91,723) 1,856 2.0% Net Cash Flow (5,490) (1,053) (4,437) 421.4% Expense savings and higher revenue sharing compared to Budget 13 Aero Cost Drivers Fav (UnFav) 2015 2016 2016 'Budget vs Forecast $ in 000's Actual Forecast Budget $ % O&M (1) 150,286 164,691 166,776 (2,085) -1.3% Debt Service Gross (2) 111,477 119,018 120,668 (1,650) -1.4% Debt Service PFC Offset (32,454) (32,860) (32,583) (277) 0.9% Amortization 24,853 28,203 28,338 (135) -0.5% Space Vacancy (3,469) (2,380) (2,431) 51 -2.1% TSA Operating Grant and Other (1,099) (1,026) (1,000) (26) 2.6% Rate Base Revenues 249,594 275,645 279,768 (4,123) -1.5% Commercial area 9,519 9,450 9,306 144 1.5% Total Aero Revenues 259,113 285,095 289,074 (3,979) -1.4% O&M, Debt Service Gross, and Amortization do not include commercial area costs or the international incentive expenses (1) O&M - mostly savings from CDD and Corporate divisions, Master Plan delays and payroll savings in AV division. These savings are largely offset by unbudgeted Security Checkpoint Queue Management Services contract spending. (2) Debt Service decrease is mostly driven by the change in funding allocation % for 2015C bonds, change in 2008VRDB interest and a change in breakout of 2015B refunding components (affected funding allocation % for refunded bond series). Aero rate base revenues based on cost recovery formulas 14 2016 Capital Budget $ in 000's 2016 2016 2016 Budget Variance Description YTD Actual Forecast Budget $ % NS NSAT Renov NSTS Lobbies (1) 2,210 23,737 43,200 19,463 45.1% Interim Baggage System Program (2) 437 5,937 10,000 4,063 40.6% Concourse D Hardstand Terminal (3) 4 329 1,790 1,461 81.6% SSAT Interior Renovations (4) 76 3,226 1,850 (1,376) -74.4% B2 Expansion for DL Club (5) 191 7,691 9,000 1,309 14.5% RW16C-34C Design and Reconst 4,294 10,494 11,755 1,261 10.7% International Arrivals Fac-IAF 6,789 56,381 57,612 1,231 2.1% Checked Bag Recap/Optimization 1,304 7,604 8,257 653 7.9% All Other 9,838 91,023 101,777 10,754 10.6% Total Spending 25,143 206,422 245,241 38,819 15.8% (1) Delays in construction due to a rebid of the PWP#1 construction effort. (2) Budget was developed when project was early in design, resulting in overly aggressive projections. (3) Delays in hiring consultant for design. (4) Returned to Commission in March to increase the project authorization by $1.9M due to higher bids. Additional scope was also added in support of the Narrow Body Gates project which increased the budget by $500k. (5) Delays with the design schedule. Spending moved out to 2017. 2016 spending is projected to be 16% below budget 15 Maritime Division Q1 2016 Financial Performance Report May 17, 2016 Maritime 2016 Business Overview Maritime Division Key Events: Independent Packers Corp agreed to 5 year lease term to support 170 employees situated in Building 40. Barge moorage at north end of Harbor Island, T25 South, and T107 Kellogg Island more fully utilized. Operations staff facilitated 5 public events conducted at the Smith Cove Cruise Terminal, drawing over 20,000 attendees. Completed negotiations related to cruise operations and stormwater permit management issues. Skip Himes hired as new General Manager of Marine Maintenance and Kenny Lyles promoted to Director of Fishing & Maritime Ops. Environmental: Terminal 91 underwater regrade complete. T117 cleanup construction completed. Increasing optimization of port properties. 17 Maritime Q1 2016 Financial Summary Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year End Projections Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Operating Revenue 7,905 8,725 8,461 265 3% 49,514 49,314 200 0% Security Grants 0 0 0 0 NA 0 0 0 NA Total Revenues 7,905 8,725 8,461 265 3% 49,514 49,314 200 0% Maritime Expenses (excl Maint) 2,006 2,313 2,832 520 18% 11,787 11,382 (405) -4% Maintenance Expenses 2,126 2,146 2,612 466 18% 10,576 10,576 0 0% P69 Facilities Expenses 35 69 72 4 5% 294 294 0 0% Other ED Expenses 744 817 1,142 325 28% 3,819 3,819 0 0% Enviromental & Sustainability 204 184 242 57 24% 1,430 1,430 0 0% CDD Expenses 336 271 215 (56) -26% 1,029 1,029 0 0% Police Expenses 622 932 996 64 6% 4,023 4,023 0 0% Corporate Expenses 1,244 2,149 2,469 321 13% 9,508 9,713 205 2% Envir Remed Liability 0 0 0 0 NA 202 202 0 0% Total Expenses 7,317 8,879 10,580 1,701 16% 42,669 42,469 (200) 0% NOI Before Depreciation 588 (153) (2,119) 1,966 -93% 6,845 6,845 0 0% Depreciation 4,217 4,336 4,299 (37) -1% 17,139 17,139 0 0% NOI After Depreciation (3,629) (4,490) (6,418) 1,929 -30% (10,294) (10,294) 0 0% Positive Q1 Revenue variance driven by Maritime Ops at $319K favorable to budget from higher moorage occupancy and rates in previously under utilized properties. Q1 Expenses $1,701 favorable to budget due primarily to timing of divisional expenses and lower than budgeted corporate expenses. Year end NOI forecast to budget with favorable revenue and corporate expense projections offset by Cruise related mitigation expenses. Timing of expenses driving favorable Q1 NOI. 18 Maritime Q1 2016 Capital Spending $ in 000's 2016 YTD 2016 2016 Budget Variance Actual Forecast Budget $ % Maritime 947 14,496 15,660 1,164 7% Significant Variances: Shilshole Bay Marina Restroom and Services Building Replacement $373 below budget from revised project schedule. Maintenance North Office Site Improvement $300K below budget as project delayed until Q4 this year. Pier 91 South End Fender timing variance. Forecasted to spend 93% of Capital Budget. 19 Economic Development Division Q1 2016 Financial Performance Report May 17, 2016 EDD Q1 Business Overview Financials 1st quarter net operating income (NOI) is $1.5M higher than budget. Full-year NOI is forecasted to exceed budget. Occupancy Portfolio Management properties at 97% occupancy at end of Q1, above target of 90%. Conference and Event Center Q1 revenue exceeded budget due to strong sales and delayed construction at P-66 Cruise Terminal. Completed lease rate reset with Trident Seafoods at T-91 to market rate. RE strategic planning process presented to Commission Eastside Rail Corridor Sale of last 12 miles to Snohomish County closed March 2016. Eastside Rail Corridor Sale Complete and RE Strat Plan Underway. 21 EDD Q1 2016 Financial Summary Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year End Projections Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Revenue 1,685 1,777 1,756 21 1% 7,513 7,449 63 1% Conf & Event Ctr Revenue 2,014 1,895 1,684 211 13% 6,759 6,296 463 7% Total Revenue 3,699 3,672 3,440 232 7% 14,272 13,745 527 4% Central Harbor 557 483 670 187 28% 2,650 2,746 96 3% Conf & Event Centers 1,734 1,721 1,748 27 2% 7,013 6,439 (574) -9% Eastside Rail Corridor 13 4 30 26 85% 118 144 26 18% P69 Facilities Expenses 9 41 43 2 5% 177 177 0 0% Small Business 0 4 31 27 87% 120 120 0 0% Workforce Development 0 (9) 284 293 103% 1,558 1,558 0 0% Tourism 146 193 421 227 54% 1,114 1,174 60 5% EconDev Expenses Other 380 470 615 145 24% 2,800 2,800 0 0% Maintenance Expenses 694 573 795 222 28% 3,153 3,153 0 0% Maritime Expenses (Excl Maint) 3 8 7 (1) -11% 28 28 0 0% Environmental & Sustainability 48 11 25 13 54% 126 126 0 0% CDD Expenses 11 88 46 (42) -92% 248 248 0 0% Police Expenses 108 39 42 3 7% 167 169 2 1% Corporate Expenses 452 946 1,126 181 16% 4,400 4,565 165 4% Envir Remed Liability 0 0 0 0 NA 0 0 0 NA Total Expense 4,154 4,573 5,882 1,310 22% 23,672 23,447 (225) -1% Net Operating Income (455) (901) (2,442) 1,542 63% (9,400) (9,702) 302 3% Favorable sales activity at P-66 Conference & Events Center, resulting in higher revenues & expenses. Favorable variances for direct expenses for Tourism, Workforce Development, and Maintenance were due to timing of expenditures. Corporate Expenses were under budget due to lower charges/allocations from Procurement, Public Affairs, Office of Strategic Initiatives, and Accounting & Financial Reporting. Full-Year Net Operating Income forecasted favorable to budget. 22 Contribution to Other Divisions Fav (UnFav) Incr (Decr) 2015 YTD 2016 YTD 2016 Budget Variance Change from 2015 $ in 000's Actual Actual Budget $ % $ % Revenues: Airport Dining & Retail 11,003 11,794 11,828 (35) 0% 791 7% Airport Properties 1,596 2,287 2,792 (505) -18% 691 43% Business Development 587 883 986 (103) -10% 296 50% Business Development & Mgmt 13,186 14,964 15,607 (643) -4% 1,778 13% Maritime Industrial 1,409 1,531 1,587 (56) -4% 123 9% Marina Office & Retail 995 1,028 957 72 7% 33 3% Maritime Portfolio Management 2,404 2,560 2,544 16 1% 156 6% Total Revenues to Other Divisions 15,590 17,524 18,150 (627) -3% 1,934 12% Expenses to Other Divisions Business Development & Mgmt 1,333 1,423 2,466 1,043 42% 90 7% Maritime Portfolio Management 567 706 1,015 309 30% 139 25% 1,900 2,130 3,481 1,352 39% 229 12% EDD making significant contribution to other divisions. Q1 net contribution to other divisions: $13.6M 23 EDD Q1 2016 Capital Spending $ in 000's 2016 YTD 2016 2016 Budget Variance Actual Forecast Budget $ % Econ Dev 1,179 7,866 8,751 885 10% Significant Variances: P66 Elevator Upgrades - Favorable: project postponed until after NCL cruise terminal work is completed. Small Projects: Unfavorable due to higher bids for WTC West projects including HVAC Controller Upgrade and Roof Deck Replacement. Forecasted to spend 90% of EDD Capital Budget. 24 Stormwater Utility Q1 2016 Financial Summary 2015 YTD 2016 YTD 2016 YTD Bud Var Yr End Projections 2016 Bud Var $ in 000's Actual Actual Budget $ % Forecast Budget $ % Total Revenue 1,051 1,190 1,079 111 10% 4,762 4,317 445 10% Stormwater Utilities Exp 17 22 171 149 87% 682 682 0 0% Maintenance & Other MD exp 0 84 379 295 78% 1,519 1,518 (1) 0% Environmental (Excl SWU) 0 0 26 26 100% 293 293 0 0% Corporate Expenses 0 2 0 (2) -398% 2 2 0 0% Total Expense 17 108 577 469 81% 2,496 2,495 (1) 0% NOI Before Depreciation 1,035 1,083 502 580 116% 2,266 1,822 444 24% Revenue favorable due to applying new rates reflected in the charter on more accurately measured areas through GIS system instead of historical tax parcels. Expenses favorable mainly due to the work progress delay resulting from timing of receiving the Camera Inspection truck in order to access the lines. Full Year Net Operating Income forecasted at $444 thousands favorable to Budget. 25 Corporate Q1 2016 Financial Performance Report May 17, 2016 26 Q1 2016 Key Business Events Launched planning effort to support Commission's 38 Cities outreach program. Implemented Paid Parental Leave. Implemented Phase II Re-org. Upgraded the Common Use Self Service (CUSS) kiosks used by customers of several airlines at the Airport. Initiated the Investment Banking Services procurement. Hired Boston Consulting for Procurement Excellence (Purchasing Transformation project). Implemented and launched the Contractors Database System (CDS) for Service Agreements to assist in tracking our efforts to promote small business growth. Executed contract with Parking Soft for a Parking Revenue Replacement System. 27 Q1 2016 Corporate Key Metrics 2016 YTD 2015 YTD Employee Development Class Attendees 197 168 Occupational Injury Rate 4.19 3.25 Total Lost work days 89 143 Responded to Public Disclosure Requests 115 98 Customer Survey for Police Service Excellent or Very Good 92% 88% Information & Communication Technology System Availability 99.7% 99.4% Oversee Implementation/Administration of CBA's Agreements 34 40 Percentage of Annual Audit Plan Completed 17% 17% Strong performance results for Corporate in Q1 2016. 28 Q1 2016 Major Expense Variances Fav (UnFav) Incr (Decr) 2015 YTD 2016 Year-to-Date Budget Variance Change from 2015 $ in 000's Actual Actual Budget $ % $ % Salaries & Benefits 14,234 16,558 17,156 598 3.5% 2,324 16.3% Wages & Benefits 5,083 5,109 5,565 456 8.2% 26 0.5% Payroll to Capital Projects 4,878 4,058 5,575 1,516 27.2% (820) -16.8% Equipment Expense 177 437 369 (68) -18.5% 260 146.4% Supplies & Stock 192 200 242 42 17.4% 8 3.9% Outside Services 3,622 2,972 8,356 5,383 64.4% (649) -17.9% Travel & Other Employee Exps 519 516 1,074 558 52.0% (3) -0.6% Insurance Expense 565 596 626 30 4.8% 31 5.6% Other (450) (414) 554 969 174.7% 36 -8.0% Charge to Capital (7,268) (5,942) (10,250) (4,308) -42.0% (1,326) -18.2% Total 21,552 24,091 29,266 5,176 17.7% 2,539 11.8% Corporate expenses were $5.2M below budget mainly due to lower Payroll costs, Outside Services and Travel & Other Employee expenses. Corporate Expenses $5.2M favorable to Budget. 29 Budget Variances by Dept. Part 1 Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year-End Projections Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Total Operating Revenues 692 933 1,038 (105) -10.1% 4,151 4,151 - 0.0% OPERATING EXPENSES Executive 390 498 668 169 25.3% 1,569 1,569 - 0.0% Commission 360 301 430 130 30.1% 1,505 1,635 130 7.9% Legal 612 691 827 136 16.5% 3,100 3,219 119 3.7% Public Affairs 909 1,296 1,596 300 18.8% 6,402 6,447 46 0.7% Human Resources & Development 1,384 1,654 1,788 135 7.5% 7,574 7,634 60 0.8% Labor Relations 191 278 293 15 5.3% 1,135 1,126 (9) -0.8% Internal Audit 248 284 405 120 29.8% 1,577 1,620 43 2.6% Office of Strategic Initiatives 589 1,004 2,619 1,616 61.7% 9,059 9,059 - 0.0% Police 5,092 5,374 5,837 463 7.9% 23,404 23,587 183 0.8% Contingency 169 38 125 87 69.6% 400 500 100 20.0% Capital Development Engineering 672 1,072 698 (375) -53.8% 5,913 5,913 - 0.0% Port Construction Services 469 520 698 179 25.6% 2,809 2,862 53 1.9% Aviation PMG 331 260 1,182 921 78.0% 2,122 4,543 2,421 53.3% Seaport PMG 40 255 203 (51) -25.3% 741 789 48 6.1% Capital Development Admin 95 106 107 1 0.7% 430 430 - 0.0% Sub-Total 1,608 2,213 2,888 675 23.4% 12,016 14,538 2,522 17.3% The new Corporate reporting structure reflects Phase II Re-org changes. 30 Budget Variances by Dept. Part 2 Fav (UnFav) Fav (UnFav) 2015 YTD 2016 Year-to-Date Budget Variance Year-End Projections Budget Variance $ in 000's Actual Actual Budget $ % Forecast Budget $ % Finance Accounting & Financial Reporting Services 1,578 1,636 1,780 144 8.1% 7,497 7,570 73 1.0% Information & Communication Technology 4,288 5,172 4,789 (383) -8.0% 21,127 21,127 - 0.0% Finance & Budget 1,064 1,186 1,195 9 0.8% 4,912 4,933 21 0.4% Business Intelligence - 205 225 19 8.7% 1,066 917 (149) -16.3% Risk Services 745 790 859 69 8.0% 3,431 3,449 18 0.5% Sub-Total 7,675 8,989 8,847 (142) -1.6% 38,033 37,995 (38) -0.1% Emergency Preparedness Emergency Management 93 80 90 10 10.7% 365 393 28 7.1% ICT Information Security 158 265 234 (30) -12.9% 927 927 - 0.0% Maritime Security 36 38 38 1 1.5% 161 161 - 0.0% Sub-Total 288 383 363 (20) -5.5% 1,452 1,480 28 1.9% Environment & Sustainability Aviation Environmental & Planning 1,646 940 1,923 982 51.1% 8,173 10,064 1,891 18.8% Maritime Environmental & Planning 648 220 435 215 49.4% 2,587 2,587 - 0.0% Storm Water Utility (net) (382) (255) (13) 241 -1807.9% (53) (53) - 0.0% Noise Programs 125 184 237 53 22.4% 862 891 29 3.3% Sub-Total 2,037 1,089 2,581 1,492 57.8% 11,569 13,489 1,920 14.2% Total Operating Expenses 21,552 24,091 29,266 5,176 17.7% 118,795 123,897 5,102 4.1% Corporate expenses forecasted to be $5.1M favorable to Budget for 2016. 31 AV Appendix 32 Rental Car Performance (in $000's) 2015 YTD 2016 YTD 2016 YTD 2015 2016 2016 Rental Car - Concession Revenue Actual Actual Budget Actual Forecast Budget RCF Concession Revenue to Port 4,950 5,265 4,692 30,662 32,591 31,781 Gross Sales by Operators 47,758 52,550 51,487 301,439 325,664 317,562 Total Transactions 275,304 288,813 288,788 1,390,169 1,448,928 1,448,928 Average Ticket $ 173.48 $ 181.95 $ 178.29 $ 216.84 $ 224.76 $ 219.17 Average Length of Stay 4.17 3.98 4.03 4.34 4.34 4.34 Transactions/O&D Enplanements 8.58% 8.19% 8.36% 8.94% 8.85% 8.85% CFC Revenue Summary Total Transaction Days 1,148,375 1,149,499 1,164,200 6,033,825 6,288,348 6,288,348 CFC Rate per Transaction Day $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 Total CFC Revenue Earned 6,890 6,897 6,985 36,203 37,730 37,730 Reserve for debt service and CP interest: (5,153) (5,532) (5,491) (20,540) (21,875) (21,963) Reserve for CP principal payment: - (750) (750) (3,000) (3,000) (3,000) Debt Service Reserve Requirement (5,153) (6,282) (6,241) (23,540) (24,875) (24,963) Residual - CFC Operating Revenue: 1,737 615 744 12,663 12,855 12,767 (in $000's) 2015 YTD 2016 YTD 2016 YTD 2015 2016 2016 Rental Car - Revenue Summary Actual Actual Budget Actual Forecast Budget RCF Concession Revenue to Port 4,950 5,265 4,692 30,662 32,591 31,781 Residual - CFC Operating Revenue: 1,737 615 744 12,663 12,855 12,767 Land Rent/Space Rent/Other 884 894 894 3,189 3,617 3,617 Total Rental Cars Operating Revenue 7,570 6,775 6,330 46,515 49,064 48,166 Higher Average Ticket versus Budget driving revenue performance 33 Aero Revenue Sharing Fav (UnFav) 2015 2016 2016 'Budget vs Forecast $ in 000's Actual Forecast Budget $ % Aero Revenues (incl' commercial) 259,113 285,095 289,074 (3,979) -1.4% Non-Aeronautical Revenues 196,844 211,885 208,321 3,564 1.7% Total O&M Expenses (238,140) (262,379) (268,216) 5,837 -2.2% Net Operating Income 217,816 234,601 229,179 5,422 2.4% ADF Interest Income 2,349 2,330 1,988 342 17.2% Security Checkpoint TSA Grant 1,102 1,000 1,000 - 0.0% Misc. Non-Operating Expenses (762) (1,278) (1,890) 612 -32.4% CFC Excess (5,159) (5,867) (5,146) (721) 14.0% Available for Debt Service [a] 215,347 230,786 225,132 5,655 2.5% Debt Service 125,153 133,437 135,217 (1,781) -1.3% Debt Service x 1.25 [b] 156,441 166,796 169,022 (2,226) -1.3% Available for revenue sharing [c]=[a]-[b] 58,906 63,991 56,110 7,881 14.0% Revenue Sharing [d]=[c]*0.5 29,453 31,995 28,055 3,940 14.0% Increased revenue sharing drives reduction in CPE 34 Expense Variances by Department Fav / (Unfav) 2016 2016 Budget Department Forecast Budget Variance Primary Drivers Landside 15,479 16,086 607 Curbside Assistants contract not utilized in 2016 Airfield 8,348 8,880 532 Airport Obstruction project lower spending Terminal 27,377 23,765 (3,613) Security contract and international incentives Business Development 10,325 10,503 178 Vacancies & hiring delays Utilities 15,153 15,252 100 Vacancies & hiring delays Aviation Executive 15,888 16,792 904 YTD Usage of contingency Airport Security 8,213 8,504 291 Vacancies & hiring delays, lower DAC security check Aviation Facilities 4,893 5,143 250 Vacancies & hiring delays Aviation Maintenance 56,619 58,485 1,866 Vacancies & hiring delays Aviation Planning 3,509 4,319 810 IDIQ Master Plan delayed start Aviation Environmental Group 4,664 5,745 1,081 SAMP environmental review savings ($1.3M), offset by Energy/Carbon Strategy and Biofuels projects ($0.3M) Aviation Risk Mgmt Expenses 2,429 1,873 (556) Update to legal reserves booked as of Q1 All Other Aviation Departments 6,479 6,462 (17) Grand Total 179,377 181,810 2,433 $2.4M in savings forecasted versus Budget 35
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