9b 2019 Financial Performance Presentation
Item No. 9b supp . Meeting Date: March 10, 2020 Port of Seattle 2019 Financial Performance Report Commission Meeting March 10th, 2020 Portwide Financial Highlights 2019 Actual vs. 2019 Budget: o Operating Revenues $10.9M favorable to budget. o Airport Non-Aeronautical Revenues $9.5M above budget. o Non-Airport Revenues $9.4M favorable to budget. o Operating Expenses $11.9M below budget. o Net Operating Income before Depreciation $22.8M favorable to budget. o Total capital spending for 2019 was $596.6M, 73% of the budget. 2019 Actual vs 2018 Actual: o Operating Revenues $74.8M higher than 2018. o Operating Expenses $45.5M higher than 2018. o NOI before depreciation $29.3M higher than 2018. 2 Portwide Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 264,114 291,268 357,598 365,604 (8,006) -2.2% 66,330 22.8% Airport Non-Aero Revenues 236,803 257,707 269,037 259,537 9,501 3.7% 11,331 4.4% Non-Airport Revenues 131,114 140,415 137,538 128,115 9,424 7.4% (2,876) -2.0% Total Operating Revenues 632,031 689,390 764,174 753,255 10,919 1.4% 74,784 10.8% Total Operating Expenses 372,982 397,638 443,089 454,986 11,896 2.6% 45,452 11.4% NOI before Depreciation 259,049 291,752 321,085 298,269 22,815 7.6% 29,333 10.1% Depreciation 165,021 164,362 174,971 168,676 (6,294) -3.7% 10,608 6.5% NOI after Depreciation 94,028 127,390 146,114 129,593 16,521 12.7% 18,725 14.7% 3 Aviation Division 2019 Financial Performance Report Aviation Division Financial Summary Business Highlights Year End passenger growth of 4%, Figures in $000s Actual Budget Variance consistent with 4% forecast Revenues Aeronautical 357,598 365,604 (8,006) Achieved both primary financial goals: Non-aeronautical 269,037 259,537 9,501 Non-aero NOI and CPE Total 626,636 625,140 1,495 Aero revenue decline reflects reduced costs O&M expense 356,635 366,105 9,470 Non-aero revenue growth driven by Clubs & NOI 270,001 259,036 10,965 Lounges, ADR, Non-Airline Space, and TNCs Key Measures Pension credit of $13.4 million offset cost Non-Aero NOI 150,752 136,534 14,218 increases due to snow event, environmental CPE ($) 12.85 13.39 0.53 reserves Capital Spending 573,598 767,732 194,134 Capital spending at 75% of annual budget Achieved primary financial goals for 2019 5 Aviation Business Events Activity: Total passengers: +4.0% International passengers: + 5.5% Cargo metric tons: + 4.9% Accomplishments: Customer Service: exceeded five-year average for 3 of 6 key ASQ measures (goal was 2): Exceeded: Waiting time at Security Check Points; Internet Access/Wi-Fi; Airport staff courtesy/helpfulness Missed: Washroom cleanliness; Ease of wayfinding; Comfort of waiting/gate areas 100% of front-line staff completed WE ARE SEA training Launched SEA Visitor Pass program Launched on-line parking pre-booking/reservation system Launched on-demand taxi system Completed ADR (Master Plan) tenant selection process (Lease Groups 1-5) 6 Capital Spending 900,000 800,000 2019 Actual vs 2019 Budget: 767,732 - 194M or 25.3% under 700,000 Major 2019 Variances: IAF = $64.9M under 600,000 579,135 573,598 - NSAT= $7.8M under (000s) Checked Bag Opt = $3.9M under 500,000 AFLD Program = $5.8M under Capital Spending Svc Tunnel Renewal = $3.3M under 400,000 SD Pond Bird Deterrent = $6.1M under ARC Flash Mitigation = $3.6M under 294,497 Fire Station Westside= $3.1M under 300,000 - SSAT Renov. Project = ($2.8M) over 200,000 153,887 - 100,000 - 2016 2017 2018 2019 2019 Budget 2019 spending variances primarily due to delayed spending, not project savings 7 Maritime Division 2019 Financial Performance Report Maritime Division Financial Business Highlights Figure in $000s Actual Budget Variance Revenues Net Operating Income Exceeding Fishing, Commercial, & Budget. Recreational Marinas 22,508 22,742 (234) Cruise 22,410 22,406 4 Revenue less than 1% below budget Maritime Portfolio Mgmt. 10,108 10,328 (220) Expenses 4% below budget Pension credit Grain / Other 4,263 4,254 9 of $1.9M offset by $1.5M in one-time costs Total 59,289 59,729 (441) and increase in Maintenance O&M Expense Direct 18,352 18,953 601 Cruise Passengers increased 9% Support Services 14,611 14,761 151 Central Services and Other 15,682 17,108 1,425 Grain Volumes decreased 22% Total 48,644 50,822 2,177 Capital Spending 44% of annual NOI 10,644 8,908 1,737 budget. Capital Spending 7,887 17,838 (9,951) Stormwater Utility on budget. 9 Maritime Business Events Cruise: Ended the 2019 cruise season with record number of passengers, over $1.2M. Over 20% annual increase in passenger participation of Cruise Port Valet Program. Launched RFP for new Cruise terminal. Completed CTA Lease Extension at T91. Signed preferential berthing agreement with Carnival Cruise Lines guaranteeing 500K passengers over next three seasons. Fishing and Commercial Marinas: Absorbed the loss of the 680' Ocean Phoenix with the 367' MV Excellence and the 276' Phoenix. Design funding approved for the NW Fender and redevelopment of Berths 6&8 at Terminal 91. Recreational Boating: Implemented Racial Equity Pilot Program. Awarded construction contract for the new Shilshole Customer Service Facility Building. 10 Maritime Business Events Environmental & Sustainability: Completed remediation system construction at T30. Signed credits agreement with NOAA, enabling the port to build and sell habitat. Recovered nearly $6M in insurance, grants, and other cost recovery mechanisms. Stormwater Utility: Installed and Completed: Five tide gates Rain Garden at T86 Drainage repair at T91 22 system repairs Received the AAPA Award of Excellence in environmental enhancements for stormwater innovations. 11 Northwest Seaport Alliance Summary Fav (UnFav) Incr (Decr) 2018 2019 Budget Variance Change from 2018 NWSA TEU Data $ in 000's Actual Actual Budget $ % $ % Full- year 2019 volumes and month of January 2020 are down due to shippers moving Revenue 192,574 195,022 199,449 (4,427) -2% 2,448 1% cargo ahead of tariffs. Q1 2020 volumes are expected to be negatively impacted by the Operating expense 89,132 100,501 113,946 13,445 12% 11,369 13% Coronavirus. Tariffs and the Coronavirus show the dangers of single -country Operating Income 103,442 94,521 85,503 9,018 11% (8,921) -9% sourcing. Many shippers are looking to diversify manufacturing and sourcing activities to SE Asia or other countries, which may be better served by east coast ports Interest Income 1,254 1,608 1,462 146 10% 354 28% due to shorter transits. Market Value Adjustment 23 405 0 405 NA 382 1661% Net Interest Income 1,277 2,013 1,462 551 38% 736 58% Exports: Japan was the largest containerized trading partner for NWSA in 2019, followed Non Operating Income (Expense) 3,361 (4,444) (3,438) 1,006 -29% (7,805) -232% Grant Income 3,905 3,868 4,294 426 10% (37) -1% by Korea, China, Taiwan and Philippines (by TEUS). Net Income 111,985 95,958 87,821 8,137 9% (16,027) -14% China's ranking in 2018 was #2. Volumes to China declined 23% for 2019 vs. 2018. Cargo TEUs 3,797,625 3,775,625 (22,000) -1% India was another country impacted by tariffs. Volumes fell 26%. Cargo Volume (Metric Tons) 30,173,621 29,982,608 (191,013) -1% Imports Note: Unaudited financial results may differ slightly from NWSA site due to rounding differences Imports from China are down 17% for 2019 vs 2018, -153,488 TEUs. Imports from other trading partners are up (Japan 7%, Vietnam 40% and Taiwan Revenue Container Revenue Expenses Below budget due to 6%). $7.8M below budget split between favorable crane maintenance, Those increases could not offset the drop in volume from China. Total containerized imports were down 7%. north and south harbor. Non- infrastructure and administrative Container Revenue $3.4M favorable expenses. to budget. 12 Economic Development Division 2019 Financial Performance Report Economic Development Division Financial Summary Business Highlights Figure in $000s Actual Budget Variance Net Operating Income exceeding budget by Revenues 21,151 19,725 1,426 $4.8M. Revenue $1.4M favorable from Conference & Event Center O&M Expense including winter event at Smith Cove. EDD & Maritime 15,285 15,593 308 Expenses $3.5 favorable from pension adjustment ($.7M), Maintenance 3,146 4,071 924 Maintenance, and Initiative Programs. Diversity in Contracting 152 199 47 Workforce Development 952 2,010 1,058 Conference and Event Center Modernization will be Tourism 1,337 1,521 183 delivered ahead of schedule. EDD Grants 785 1,160 375 Diversity in Contracting met the 2019 goal. Central Services and Other 6,005 6,561 556 Total 27,663 31,114 3,451 Capital Spending 55% of annual budget. NOI (6,512) (11,389) 4,877 Capital Spending 3,121 5,713 (2,592) 14 Economic Development Business Events Diversity in Contracting: A 54% increase to the number of firms that participated in PortGen events in 2018. Real Estate: Closed sale of small property on Harbor Avenue. Contractor started Bell Harbor International Conference Center renovation. IAC Commerce center building on Port property in SeaTac completed and leased. Innovation: Signed contract with Maritime Blue to advance maritime accelerator program. Made field trip to Iceland to see and learn about their Ocean Cluster maritime innovation center. 15 Economic Development Business Events P69 Facilities: Completed Solar Panel Installation; 66% cost recovered through Dept. of Commerce grant. Fund Authorization for lobby renovation. Tourism: Port co-sponsored opening event of the 2019 US China Tourism Summit. European and Australian marketing representation generating over $1.2M+ in editorial coverage about Washington and Seattle-Alaska Cruises. Workforce Development: Awarded contract to sustain Youth Maritime Collaborative career connected learning initiatives to Maritime Blue and Goodwill Industries. Launched Aviation Career Pathways Airport Maintenance Technician Training pilot project. 16 Central Services 2019 Financial Performance Report Central Services Business Highlights Completed ICT projects in 2019 include: Project Delivery system, Automated Checkpoint Wait Time, Sea-Tac Visitor Pass, and Taxi System. Sponsored Green City Days in near-airport communities as part of the multi-year collaborative project to foster urban forest stewardship. Announced collective partnership with sustainability leaders to develop the Embodied Carbon in Construction Calculator (EC3) tool. Hosted Safety and Preparedness Fairs to increase employee readiness with topics ranging from worksite safety to being vigilant against email spam and phishing attempts. Hosted 200 guests on the Port's first-ever multilingual boat tour of Elliott Bay and the Duwamish River. Adopted the Duwamish Valley Community Benefits Commitment Policy. Hosted several EDI workshops: Equity 101, Islamophobia 101, Transgender Inclusion 101. CPI team assisted the AVM field crew garage clean team improve their garbage transportation process; AVM field crew garage clean team received the Q3 Innovation Award for their process improvement effort. Police Marine Patrol Unit provided a waterside tour to our Federal partners participating in a Maritime Security class. The tour highlighted security vulnerabilities impacting a seaport. Hosted Career Awareness events in Mt. Rainier High School, Foster High School, and Highline High School. Supported the Environmental Challenge with Raisbeck Aviation High attended by 110 sophomore students. 18 Central Services Financial Highlights Core Central Support Services Police Capital Development Environment & Sustainability 2019 Expenses are $14.0M favorable to budget due to: In 000s DRS pension true-up credit of 160,000 $9.9M Staff vacancies 140,000 Delays in implementing program initiatives and less contract 120,000 spending. 100,000 2019 Total Operating expenses are 80,000 higher compared to 2018 due to: Higher payroll costs due to merit 60,000 increase and new FTEs. 40,000 Additional funding to support Portwide goals and initiatives. 20,000 0 2016 2017 2018 2019 2019 Budget 19 Portwide 2019 Financial Performance Report Portwide Financial Highlights 2019 Actual vs. 2019 Budget: o Operating Revenues $10.9M favorable to budget. o Airport Non-Aeronautical Revenues $9.5M above budget. o Non-Airport Revenues $9.4M favorable to budget. o Operating Expenses $11.9M below budget. o Net Operating Income before Depreciation $22.8M favorable to budget. o Total capital spending for 2019 was $596.6M, 73% of the budget. 2019 Actual vs 2018 Actual: o Operating Revenues $74.8M higher than 2018. o Operating Expenses $45.5M higher than 2018. o NOI before depreciation $29.3M higher than 2018. 21 Portwide Net Operating Income Performance Operating Revenues are $10.9M higher than budget due to higher Airport Non-Aero Revenues Aeronautical Revenues Non-Airport Revenues Total Operating Expenses NOI revenues in: In 000s ADR & Terminal Leased Space Ground Transportation 900,000 Rental Cars Clubs and Lounges 750,000 Airport Commercial Properties Conference & Event Centers 600,000 NWSA Distributable Revenue 450,000 Total Operating expenses are $11.9M below budget due to: DRS Pension Plan True-up credit 300,000 of $16.5M Spending delays on Outside 150,000 Services, utilities and travel accounts Partially offset by higher costs 0 2016 2017 2018 2019 2019 Budget related to snow removals. 22 Non-Airport Net Operating Income Performance Non-Airport Operating Revenue Other Operating Revenues NWSA Distributable Revenues Total Operating Expenses NOI exceeded budget by $9.4M due to: In 000s Higher revenue from Conference & Event Centers 150,000 Higher NWSA Distributable Revenues 125,000 100,000 Expenses are $2.4M lower than budget due to: 75,000 DRS Pension Plan True- up credit 50,000 Staff vacancies Lower Outside Services and 25,000 Travel and Other Employee expenses 0 2016 2017 2018 2019 2019 Budget 23 Comprehensive Financial Summary Fav (UnFav) 2017 2018 2019 2019 Budget Variance ($ in 000's) Actual Actual Actual Budget $ % Explanation Revenues 1. Operating Revenues 632,031 689,390 764,174 753,255 10,919 1.4% See details in the operating revenue slides 2. Tax Levy 71,702 71,771 73,801 74,160 (359) -0.5% In line with budget 3. PFCs 88,389 94,070 100,004 95,185 4,819 5.1% Commiserate to enplanement growth 4. CFCs 25,790 21,802 22,355 23,482 (1,126) -4.8% Release of matured bond reserve fund 5. Fuel Hydrant 7,000 6,942 6,742 7,022 (279) -4.0% In line with budget 6. Non-Capital Grants & Donations 6,705 1,573 2,880 2,655 225 8.5% Reimbursement from LEO and K9 7. Capital Contributions 30,112 43,650 17,736 49,345 (31,609) -64.1% Lower TSA OTA and FAA grants 8. Interest Income 12,174 26,287 54,078 30,903 23,175 75.0% Larger fund balance & unrealized gain on investments Total 873,902 955,484 1,041,771 1,036,007 5,764 0.6% Expenses 1. O&M Expense 372,982 397,638 443,089 454,986 11,896 2.6% See details in the operating expense slides 2. Depreciation 165,021 164,362 174,971 168,676 (6,294) -3.7% More new assets came into service 3. Revenue Bond Interest Expense 97,748 100,432 105,601 129,429 23,828 18.4% Less new bond issuance and Cap-I than budgeted 4. GO Bond Interest Expense 13,891 13,414 12,493 12,689 197 1.6% In line with budget 5. PFC Bond Interest Expense 4,931 4,368 3,547 3,606 58 1.6% In line with budget 6. Public Expense 4,588 5,269 12,986 21,009 8,023 38.2% Safe & Swift/Heavy Haul delay 7. Non-Op Environmental Expense 4,464 10,600 118 5,000 4,882 97.6% T30 Chev Cleanup complete 8. Other Non-Op Rev/Expense 10,441 3,217 21,959 1,415 (20,544) -1451.8% Assets retirements from NSAT, baggage system and T-5 Total 674,066 699,299 774,765 796,810 22,046 2.8% Special Item - 34,923 - - - 0.0% T117 Habitat Restoration Project Retro Adjustment to Net Position - 2,736 - - - 0.0% Change In Net Assets 199,836 218,526 267,007 239,197 27,810 11.6% 24 Portwide Capital Spending In 000's 900,000 816,286 Significant increase in capital spending in 750,000 the last two years. 617,748 596,633 2019 capital spending of 600,000 $597M was 73% of the budget. 450,000 Major projects in 2019 324,523 include IAF, NSAT, and 300,000 Checked Baggage Recap 169,461 Optimization. 150,000 0 2016 2017 2018 2019 2019 Budget 25 2020 Capital Budget Update Draft Plan of Budget (year- Division (in $000's) Finance end update) Capital Budget presented during the 2020 budget and plan of finance Airport 656,204 585,131 briefings is updated each Maritime 42,566 35,244 quarter. Economic Development 15,801 14,429 The 2019 Q4 update Central Services 20,048 19,171 establish es the approved Subtotal - Capital Projects 734,619 653,975 capital budget for 2020 incorpor ating the final CIP Cash Adjustment (99,066) (87,000) capital s pending in 2019 into the forecast for 2020. Total Proposed CIP 635,553 566,975 26 Key Takeaways 2019 saw continued growth in business activity across most segments except NWSA cargo and grain volumes, which were affected by Chinese tariffs While NOI for all divisions exceeded budget in 2019, actual performance was enhanced by expense offset of $16.5 million from State pension credit Expense trends being monitored to ensure alignment with future revenue growth 2020 impacts of Coronavirus are being assessed but too early to predictspending caution is warranted 27 Aviation Division Appendix 2019 Financial Performance Report Business Highlights: 2019 Goals SAFETY: Airfield composite safety score of 19 exceeds annual target of 18 Safety evaluation score of 105% vs. objective of 90% Individual not going home: 63 vs. 2019 goal < 52 SECURITY: Modified approach to Phase 2 employee screening for airfield will initiate mobile random screening team in Q1 2020. Perimeter Intrusion Detection system delayed, but on track for 2020. Annual TSA regulatory compliance audit completed. No significant findings. Airfield composite safety score exceeded goal 29 Business Highlights: 2019 Goals EMPLOYEE ENGAGEMENT: Goal was to increase employee engagement in the Aviation Division as evidenced by a 3% increase over the 2018 survey results by Q4 2019; however, decision was made to conduct survey in 2020 rather than Q4 2019. Each department implemented action plans to address opportunities. INNOVATIONS & EFFICIENCES: Conducted three Shark Tank innovation forums in 2019 Implement two efficiencies or innovations in each department completed 18 vs. target of 22 ASSET MANAGEMENT: Completed inventories of 50% of airport assets (on plan) Completed parking garage structural assessment by Q4 (on plan) Shark Tank forums generating great ideas 30 Business Highlights: 2019 Goals SOCIAL RESPONSIBILITY: Airport Concessions Disadvantaged Business Enterprise (ACDBE) share of sales = 26.8% vs. goal of 22% Disadvantaged Business Enterprise (DBE) share of FAA grant contract spending of 11.08% vs. goal of 8% Women and Minority Business Enterprise share of spending on non-construction contracts = 14.5% vs. goal of 12% CUSTOMER SERVICE: Exceeded five-year average for 3 of 6 key ASQ measures (goal was 2): Exceeded: Waiting time at Security Check Points; Internet Access/Wi-Fi; Airport staff courtesy/helpfulness Missed: Washroom cleanliness; Ease of wayfinding; Comfort of waiting/gate areas Exceeded targets for all social responsibility targets and exceeded customer service goal 31 Business Highlights: 2019 Goals ENVIRONMENT AND SUSTAINABILITY: Substantial progress on renewable natural gas contract Noise: substantial progress on sound insulation bid package for first condominium; insulated 17 single family homes Stormwater: Received King County approval on plan to meet effluent limits FINANCIAL PERFORMANCE: Achieved both 2019 goals: o Non-aeronautical NOI of $150.8M vs. budget of $136.6M o Airline costs (CPE) of $12.85 vs. budget of $13.39 Achieved financial goals; very close to fully achieving environmental goals 32 Business Highlights: 2019 Goals Major Capital Projects: North Satellite: Completed Phase 1 Started construction on Phase 2 International Arrivals Facility: Erection of center span and transport delayed (completed in January 2020) Pod C on track Baggage Optimization: Phase 1 90% complete Phase 2 design complete Phase 2 bids exceeded engineers estimate likely delay Sustainable Airport Master Plan (SAMP) Finalized NEPA scope of work; submitted updated forecast; progress on purpose and need, alternatives, existing conditions Progress on SAMP and major projects 33 Airport Activity Growth rate 60,000 14% 51,748 50,787 49,850 2019 Actual 12% 50,000 46,935 45,737 Int'l Passengers +4.0% Landed weight +4.0% Int'l Int'l Int'l Int'l 10% Cargo metric tons +4.9% 40,000 Passengers (in 000s) 8.0% 8% 30,000 6.2% 6% Growth rate 20,000 4.0 % 4% 2.6% 10,000 2% Domestic Domestic Domestic Domestic Domestic 0 0% 2016 2017 2018 2019 2019 Budget Total passenger growth ended with 4% growth for 2019 34 Airline Cost Management (CPE) CPE Revenue Sharing ($000s) 16.00 45000 42,310 2019 Budget: 40000 14.00 13.39 Adjusted revenue sharing 36,863 12 .85 37,395 per SLOA IV to 20% from 35000 12.00 40% in 2018 10.79 10.52 10 .10 30000 10.00 2019 CPE Actual: 25000 Higher than 2018 due to CPE 8.00 higher revenue requirements 20000 in 2019, but came in lower 6.00 than 2019 Budget due to 17,146 15,682 15000 Revenue Sharing (000s) increase in forecasted non- 4.00 airline revenues and lower 10000 expenses driven by pension 2.00 5000 credit and lower charges from other divisions - 0 2016 2017 2018 2019 2019 Budget 2019 Revenue Sharing down from 2018 based on change from 40% to 20% sharing 35 Non-Aeronautical Performance 2019 vs. 2018 Actual: Revenues 4.4% Increase, Non-Aero NOI ($000s) Non-Aero Revenue per Enplanement primarily in Clubs & Lounges, Ground 180,000 12.00 Transportation, ADR, Non- 10.35 10.40 160,000 10.11 Airline Terminal Space, & 9.70 10.22 10.00 Public Parking 149,959 150,752 140,000 133,101 136,534 128,727 Expenses 9.8% Increase 120,000 8.00 NOI 0.5% Increase 100,000 2019 Actual vs. Budget of 3.7% NOI (000s) 6.00 80,000 Rev Per Enplanement Revenue growth: Continued strong 60,000 4.00 performance in Clubs & 40,000 Lounges, ADR, Non-Airline 2.00 Terminal Space, and 20,000 Commercial Properties. - - - - - - - - Public parking came within 2016 - 2017 - 2018 - 2019 2019 Budget Budget Clubs & Lounges, ADR, Non-Airline Space, and TNCs drive positive revenue variance in 2019 36 Total Operating Expense Performance Total O&M Expense ($000s) O&M Expense per Enplanement 2019 Actual vs 2018 Actual: 450,000 16.00 $37.8M or 11.9% higher due to 2019 budget initiatives 13.78 14.42 400,000 14.00 12.77 12.81 366,105 2019 Actual vs 2019 Budget: 356 ,635 350,000 $9.5M favorable, 2.6% 11 .46 12.00 318,849- 300,000 299,114 Under-run driven primarily by: - 10.00 Pension Credit Adjustment O&M Expense (000s) 261,226 - to Payroll Expenses of 250,000 13.4M (6M Airport, 7.4M 8.00 Allocated from Other 200,000 Divisions) 6.00 150,000 O&M Expense per Enplanement The above Pension Credit 4.00 adjustment of 13.4M and 100,000 spending deferrals of 3M from other divisions absorbed 6.9M 2.00 50,000 of the over-runs in Direct - - - Airport Expenses - - 2016 2017 2018 2019 2019 Budget Cost savings primarily due to Pension Credit Adjustment and delayed project and program spending 37 Passengers (Growth Comparison) Growth Rate (Actual) Budget Assumed Growth Rate 9% 8.0% 8% 7% 6.2% 6% 5.5% 5.0% Growth Rate 5% 4.8% 4.0% 4.0% 4% 3.0% 3% 2.6% 2.2% 2% 1% 0% 2013 2016 2017 2018 2019 Passenger updated growth forecast is 4% vs. initial 3% 38 Airport Activity % Change Passenger Activity 2017 2018 2019 from 2018 Change 2019 Market Total Passengers (000's) Airline 2018 v. 2019 Share Domestic 41,804 44,422 46,101 3.8% Alaska 4.7% 49.4% International 5,130 5,428 5,728 5.5% Delta 9.9% 24.4% Total 46,935 49,850 51,829 4.0% United -7.0% 5.7% Southwest -8.8% 5.6% Operations 416,124 438,391 450,487 2.8% American -6.5% 4.7% Landed Weight (In Millions of lbs.) Cargo 2,323 2,471 2,485 0.6% All other 26,107 27,879 29,078 4.3% 2019 Year End: Total 28,431 30,350 31,562 4.0% Passenger growth of 4% over Cargo - Metric Tons 2018 Actuals, consistent with Domestic freight 242,271 241,397 252,671 4.7% forecasted growth of 4% for International freight 123,934 133,274 143,647 7.8% 2019, and surpassed original Mail 59,651 57,644 57,231 -0.7% budget of 3% growth Total 425,856 432,315 453,549 4.9% 2019 total passenger growth of 4.0% 39 Aviation Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Operating Revenues: Aeronautical Revenues 264,114 291,268 357,598 365,604 (8,006) -2.2% 66,330 22.8% Non-Aeronautical Revenues 236,803 257,707 269,037 259,537 9,501 3.7% 11,331 4.4% Total Operating Revenues 500,916 548,975 626,636 625,140 1,495 0.2% 77,661 14.1% Total Operating Expense 299,114 318,849 356,635 366,105 9,470 2.6% 37,786 11.9% Net Operating Income 201,802 230,126 270,001 259,036 10,965 4.2% 39,875 17.3% Capital Expenditures 293,785 579,135 573,598 767,732 194,134 25.3% (5,537) -1.0% (1) Annual non-cash amortization of $17.9M lease incentive related to the 5 year SLOA III agreement which ended in 2017. 2019 Actual NOI $10.9M favorable to budget 40 Key Performance Measures Fav (UnFav) Incr (Decr) CPE 2019 Actual vs 2018 Actuals: 2017 2018 2019 2019 Budget Vairance Change from 2018 CPE increase Impacted by SLOA IV Actual Actual Actual Budget $ % $ % reduction in Revenue Sharing to Key Performance Metrics 20% in 2019 from 40% in 2018 Cost per Enplanement (CPE) 10.52 10.79 12.85 13.39 0.53 4.0% 2.07 19.1% Non-Aeronautical NOI (in 000's) 133,101 149,959 150,752 136,534 14,218 10.4% 793 0.5% Non-Aero NOI 2019 Forecast vs 2019 Budget: Other Performance Metrics Non- Aero NOI growth due to O&M Cost per Enplanement 12.77 12.81 13.78 14.42 0.63 4.4% 0.98 7.6% higher forecasted Non -Aero Non-Aero Revenue per Enplanement 10.11 10.35 10.40 10.22 0.18 1.7% 0.05 0.4% Revenue Debt per Enplanement (in $) 114 133 133 123 (9) -7.7% (0) -0.3% Debt Service Coverage 1.57 1.66 1.68 1.65 0.03 2.1% 0.02 1.4% Other Performance Metrics: Days cash on hand (10 months = 304 days) 379 235 314 278 36 13.0% 79 33.5% Aero Revenue Sharing Forecast Aeronautical Revenue Sharing ($ in 000's) (42,311) (36,863) (17,146) (15,682) (1,464) -9.3% 19,717 53.5% reflects 20% Revenue Sharing per SLOA IV. Activity (in 000's) Enplanements 23,416 24,894 25,874 25,394 480 1.9% 980 3.9% Positive: Non-aero NOI above budget. CPE below budget. 41 Aviation Expense YE Summary Fav (UnFav) Incr (Decr) 2019 Actual to 2019 Budget 2017 2018 2019 2019 Budget Variance Change from 2018 Total Operating Expenses = $9.5M $ in 000's Actual Actual Actual Budget $ % $ % favorable with 13.4M in Pension Credit Operating Expenses: (6M Airport, 7.4M Allocated from Other Payroll 114,463 125,341 132,688 135,611 2,923 2.2% 7,347 5.9% Divisions) Outside Services 41,055 47,638 54,774 60,950 6,175 10.1% 7,137 15.0% Utilities 16,374 18,237 18,115 20,235 2,120 10.5% (122) -0.7% Without the Pension Credit, Total Other Airport Expenses 28,292 25,125 36,804 28,397 (8,407) -29.6% 11,680 46.5% Operating Expenses would be = $3.9M Total Airport Direct Charges 200,184 216,341 242,382 245,192 2,810 1.1% 26,041 12.0% unfavorable Environmental Remediation Liability 8,812 6,233 15,900 14,259 (1,641) -11.5% 9,667 155.1% Airport Expenses Only would have been Capital to Expense 2,856 6,891 2,089 - (2,089) 0.0% (4,802) -69.7% unfavorable by 6.9M primarily due to Total Exceptions 11,668 13,124 17,989 14,259 (3,730) -26.2% 4,865 37.1% the following: 3.1M over in Payroll Total Airport Expenses 211,852 229,465 260,371 259,451 (920) -0.4% 30,906 13.5% 3.8M over in Non-Payroll 15.9% 1.6M over in ERL expense Police Costs 17,652 19,231 22,290 25,137 2,848 11.3% 3,059 7.5M over in Other expenses (1.6M in Capital Development 14,701 12,607 12,906 16,242 3,336 20.5% 299 2.4% litigated expenses, 3.3M maintenance exp mostly due to snow impact, 2.6M in other) Other Central Services 51,004 53,121 56,135 60,129 3,994 6.6% 3,014 5.7% Partially offset by Savings from 3.2M in Maritime/Economic Development 3,904 4,425 4,933 5,145 212 4.1% 509 11.5% Outside Services and 2.1M in Utilities Total Charges from Other Divisions 87,262 89,384 96,264 106,654 10,389 9.7% 6,880 7.7% Over-run in Airport Expenses (without the Pension Credit) was partially Total Operating Expense 299,114 318,849 356,635 366,105 9,470 2.6% 37,786 11.9% absorbed by savings due to schedule and spending delays from other divisions of 3M OPEX w/Pension Credit is 9.5M or 2.6% Favorable. Otherwise $3.9M or 1.1% Unfavorable. 42 Aeronautical Business YE Fav (UnFav) Incr (Decr) 2019 Actual to Budget 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Aero Revenue - $8.1M unfavorable Revenues: Rate based revenue $6.5 M lower Movement Area 108,638 116,703 123,436 130,873 (7,437) -5.7% 6,733 5.8% driven primary by savings in Apron Area 16,771 15,627 22,016 19,714 2,302 11.7% 6,389 40.9% Payroll (see Aero Expenses Terminal Rents 155,431 169,318 205,283 203,319 1,965 1.0% 35,965 21.2% explanation below) Federal Inspection Services (FIS) 18,612 16,226 12,321 14,521 (2,199) -15.1% (3,905) -24.1% Total Rate Base Revenues 299,452 317,874 363,057 368,426 (5,370) -1.5% 45,183 14.2% Revenue sharing $1.6M higher to Signatory Airlines primarily Commercial Area 10,574 10,257 11,687 12,859 (1,172) -9.1% 1,430 13.9% driven by lower revenue Subtotal before Revenue Sharing 310,026 328,131 374,744 381,286 (6,542) -1.7% 46,613 14.2% requirement as a result of pension credit, and to a lesser degree Revenue Sharing (42,311) (36,863) (17,146) (15,682) (1,464) -9.3% 19,717 53.5% higher non-aero revenue Other Prior Year Revenues (26) - - - - 0.0% - Total Aeronautical Revenues 267,690 291,268 357,598 365,604 (8,006) -2.2% 66,330 22.8% Aero Expenses $4.8M favorable Driven primarily by savings in Total Aeronautical Expenses 195,414 211,101 238,349 243,102 4,753 2.0% 27,248 12.9% Payroll: Approx. 2.1M in Pension Net Operating Income 72,276 80,167 119,249 122,502 (3,253) -2.7% 39,083 48.8% Year End credit adjustment to Aero, and 1.4M Sal/Wages Debt Service (1) (86,564) (91,673) (110,945) (109,343) (1,601) -1.5% (19,272) -21.0% charged to Capital Net Cash Flow (14,288) (11,506) 8,305 13,159 (4,854) 36.9% 19,811 172.2% Lower Aeronautical Revenues primarily driven by spending delays in outside services, projects, and program spending 43 Aero Cost Drivers Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 2019 Actual to 2019 Budget ($5.4M) lower in Rate Based $ in 000's Actual Actual Actual Budget $ % $ % Revenues from O&M costs is O&M 192,188 206,076 231,927 237,387 (5,460) -2.3% 25,851 12.5% driven primarily by savings Debt Service Gross 113,832 115,419 135,902 136,513 (611) -0.4% 20,483 17.7% in Payroll - approx. 2.1M in Debt Service PFC Offset (33,057) (32,987) (33,036) (33,045) 10 0.0% (48) 0.1% Pension Year End credit adjustment, and from more Amortization 29,654 32,371 30,599 30,121 478 1.6% (1,772) -5.5% charges to Capital projects Space Vacancy (2,264) (2,132) (1,516) (1,521) 5 -0.4% 616 -28.9% Debt Service and TSA Operating Grant and Other (901) (873) (820) (1,028) 208 -20.3% 53 -6.1% Amortization is in-line with Rate Base Revenues 299,452 317,874 363,057 368,426 (5,370) -1.5% 45,183 14.2% budget Commercial area 10,574 10,257 11,687 12,859 (1,172) -9.1% 1,430 13.9% Total Aero Revenues 310,026 328,131 374,744 381,286 (6,542) -1.7% 46,613 14.2% Aero rate base revenues based on cost recovery formulas 44 Aero Revenue Sharing Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Aero Revenues (incl' commercial) 310,026 328,131 374,744 381,286 (6,542) -1.7% 46,613 14.2% Non-Aeronautical Revenues 236,803 257,707 269,037 259,537 9,501 3.7% 11,331 4.4% Total O&M Expenses (299,114) (318,849) (356,635) (366,119) 9,485 -2.6% (37,786) 11.9% Net Operating Income 247,714 266,989 287,147 274,703 12,444 4.5% 20,158 7.6% ADF Interest Income Q4 N ATE 4,242 3,752 5,356 6,352 (996) -15.7% 42.7% Security Checkpoint TSA Grant 1,039 1,001 1,049 1,028 21 2.0% 48 4.8% Misc. Non-Operating Expenses (1,799) (1,586)U pdate N (800) (1,311) eede511 -39.0% d1,604 787 -49.6% CFC Excess (2,750) (7,724) (6,889) (3,993) (2,896) 72.5% 834 -10.8% Available for Debt Service [ a]248,446 262,433 285,863 276,780 9,083 3.3% 23,430 8.9% Debt Service 131,060 136,218 160,243 158,696 1,548 1.0% 24,025 17.6% Debt Service x 1.25 [b]163,825 170,273 200,304 198,369 1,935 1.0% 30,031 17.6% Available for revenue sharing [c]=[a]-[b]84,621 92,159 85,559 78,410 7,148 9.1% (6,601) -7.2% Revenue Sharing [ d]=[c]*0.5 42,310 (1) 36,864 17,146 15,682 1,464 9.3% (19,718) -53.5% Higher revenue sharing percentage due to higher non-aero NOI and lower expenses 45 Non-Aeronautical Business YE Fav (UnFav) Incr (Decr) 2019 Actuals to 2018 Actuals 2017 2018 2019 2019 Budget Variance Change from 2018 Non-Aero Revenue - $ in 000's Actual Actual Actual Budget $ % $ % Rental Car concession revenue flat to Non-Aero Revenues PY, CFC operating revenue decline due to Rental Cars - Operations 35,051 37,306 36,793 36,455 339 0.9% (513) -1.4% higher debt service in 2019. Rental Cars - Operating CFC 10,641 16,263 15,773 13,624 2,149 15.8% (490) -3.0% Public Parking 75,106 80,212 82,125 82,350 (226) -0.3% 1,913 2.4% Parking revenue growth due to higher enplanements and net impact of parking Ground Transportation 15,684 18,772 20,765 19,734 1,031 5.2% 1,993 10.6% rate increase to General Parking Airport Dining & Retail 54,611 59,021 61,615 59,484 2,131 3.6% 2,593 4.4% beginning in July 2019. Non-Airline Terminal Leased Space 4,369 5,302 6,398 4,909 1,489 30.3% 1,096 20.7% Commercial Properties 18,042 15,434 15,773 14,219 1,554 10.9% 339 2.2% GT driven by TNC revenue growth, Utilities 7,018 7,206 7,431 8,058 (627) -7.8% 225 3.1% partially offset by decline in demand for Employee Parking 9,617 10,269 10,438 10,134 304 3.0% 168 1.6% taxis Clubs and Lounges 5,041 6,802 10,274 8,520 1,753 20.6% 3,472 51.0% Airport Dining & Retail strong Other 1,624 1,119 1,653 2,049 (395) -19.3% 534 47.7% performance in Food & Beverage sales and Advertising revenue is partially offset by Total Non-Aero Revenues 236,803 257,707 269,037 259,537 9,501 3.7% 11,331 4.4% decline in Duty Free sales. Retail revenue Total Non-Aero Expenses 103,702 107,748 118,286 123,003 4,717 3.8% 10,538 9.8% includes $1.5M prior year adjustment Net Operating Income 133,101 149,959 150,752 136,534 14,218 10.4% 793 0.5% recognized in 2019. Less: CFC (Surplus) / Deficit (1) (2,750) (7,724) (6,889) (3,993) (2,896) -72.5% 834 10.8% Clubs demand driven growth continues. Adjusted Non-Aero NOI 130,351 142,235 143,862 132,540 11,322 8.5% 1,627 1.1% All other Non-Aero revenue showing Debt Service (1) (44,495) (44,545) (49,299) (49,352) 54 0.1% (4,753) -10.7% steady growth Net Cash Flow 85,856 97,690 94,564 83,188 11,376 13.7% (3,126) -3.2% Expenses - planned spending in line with 2019 Budget initiatives (1) CFC excess and Debit service are forecasted/budgeted on an annual basis only. Thus, quarterly data is not available. NOI 10.4% favorable to Budget, 0.5% higher than 2018 46 Public Parking Performance YE Public Parking - Revenue Detail Fav (UnFav) Incr (Decr) 2019 Actual vs. 2018 Actual 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Garage General Parking Parking Garage Revenue to Port Revenue to Port - General Parking 68,024 72,473 73,779 74,554 (775) -1.0% 1,306 1.8% revenue growth YOY primarily Other Garage Revenue driven by higher Premier Corporate Parking 958 1,225 1,415 1,247 168 13.4% 189 15.4% Passport Parking Program 2,990 3,219 3,582 3,330 252 7.6% 363 11.3% enplanements and a price Revenue to Port - Parking Programs 3,947 4,444 4,997 4,578 419 9.2% 552 12.4% increase to General Parking Total Parking Garage Revenue 71,971 76,917 78,776 79,132 (356) -0.4% 1,859 2.4% Other Parking Revenue beginning in July 2019. Concession Rent - Doug Fox off-site parking 3,109 3,238 3,292 3,200 92 2.9% 54 1.7% Parking programs - demand All Other Parking Revenue 25 56 56 19 37 197.7% 0 0.7% Total Parking Revenue 75,106 80,212 82,125 82,350 (226) -0.3% 1,913 2.4% driven growth continues . Parking Transactions by duration Fav / (UnFav) Incr / (Decr) 2017 2018 2019 Budget Variance Change from 2018 in 000's Actual Actual Actual Budget # % # % 2019 Actual vs. 2019 Budget Total Enplanements 23,416 24,894 25,874 25,394 480 1.9% 980 3.9% O&D % 70.4% 71.2% 71.2% 70.3% 0.9% 1.3% 0.0% 0.0% Garage General Parking O&D Enplanements 16,485 17,725 18,422 17,852 570 3.2% 697 3.9% customer preference for other Revenue per O&D Enplanement Metrics Public Parking $ 4.13 $ 4.09 $ 4.00 $ 4.18 $ (0.17) -4.1% $ (0.08) -2.1% modes of transportation and Premier Corporate Parking $ 0.06 $ 0.07 $ 0.08 $ 0.07 $ 0.01 9.9% $ 0.01 11.1% 3rd party parking lots more Passport Parking Program $ 0.18 $ 0.18 $ 0.19 $ 0.19 $ 0.01 4.2% $ 0.01 7.1% Total Garage Revenue per O&D Enplanement $ 4.37 $ 4.34 $ 4.28 $ 4.43 $ (0.16) -3.5% $ (0.06) -1.5% than offset the mid-year price Concession Rent - Doug Fox off-site parking $ 0.19 $ 0.18 $ 0.18 $ 0.18 $ (0.00) -0.3% $ (0.00) -2.2% increase. All Other Parking Revenue $ 0.00 $ 0.00 $ 0.00 $ 0.00 $ 0.00 188.5% $ (0.00) -3.1% Total Parking per O&D Enplanement $ 4.56 $ 4.53 $ 4.46 $ 4.61 $ (0.16) -3.4% $ (0.07) -1.5% Strong enplanements growth and tariff rate increases driving parking revenue growth 47 Rental Car Performance YE Rental Car - Revenue Detail Fav / (UnFav) Incr / (Decr) Key message: 2017 2018 2019 2019 Budget Variance Change from 2018 Rental Car revenue continues to be impacted by $ in 000's Actual Actual Actual Budget $ % $ % Total Enplanements 23,416 24,894 25,874 25,394 480 1.9% 980 3.9% availability of other transportation alternatives (light O&D % 70.4% 71.2% 71.1% 70.3% 0.8% 1.1% -0.1% -0.1% rail, TNCs, car-sharing, etc.) O&D Enplanements 16,485 17,725 18,396 17,852 545 3.1% 672 3.8% 2019 Actual vs. 2018 Actual Gross Sales by Operators 313,654 334,355 328,156 326,665 1,491 0.5% (6,199) -1.9% Total Transactions 1,388 1,416 1,414 1,396 18 1.3% (2) -0.2% Rental Car Concession revenue - Declining faster than Average Ticket $226.03 $236.08 $232.06 $234.00 ($1.94) -0.8% ($4.02) -1.7% enplanements. Concession Revenue is impacted by (3) Average Length of Stay 4.37 4.44 4.49 4.43 0.06 1.5% 0.06 1.3% key indicators: Transactions/O&D Enplanements 8.42% 7.99% 7.69% 7.82% -0.13% -1.7% -0.30% -3.8% Expected continuation of decline in Transactions CFC Revenue Summary Total Transaction Days 6,067 6,286 6,356 6,184 172 2.8% 70 1.1% per O&D Enplanement reflects trend in passenger CFC Rate per Transaction Day $6.00 $6.00 $6.00 $6.00 $0.00 0.0% $0.00 0.0% preference shifting to other transportation options, CFC Revenue Earned 36,404 37,716 38,137 37,106 1,032 2.8% 421 1.1% most notable in short-term (1-day) rentals Other CFC Collections 27 349 (9) 0 (9) N/A (358) -102.5% Average length of stay is increasing as 1-day rentals Total CFC Revenue 36,430 38,065 38,128 37,106 1,023 2.8% 64 0.2% have declined significantly, due to shift in customer Debt Service Reserve Requirement (25,790) (21,802) (23,655) (23,482) (174) 0.7% (1,854) 8.5% preference to other transportation alternatives. Reserve Fund Release (bond maturation ) - - 1,300 - 1,300 N/A 1,300 N/A Average ticket price is a function of rental car Net Debt Service (25,790) (21,802) (22,355) (23,482) 1,126 -4.8% (554) 2.5% pricing and customer demand, and can vary Residual - CFC Operating Revenue 10,641 16,263 15,773 13,624 2,149 15.8% (490) -3.0% significantly. The average ticket price has fallen due Rental Car - Revenue Summary Fav / (UnFav) Incr / (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 to pricing competition, partially offset by erosion of $ in 000's Actual Actual Actual Budget $ % $ % short-term rentals to other transportation modes. RCF Concession Revenue to Port 31,352 33,474 32,870 32,666 203 0.6% (604) -1.8% CFC Operating Revenue YOY decline primarily due to Residual - CFC Operating Revenue: 10,641 16,263 15,773 13,624 2,149 15.8% (490) -3.0% increase in debt service compared to prior year Land Rent/Space Rent/Other 3,699 3,833 3,924 3,788 136 3.6% 91 2.4% Total Rental Cars Operating Revenue 45,691 53,569 52,567 50,079 2,488 5.0% (1,003) -1.9% Reduced transactions per O&D enplaned passenger 48 Ground Transportation YE Ground Transportation - Revenue Detail Fav (UnFav) Incr (Decr) Key message: 2017 2018 2019 2019 Budget Variance Change from 2018 Significant changes in customer preferred ground $ in 000's Actual Actual Actual Budget $ % $ % transportation alternatives are reflected in both revenue Ground Transportation Revenues and trip activity between GT operator categories. Transportation Network Companies 6,940 10,349 12,982 11,574 1,408 12.2% 2,633 25.4% 2019 Actual vs. 2018 Actual On Demand Taxis 5,199 4,475 3,578 4,176 (598) -14.3% (898) -20.1% On Demand Limos 858 853 837 842 (5) -0.6% (16) -1.8% GT Revenue forecast compared to prior year: Belled In Taxis (Annual Permit) 45 35 27 33 (6) -16.8% (8) -21.5% TNC revenue in 2019 reflects continued shift in Pre-Arranged Limos (Annual Permit) 626 635 611 588 23 3.9% (24) -3.8% customer preference, from all other landside modes Courtesy Cars (cost recovery) 1,319 1,660 2,019 1,919 100 5.2% 358 21.6% of transportation. All other Operators (cost recovery) 394 340 418 388 30 7.8% 78 22.8% Taxi revenue continues to erode in comparison to Other Misc Revenues 303 424 293 214 79 37.0% (131) -30.9% TNCs. Total GT Revenue 15,684 18,772 20,765 19,734 1,031 5.2% 1,993 10.6% Revenue from all other GT operator categories Trip Activity Fav / (UnFav) Incr / (Decr) 2017 2018 2019 2019 continues to reflect changes in market demand. Budget Variance Change from 2018 in 000's Actual Actual Actual Budget # % # % Overall GT revenue growing more than 10% Ground Transportation Trips compared to prior year due to TNCs paying a higher Transportation Network Companies 1,277 1,715 2,172 1,929 243 12.6% 457 26.6% trip fee, on average. On Demand Taxis 750 723 616 696 (80) -11.5% (108) -14.9% On Demand Limos 72 69 65 67 (2) -3.4% (4) -6.1% GT Trip Activity forecast compared to prior year: Belled In Taxis (Annual Permit) 56 18 13 18 (5) -26.3% (5) -28.6% Trip volume for all other GT operator categories Pre-Arranged Limos (Annual Permit) 337 347 65 344 (279) -81.1% (282) -81.3% continues to adjust to market demand. Courtesy Cars (cost recovery) 1,175 1,209 1,236 1,160 76 6.5% 27 2.2% Overall trip volume grew 2.3% compared to prior All other Operators (cost recovery) 79 63 74 57 17 30.1% 11 17.7% year. Total GT Trip Activity 3,746 4,145 4,240 4,271 (31) -0.7% 95 2.3% TNC growth continue to outpace enplanement growth 49 Airport Dining & Retail YE Fav / (Unfav) Budget Incr / (Decr) from 2019 vs. 2018 Actuals YTD Airport Dining & Retail 2017 YTD 2018YTD 2019 Year-to-Date Variance 2018 Food & Beverage Strong sales Org Basis (in 000's) Actual Actual Actual Budget $ % $ % growth on concourse D and Central ADR Revenue terminal offset a decline on North Food & Beverage 21,579 23,132 26,436 23,780 2,656 11.2% 3,304 14.3% Satelite. Retail 13,989 17,005 16,313 15,445 868 5.6% (692) -4.1% Retail Sales 2019 Forecast Duty Free 6,912 7,026 6,189 7,497 (1,308) -17.4% (837) -11.9% includes a favorable $0.8M prior Personal Services 3,728 3,951 3,847 3,785 62 1.6% (104) -2.6% period adjustment from Advertising 6,662 6,432 7,326 6,896 430 6.2% 894 13.9% reconciliation of 3 leases. Space Rental - Terminal 1,292 1,351 1,298 1,385 (87) -6.3% (53) -4.0% Convenience Retail 'grab'n'go" All other revenue 449 125 328 697 (369) -53.0% 203 163.2% food sales declined as expected in Total ADR Revenue 54,611 59,022 61,737 59,484 2,253 3.8% 2,715 4.6% 2019 after strong growth in 2018 as new restaurants opened after Sales per Enplanement leases transitioned in 2019/2018. SPE - Food & Beverage $ 7.18 $ 7.34 $ 7.55 $ 7.30 $ 0.25 3.4% $ 0.21 2.8% Duty Free - Sales continue to lag, SPE - Retail Sales $ 4.07 $ 4.38 $ 3.99 $ 3.88 $ 0.11 2.8% $ (0.38) -8.8% likely due to stricter Chinese SPE - Duty Free $ 0.91 $ 0.83 $ 0.77 $ 0.90 $ (0.13) -14.3% $ (0.06) -7.7% enforcement of existing tariffs. SPE - Personal Services $ 0.95 $ 0.94 $ 0.83 $ 0.92 $ (0.08) -9.1% $ (0.11) -11.6% Expect further reductions due to decline in Asian passengers. SPE - Airport Dining & Retail $ 13.12 $ 13.50 $ 13.15 $ 13.00 $ 0.15 1.1% $ (0.35) -2.6% Advertising - continued to grow with Clear Channel relationship Strong performance in Food & Beverage continues 50 Commercial Properties YE Fav / (Unfav) Incr / (Decr) from 2019 Forecast vs. 2018 Actuals YTD Non-Aero Commercial Properties (3630) 2017 YTD 2018 YTD 2019 Year to Date Bdgt Variance 2018 Subclass Basis (in 000's) Actual Actual Actuals Budget $ % $ % Revenue In-Flight Meal Revenue In-Flight Kitchen Revenue 7,827 8,705 10,053 8,634 1,419 16.4% 1,349 15.5% growth continues to Land Rental 2,562 4,009 4,658 4,605 54 1.2% 650 16.2% outpace the growth in DMCP In Lieu Revenue 5,879 483 547 547 1 0.1% 65 13.4% enplanements. Burien NERA 3 FAA Pilot Program grant 1,402 1,807 49 - 49 100% (1,758) -97.3% All Other Commercial Properties Revenue 372 430 465 434 31 7.1% 34 8.0% Non-Aero commercial real Non-Aero Commercial Properties Revenue: 18,042 15,433 15,773 14,219 1,554 10.9% 340 2.2% estate portfolio now stable, Expenses as construction on DMCBP pre paid frontage fee amortization 3,924 346 346 371 25 6.7% - 0.0% new development NERA Grant Expenses 1,589 2,105 - - - n/a (2,105) -100% properties is complete and Outside Services 223 48 87 81 properties have all All Other Commercial Properties Expenses 192 161 198 227 29 12.6% 37 22.8% transitioned to full land Non-Aero Commercial Properties Expenses: 5,928 2,661 631 679 54 7.9% (2,029) -76.3% rental rates. Occupancy is NOI before Allocations 12,114 12,773 15,141 13,541 1,607 11.9% 2,369 18.5% stable on existing properties. NERA grant program ended in mid-2018 In-flight meal revenue growth continues to outpace enplanement growth 51 2019 Capital Expenditures $ in 000's 2019 2019 Budget Variance Description YTD Actual Budget $ % (1) Steel fabrication and trade staffing challenges have caused significant delays to the project. International Arrivals Fac-IAF (1) 311,613 376,548 64,935 17.2% (2) Delay with mechanical air handling equipment purchase, construction labor NS NSAT Renov NSTS Lobbies (2) 133,219 141,054 7,835 5.6% leveling efforts both contributed to annual cashflow variance. (3) Originally, the construction was to be done in one year, but construction timing SD Pond Bird Deterrent Improv (3) 3,489 9,620 6,131 63.7% has now shifted into year two. AFLD Pvmnt Program 2016-2020 (4) 4,593 10,350 5,757 55.6% (4) WP U00495 (2019AIP) had bid much lower than engineer's estimate. WP U00503 (2020 AIP) scope originally was to be in four key locations on the Terminal Security Enhancements (5) 1,796 6,700 4,904 73.2% Airfield. AVOPs indicated that the original scope locations were too disruptive. The 2020 project scope was adjusted to align with operations request. RCF Pavement Remediation (6) 810 5,200 4,390 84.4% (5) 2019 Baseline cashflow prepared prior to scope revision (sidewalk surfacing). Checked Bag Recap/Optimization (7) 21,973 25,865 3,892 15.0% Scope revision contributed to a four month construction delay. Subsequently, bids were cancelled and construction did not start in 2019. Arc Flash Mitigation (8) 80 3,636 3,556 97.8% (6) 2019 Baseline cashflow prepared prior to scope revision (security fencing). Service Tunnel Renewal/Replace (9) 11,694 15,000 3,306 22.0% Scope revision delayed construction by two months. Subsequent to scope revision, construction delayed by an additional month due to a bid protest. Highline School Insulation (10) 6 3,300 3,295 99.8% (7) Contractor is six months behind schedule, spending is behind original estimate. Parking Garage Elevators Modernization (11) 483 3,590 3,107 86.6% (8) Design delays have postponed the start of construction until 2020. (9) 2019 Baseline cashflow assumed traffic management change order was Fire Station - Westside (12) 949 4,000 3,051 76.3% implemented, ultimately, this did not occur. Furthermore, reduced spending on work in the main garage also contributed to the variance. SSAT Infrastructure HVAC (13) 9,072 6,250 (2,822) -45.1% (10) Awaiting grant issuance for project to commence. (11) Work project U00434 - elevator shafts and vestibules is being delayed until 2020 All Other 73,822 156,618 82,796 52.9% construction season due to design delays and weather windows. (12) A change in delivery method (from two major works contracts to one contract) Total Spending 573,598 767,732 194,134 25.3% has resulted in a delay in the construction start date until Q2 2020. (13) Adjusted the work areas to allow the contractor more efficiencies with larger spaces to complete the work, accelerating spending this year. YTD spending variances primarily due to delayed Capex spending 52 SAMP Overview YTD Summary Fav (Unfav) Inc (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % SAMP Completion & Transition to Env Review 1,335 462 148 300 152 50.7% (314) -68.0% Adv Planning IDIQ - Master Plan 1,141 3,905 2,448 4,000 1,552 38.8% (1,457) -37.3% Environmental Review - Master Plan 169 521 866 1,600 734 45.9% 345 66.2% SAMP Utilities Master Plan 276 459 1,358 2,000 642 32.1% 899 195.9% Total SAMP-Related Spending 2,921 5,347 4,820 7,900 3,080 39.0% (527) -9.9% YTD timing delay in Environmental Review and Advanced Planning 53 Maritime Division Appendix 2019 Financial Performance Report Maritime Financial Highlights Maritime Net Income is $1,723K favorable to budget and $3,283K below 2018 Revenue unfavorable to budget by $441K (-1%) due to utility revenues and lower recreational boating occupancy for non-liveaboards. Revenue $1.7M or 3% higher than 2018 driven by Cruise rate and passenger increases, offset by reduction in Grain volumes and leases from WSDOT. Expenses $2.2M favorable to budget driven by favorable pension adjustment. Expense are up $5.4M or 12% Y/Y. Growth seen in one time direct expenses, maintenance allocations, environmental, and central services. Capital budget $10M or 56% Fav (UnFav) Incr (Decr) below budget. 2017 2018 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Total Revenues 54,183 57,575 59,289 59,729 (441) -1% 1,714 3% Stormwater Utility revenue Total Operating Expenses 42,164 43,252 48,644 50,822 2,177 4% 5,392 12% and expenses were each 1% Net Operating Income 12,020 14,323 10,644 8,908 1,737 19% (3,678) -26% above budget. Depreciation 17,410 18,022 17,627 17,613 (14) 0% (395) -2% Net Income (5,390) (3,699) (6,982) (8,705) 1,723 20% (3,283) -89% 55 Maritime 2019 Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Ship Canal Fishing & Operations 2,854 3,502 3,929 4,021 (92) -2% 427 12% Elliott Bay Fishing & Commercial Operations 6,443 6,755 6,095 5,927 169 3% (659) -10% Recreational Boating 11,086 12,035 12,484 12,794 (311) -2% 449 4% Cruise 17,596 18,880 22,410 22,406 4 0% 3,530 19% Grain 5,427 5,167 4,266 4,254 12 0% (901) -17% Maritime Portfolio Management 10,787 11,305 10,108 10,328 (220) -2% (1,198) -11% Other (9) (69) (3) 0 (3) NA 66 -96% Total Revenue 54,183 57,575 59,289 59,729 (441) -1% 1,714 3% Expenses Maritime (Excl. Maint) 11,937 11,326 13,364 13,957 592 4% 2,039 18% Economic Development 4,172 4,347 4,987 4,996 9 0% 640 15% Total Direct 16,109 15,673 18,352 18,953 601 3% 2,679 17% Maintenance Expenses 10,420 11,416 12,186 11,980 (206) -2% 770 7% Envir Services & Planning 1,078 1,553 2,250 2,559 309 12% 697 45% Seaport Project Management 240 295 175 222 48 21% (120) -41% Total Support Services 11,739 13,265 14,611 14,761 151 1% 1,346 10% IT 2,711 2,558 2,685 2,788 103 4% 127 5% Police Expenses 3,756 4,041 4,086 4,473 387 9% 45 1% External Relations 1,346 1,379 1,564 1,646 82 5% 185 13% Other Central Services 6,302 6,117 7,069 7,995 925 12% 952 16% Aviation Division / Other 202 220 278 206 (72) -35% 58 26% Total Central Services / Other 14,316 14,315 15,682 17,108 1,425 8% 1,367 10% Total Expense 42,164 43,252 48,644 50,822 2,177 4% 5,392 12% NOI Before Depreciation 12,020 14,323 10,644 8,908 1,737 19% (3,678) -26% Depreciation 17,410 18,022 17,627 17,613 (14) 0% (395) -2% NOI After Depreciation (5,390) (3,699) (6,982) (8,705) 1,723 20% (3,283) -89% 56 Maritime Division Financial Trends In 000s Variance from 2018 80,000 Revenue Up $1.7M/3% 70,000 Cruise up $3.5M. Grain and Portfolio Management down 60,000 Depreciation $2.1M 50,000 Central Services / Other 40,000 Expense up $5M/8% Direct up $2.7M/17% Support Services 30,000 $1.1M in Capital Expense $.9M in Environmental 20,000 Direct Remediation Support Services up $1.3M/10% from 10,000 Revenue Maintenance and Environmental Central Services up $1.4M/10% - 2014 2015 2016 2017 2018 2019 Act 2019 Bud Depreciation down $.4M/-2% 57 Cruise Financial Trends In 000s 25,000 Variance from 2018 20,000 Revenue Up $3.5M/19% Depreciation Tariff increase Passenger growth Central Services / Other 15,000 Expense up $1.7M/11% Direct up $1.2M/42% Support Services Other Contracted Services up 10,000 $.5M due to Port Valet program Expenses from on hold capital Direct projects up $.5M 5,000 Central Services up $.5M/12% Depreciation down $.3M/-5% Revenue - 2016 2017 2018 2019 Act 2019 Bud 58 Recreational Boating Financial Trends In 000s Variance from 2018 16,000 Revenue Up $449K/4% 14,000 Rate increase offset partially by occupancy. 12,000 Depreciation Expense up $1.1M/9% 10,000 Direct up $523K/14% Central Services / Other 8,000 Payroll, Utility, Bad Debt Support Services up $94K/3% Support Services 6,000 Central Services up $632K/20% Depreciation down $109K/-4% 4,000 Direct 2,000 Revenue - 2016 2017 2018 2019 Act 2019 Bud Includes Shilshole Bay Marina, Bell Harbor Marina, and Harbor Island Marina. 59 Ship Canal Fishing & Ops Trends In 000s Variance from 2018 10,000 Revenue Up $427K/12% 9,000 Full year of Salmon Bay Marina in 2019 8,000 vs year in 2018 Depreciation 7,000 6,000 Expense up $1.1M/15% Central Services / Other Direct up $541K/23% 5,000 Salmon Bay Marina and Asset Support Services Retirement Obligation 4,000 Support Services up $203K/12% from 3,000 Direct Maintenance and Environmental Central Services up $121K/8% 2,000 Revenue Depreciation up $277K/15% 1,000 - 2016 2017 2018 2019 Act 2019 Bud Includes Fishermen's Terminal, Maritime Industrial Center, and Salmon Bay Marina. 60 Elliott Bay Fishing & Commercial Ops Trends In 000s Variance from 2018 12,000 Revenue Down $659K/-10% T46 North berth down $850K from 10,000 WSDOT following tunnel project 8,000 Depreciation Expense down $744K/-8% Central Services / Other Direct down $221K/-8% 6,000 Support Services down $273K/-15% Support Services from Maintenance 4,000 Central Services down $170K/-10% Direct Depreciation down $80K/-2% 2,000 Revenue - 2016 2017 2018 2019 Act 2019 Bud Includes Terminal 91 (waterside non-Cruise), Terminal 46 Docks, Kellogg Island, Terminal 25, Terminal 18 Dolphins, Pier 69 Vessels, Pier 28 Docks, Pier 34 Dolphins, Pier 2 Docks, and Terminal 108 Moorage. 61 Maritime Portfolio Management Trends In 000s 16,000 Variance from 2018 14,000 Revenue down $1.2M/-11% T106 mainly WSDOT down $1.1M 12,000 Depreciation 10,000 Central Services / Other Expense up $1.1M/9% Direct up $299K/7% 8,000 FT Gear Storage Improvements Support Services and FT West wall 6,000 Support Services up $687K/24% from Maintenance and Environmental Direct 4,000 Central Services up $252K/6% Depreciation down $133K/-5% 2,000 Revenue - 2016 2017 2018 2019 Act 2019 Bud Includes uplands of Shilshole Bay Marina, Terminal 91 (Industrial), Fishermen's Terminal, Maritime Industrial Center, Salmon Bay Marina, T-115, T-108, and T-106. 62 Grain Terminal Goal: Net Income Maximized In 000s Variance from 2018 6,000 Revenue down $.9M/-17% Reduction in grain volumes due in part 5,000 to tariff considerations. 4,000 Expense down $82K/-4% Depreciation Direct down $106K/-36% 3,000 Support Services up $51K/10% Central Services / Other Central Services up $19K/2% Depreciation down $45K/-8% 2,000 Support Services Direct 1,000 Revenue - 2016 2017 2018 2019 Act 2019 Bud 63 Maritime 2019 Business Line Financials Page 1 Fav(UnFav) Bud Var Incr/(Decr) Chg fr Prior Year $ in 000's Actual Actual Actual Budget $ % $ % 2017 2018 2019 2019 Cruise Revenue 17,596 18,880 22,410 22,406 4 0% 3,530 19% Expense 8,997 9,850 11,896 12,017 121 1% 2,046 21% NOI Before Depreciation 8,599 9,030 10,514 10,389 125 1% 1,484 16% Depreciation Expense 5,924 6,517 6,212 5,986 (226) -4% (305) -5% NOI After Depreciation 2,675 2,513 4,302 4,403 (101) -2% 1,789 71% Rec Boating Revenue 11,086 12,035 12,484 12,794 (310) -2% 449 4% Expense 9,780 9,910 11,159 11,750 591 5% 1,249 13% NOI Before Depreciation 1,306 2,125 1,325 1,044 281 27% (800) -38% Depreciation Expense 3,122 2,872 2,763 2,727 (36) -1% (109) -4% NOI After Depreciation (1,816) (747) (1,438) (1,683) 245 15% (691) -93% Maritime Portfolio Revenue 10,787 11,305 10,108 10,328 (220) -2% (1,197) -11% Expense 10,620 10,208 11,446 11,982 536 4% 1,238 12% NOI Before Depreciation 167 1,097 (1,338) (1,654) 316 19% (2,435) -222% Depreciation Expense 2,681 2,693 2,560 2,502 (58) -2% (133) -5% NOI After Depreciation (2,514) (1,596) (3,898) (4,156) 258 6% (2,302) -144% Ship Canal Fishing & Operations Revenue 2,854 3,502 3,929 4,021 (92) -2% 427 12% Expense 5,265 5,575 6,440 6,319 (121) -2% 865 16% NOI Before Depreciation (2,411) (2,073) (2,511) (2,298) (213) -8% (438) -21% Depreciation Expense 1,665 1,908 2,185 2,370 185 8% 277 15% NOI After Depreciation (4,076) (3,981) (4,696) (4,668) (28) -1% (715) -18% 64 Maritime 2019 Business Line Financials Page 2 Fav(UnFav) Bud Var Incr/(Decr) Chg fr Prior Year $ in 000's Actual Actual Actual Budget $ % $ % 2017 2018 2019 2019 Elliott Bay Fishing & Commercial Operations Revenue 6,443 6,755 6,095 5,927 168 3% (660) -10% Expense 5,484 6,130 5,466 6,195 729 13% (664) -11% NOI Before Depreciation 959 625 629 (268) 897 NA 4 1% Depreciation Expense 3,454 3,421 3,341 3,471 130 4% (80) -2% NOI After Depreciation (2,495) (2,796) (2,712) (3,739) 1,027 38% 84 -3% Bulk/Grain Terminal Revenue 5,427 5,167 4,266 4,254 12 0% (901) -17% Expense 1,397 1,737 1,700 1,810 110 6% (37) -2% NOI Before Depreciation 4,030 3,430 2,566 2,444 122 5% (864) -25% Depreciation Expense 558 597 552 543 (9) -2% (45) -8% NOI After Depreciation 3,472 2,833 2,014 1,901 113 6% (819) -29% Other Revenue (9) (69) (3) 0 (3) NA 66 96% Expense 621 (159) 537 748 211 28% 696 438% NOI Before Depreciation (630) 90 (540) (748) 208 28% (630) -700% Depreciation Expense 6 14 14 14 0 0% 0 NA NOI After Depreciation (636) 76 (554) (762) 208 27% (630) -829% Total Maritime Revenue 54,183 57,575 59,289 59,729 (440) -1% 1,714 3% Expense 42,164 43,252 48,644 50,822 2,178 4% 5,392 12% NOI Before Depreciation 12,019 14,323 10,645 8,907 1,738 20% (3,678) -26% Depreciation Expense 17,410 18,022 17,627 17,613 (14) 0% (395) -2% NOI After Depreciation (5,391) (3,699) (6,982) (8,706) 1,724 20% (3,283) -89% 65 Maritime Capital 2019 2019 2019 Budget Variance Small Projects Numerous projects within CIP are $ in 000's Actual Budget $ % under feasibility discussions to either cancel or defer Small Projects 1,469 3,954 2,485 63% spending into 2020. SBM Restrms/Service Bldgs Rep 1,957 2,920 963 33% Contingency Renewal & Replace. 0 2,000 2,000 100% T117 Restoration Schedule delayed due to delay in MD Fleet 2019 655 1,818 1,163 64% Trustee negotiation. Cruise Terminal Tenant Improv 1,189 1,370 181 13% T117 Restoration 316 1,040 724 70% New Cruise Terminal - A site for the new cruise FT Docs 3,4,5 Fixed Pier 986 600 (386) -64% terminal became available sooner than expected. New Cruise Terminal 1,107 600 (507) -85% Design development proceeding earlier than SBM Paving 67 596 529 89% anticipated. Maritime Technology Projects 59 450 391 87% Marina Mgt Sys Replacement (113) 426 539 127% SBM Paving/Restrooms Construction delayed due All Other Projects 195 2,064 1,869 91% to re-evaluation of project scope after bids received Total Maritime 7,887 17,838 9,951 56% 33% over Engineer's estimate. Marina Management System Project on hold as Vendor unable to meet security requirements. Costs expensed until further analysis. 66 Environmental Highlights Maritime Environmental Completed the remediation system construction at T30. Signed the Credits Agreement with NOAA, enabling the Port to build and sell habitat at T117. Completed installation of solar at P69, meeting our anticipated production goals. Finalized the East Waterway Feasibility Study making significant progress on cleanup negotiations. Smith Cove Blue Carbon Pilot Project completed restoration element and first year of monitoring. Salmon Safe renewed the Port's Certification through audit and compliance. Foster employee talent and development through high school internships. 6 Interns in E&S and 7 in Env Finance. Recovered $5,915,000 from energy grants/rebates, insurance, agreements, and derelict vessel earmark. Stormwater Utility - Received the AAPA Award of Excellence in environmental enhancement for stormwater innovations. Installed 5 tide gates; rain garden at T86; drainage repair at T91; completed 22 system repairs. 67 Stormwater Utility Fav (UnFav) Incr (Decr) Total Year 2017 2018 2019 Budget Variance Change from 2018 Budget $ in 000's Actual Actual Actual Budget $ % $ % Revenue NWSA 3,891 4,195 4,499 4,564 (65) -1% 304 7% 3,995 Tenants Revenue 957 1,001 1,235 1,125 110 10% 234 23% 507 Non-tenants Revenue 112 89 105 105 (0) 0% 17 19% 1,293 Total Revenues 4,959 5,285 5,839 5,795 45 1% 554 10% 5,795 Expenses SWU Direct 905 841 994 1,052 (58) -5% 153 18% 1,052 Maintenance Expenses 2,380 3,317 3,039 2,933 106 4% (278) -8% 2,933 EDD Expenses 20 7 33 50 (16) -33% 26 346% 50 Environmental & Sustainability 372 327 310 249 61 25% (17) -5% 268 Capital Development Division 43 35 61 78 (17) -22% 26 73% 70 Other Central Services 402 687 796 802 (6) -1% 109 16% - Total Expenses 4,122 5,214 5,234 5,163 71 1% 20 0% 4,373 NOI Before Depreciation 837 241 500 357 143 40% 259 107% Depreciation 1,008 1,117 1,209 1,108 101 9% 91 8% 1,108 NOI After Depreciation (171) (876) (709) (751) 42 -6% 168 -19% (1,108) Crews have completed a full assessment of the stormwater system, rehabilitated 24%, completed 22 repairs, and installed 5 tide gates in 2019. 68 Economic Development Division Appendix 2019 Performance Report Economic Development Financial Highlights 2019 Net Income $5M favorable to budget and $729K greater than 2018 Revenue favorable to budget by $1,426K and $446K greater than 2018 driven by favorable volumes at the Conference and Event Centers.. Expenses favorable to budget by $3,451K driven by timing of Economic Development grant matching funds timing, initiative programs, favorable P66 allocation methodology change, and underspend in central services. Expenses are flat on a Y/Y basis. EDD spent 55 % of Fav (UnFav) Incr (Decr) Capital budget with 2017 2018 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % underspend in Small Total Revenues 17,791 20,705 21,151 19,725 1,426 7% 446 2% Projects and Tenant Total Operating Expenses 25,396 27,651 27,663 31,114 3,451 11% 12 0% Improvements offset by Net Operating Income (7,605) (6,946) (6,512) (11,389) 4,877 43% 434 6% earlier delivery of Bell Depreciation 3,863 3,992 3,698 3,819 121 3% (295) -7% Harbor Conference Net Income (11,469) (10,938) (10,210) (15,208) 4,998 33% 729 7% Center Modernization. 70 EDD 2019 Financial Detail Fav (UnFav) Incr (Decr) 2017 2018 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Revenue 8,658 9,002 8,912 8,930 (18) 0% (90) -1% Conf & Event Centers 9,133 11,703 12,239 10,795 1,444 13% 536 5% Total Revenue 17,791 20,705 21,151 19,725 1,426 7% 446 2% Expenses Portfolio Management 3,875 3,571 3,732 4,128 396 10% 161 4% Conf & Event Centers 7,639 9,889 10,218 9,374 (845) -9% 329 3% P69 Facilities Expenses 206 235 215 225 9 4% (20) -8% RE Dev & Planning 214 149 136 216 80 37% (13) -9% EconDev Expenses Other 776 785 930 1,262 332 26% 145 19% Maintenance Expenses 3,666 3,915 3,146 4,071 924 23% (769) -20% Maritime Expenses (Excl Maint) 52 166 54 0 (54) NA (112) -68% Total EDD & Maritime Expenses 16,427 18,711 18,432 19,275 843 4% (279) -1% Diversity in Contracting 64 132 152 199 47 24% 20 15% Workforce Development 850 702 952 2,010 1,058 53% 250 36% Tourism 1,234 1,408 1,337 1,521 183 12% (71) -5% EDD Grants 751 838 785 1,160 375 32% (53) -6% Total EDD Initiatives 2,900 3,080 3,226 4,890 1,663 34% 146 5% Environmental & Sustainability 260 281 344 395 51 13% 64 23% CDD Expenses 387 283 234 235 1 0% (49) -17% Police Expenses 51 (76) 61 228 168 73% 137 -180% Other Central Services 5,257 5,259 5,251 5,936 685 12% (8) 0% Aviation Division 113 113 114 155 41 26% 1 1% Total Central Services & Aviation 6,068 5,860 6,005 6,950 945 14% 145 2% Envir Remed Liability 0 0 0 0 0 NA 0 NA Total Expense 25,396 27,651 27,663 31,114 3,451 11% 12 0% NOI Before Depreciation (7,605) (6,946) (6,512) (11,389) 4,877 43% 434 6% Depreciation 3,863 3,992 3,698 3,819 121 3% (295) -7% NOI After Depreciation (11,469) (10,938) (10,210) (15,208) 4,998 33% 729 7% 71 Economic Development Division Financial Trends Variance from 2018 In 000s Revenue up $446K/2% 40,000 Conference & Event Revenue up 35,000 Bell St Garage Revenue up T102 Revenue down from due to two 30,000 large tenants vacating from corporate 25,000 consolidations Depreciation 20,000 *Program Expense Expense down $282K/-1% **Operating Expense 15,000 Operating Expenses down $134K Revenue Program Expenses up $146K 10,000 Depreciation down $295K 5,000 - 2014 2015 2016 2017 2018 2019 Act 2019 Bud * Includes Small Business, Tourism, Workforce Development, Real Estate Development, and Economic Development Grants. ** Includes all other Direct, Indirect, and Allocation Expenses. 72 Portfolio Management Trends In 000s 35,000 Variance from 2018 30,000 Revenue up $411K/2% Conference and Event Center volumes Depreciation 25,000 up due to Lumaze holiday light event at Smith Cove Cruise Terminal. 20,000 Central Services / Other Expense down $444K/-2% 15,000 Direct up $511K/3% from Conference & Support Services Event volumes. 10,000 Support Services down $747K/-17% Direct from Maintenance allocation change 5,000 Central Services up $94K/2% Depreciation down $302K/-8% Revenue - 2016 2017 2018 2019 Act 2019 Bud Includes non-alliance & upland real-estate at Tsubota, T-91 (General), T-86, P-69, Bell Street Garage, Smith Cove Conference Center, Bell Harbor Conference Center, World Trade Center, Foreign Trade Zone, Pier 2, T-34, and T-102. 73 EDD Capital 2019 Budget Variance 2019 2019 Tenant Improvements - Capital Actual Budget $ % Vacancies and delays in $ in 000's leasing/approval process have Tenant Improvements -Capital 0 1,012 1,012 100% impacted cash flow timeline. RE: Contingency Renew.&Replace 0 1,000 1,000 100% Small Projects 157 750 593 79% Small Projects Upland Garage EV BHICC Interior Modernization 1,930 750 (1,180) -157% Charging Station project was P66 HVAC Systems Upgrade 277 690 413 60% cancelled by project sponsor for T91 Upland PreDevelopment 176 625 449 72% 2019. Project feasibility for 2020 P69 Commission Chamber Refresh 298 301 3 1% under discussion. P69 Solar Panel System 266 300 34 11% EDD Technology Projects 0 250 250 100% T-91 Upland Industrial Spending Fleet Replacement 0 30 30 100% less in 2019 with more spending to Other Projects 17 5 (12)0 -240% occur in 2020 and 2021. Design NA delayed until 2020 at the request of Total Economic Development 3,121 5,713 2,592 45% EDD. 74 Central Services Appendix 2019 Financial Performance Report Central Services Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Total Operating Revenues 68 (500) 1,282 185 1,097 593.0% 1,783 -356.2% Core Central Support Services 71,071 73,576 77,505 82,710 5,205 6.3% 3,929 5.3% Police 22,095 23,908 27,793 30,778 2,985 9.7% 3,885 16.3% Capital Development 17,370 15,501 15,244 18,628 3,384 18.2% (257) -1.7% Environment & Sustainability 6,975 8,770 10,748 13,224 2,476 18.7% 1,978 22.6% Total Operating Expenses 117,511 121,755 131,290 145,339 14,049 9.7% 9,535 7.8% 76 Central Services Expense by Category Fav (UnFav) Incr (Decr) Payroll savings due to Staff 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % vacancies and DRS pension true-up Salaries & Benefits 69,448 78,529 83,238 84,640 1,403 1.7% 4,708 6.0% credit of $9.9M. Wages & Benefits 20,517 15,858 18,788 28,479 9,690 34.0% 2,930 18.5% Outside Services favorable to Payroll to Capital Projects 21,859 22,781 22,948 27,558 4,610 16.7% 167 0.7% Equipment Expense 3,109 4,107 3,177 2,355 (822) -34.9% (930) -22.7% budget due to delay in Supplies & Stock 1,446 1,399 1,508 1,219 (289) -23.7% 110 7.8% implementing program initiatives Outside Services 34,053 39,009 39,896 44,905 5,009 11.2% 886 2.3% and lower contract spending. Travel & Other Employee Exps 2,568 2,574 2,910 3,689 780 21.1% 336 13.1% Insurance Expense 2,223 2,145 2,276 2,300 24 1.0% 131 6.1% Equipment Expense unfavorable to Litigated Injuries & Damages 435 (82) - - - 0.0% 82 -100.0% the budget due to more Computer Other 2,153 2,896 4,240 3,788 (452) -11.9% 1,344 46.4% & Telephone Acquisitions. Charge to Capital/Overhead Alloc (40,301) (47,461) (47,690) (53,595) (5,904) 11.0% 229 0.5% Charge to Capital unfavorable to Total 117,511 121,755 131,290 145,339 14,049 9.7% 9,535 7.8% budget due to delay of some capital projects. 77 Central Services Capital Spending 2018 2019 2019 Budget Variance $ in 000's Actual Actual Budget $ % Infrastructure - Small Cap 786 1,156 1,500 344 22.9% Services Tech - Small Cap 225 631 1,000 369 36.9% Enterprise GIS - Small Cap 34 215 250 35 14.0% Project Cost Management S 430 321 350 29 8.3% Supplier Database System 349 408 410 2 0.5% PeopleSoft Financials Upgrade 2,025 1,407 1,575 168 10.7% Radio System Upgrade 3,866 5,447 9,140 3,693 40.4% Police Records Mgmt System 0 0 800 800 100.0% New Budget System 0 17 600 583 97.2% Office Wi-Fi Refresh 0 0 500 500 100.0% Maximo Upgrade 0 38 500 462 92.4% Fiber Channel 0 0 600 600 100.0% Phone System Upgrade 0 0 1,400 1,400 100.0% STIA Network Redundancy 0 0 900 900 100.0% CDD Fleet Replacement 768 317 1,439 1,122 78.0% CDD Small Cap 252 202 351 149 42.5% Corporate Fleet Replacement 726 397 1,328 931 70.1% Other (note 1) 246 299 725 426 58.8% TOTAL 9,707 10,855 23,368 12,513 53.5% Note: (1) "Other" includes remaining ICT projects and small capital projects/acquisitions. 78 Portwide Appendix 2019 Financial Performance Report Portwide Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 264,114 291,268 357,598 365,604 (8,006) -2.2% 66,330 22.8% Airport Non-Aero Revenues 236,803 257,707 269,037 259,537 9,501 3.7% 11,331 4.4% Non-Airport Revenues 131,114 140,415 137,538 128,115 9,424 7.4% (2,876) -2.0% Total Operating Revenues 632,031 689,390 764,174 753,255 10,919 1.4% 74,784 10.8% Total Operating Expenses 372,982 397,638 443,089 454,986 11,896 2.6% 45,452 11.4% NOI before Depreciation 259,049 291,752 321,085 298,269 22,815 7.6% 29,333 10.1% Depreciation 165,021 164,362 174,971 168,676 (6,294) -3.7% 10,608 6.5% NOI after Depreciation 94,028 127,390 146,114 129,593 16,521 12.7% 18,725 14.7% 80 Non-Airport Financial Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % NWSA Distributable Revenue 54,925 55,992 47,979 43,911 4,069 9.3% (8,013) -14.3% Maritime Revenues 54,183 57,575 59,289 59,729 (440) -0.7% 1,714 3.0% EDD Revenues 17,791 20,705 21,151 19,725 1,426 7.2% 446 2.2% SWU & Other 4,214 6,143 9,119 4,749 4,370 92.0% 2,976 48.4% Total Operating Revenues 131,114 140,415 137,538 128,115 9,424 7.4% (2,876) -2.0% Total Operating Expenses 73,868 78,789 86,455 88,881 2,426 2.7% 7,666 9.7% NOI before Depreciation 57,246 61,626 51,084 39,234 11,850 30.2% (10,542) -17.1% Depreciation 40,619 40,159 38,737 37,832 (905) -2.4% (1,422) -3.5% NOI after Depreciation 16,628 21,467 12,347 1,402 10,944 780.5% (9,120) -42.5% 81 Portwide Operating Revenues Summary Fav (UnFav) Incr (Decr) 2017 2018 2019 2019 Budget Variance Change from 2018 $ in 000's Actual Actual Actual Budget $ % $ % Aeronautical Revenues 264,114 291,268 357,598 365,604 (8,006) -2.2% 66,330 22.8% - - - Public Parking 75,106 80,212 82,125 82,350 (226) -0.3% 1,913 2.4% Rental Cars - Operations 35,051 37,306 36,793 36,455 339 0.9% (513) -1.4% Rental Cars - Operating CFC 10,641 16,263 15,773 13,624 2,149 15.8% (490) -3.0% ADR & Terminal Leased Space 58,980 64,323 68,013 64,393 3,620 5.6% 3,690 5.7% Ground Transportation 15,684 18,772 20,765 19,734 1,031 5.2% 1,993 10.6% Employee Parking 9,617 10,269 10,438 10,134 304 3.0% 168 1.6% Airport Commercial Properties 18,042 15,434 15,773 14,219 1,554 10.9% 339 2.2% Airport Utilities 7,018 7,206 7,431 8,058 (627) -7.8% 225 3.1% Clubs and Lounges 5,041 6,802 10,274 8,520 1,753 20.6% 3,472 51.0% Cruise 17,596 18,880 22,410 22,406 4 0.0% 3,530 18.7% Recreational Boating 11,086 12,529 12,484 12,794 (311) -2.4% (45) -0.4% Fishing & Operations 9,297 9,763 10,024 9,947 77 0.8% 261 2.7% Grain 5,427 5,167 4,266 4,254 12 0.3% (901) -17.4% Maritime Portfolio Management 10,787 11,305 10,108 10,328 (220) -2.1% (1,198) -10.6% Central Harbor Management 8,634 9,018 8,898 8,895 3 0.0% (119) -1.3% Conference & Event Centers 9,133 11,703 12,239 10,795 1,444 13.4% 536 4.6% NWSA Distributable Revenue 54,925 55,992 47,979 43,911 4,069 9.3% (8,013) -14.3% Other 5,854 7,177 10,783 6,833 3,950 57.8% 3,606 50.2% Total Operating Revenues (w/o Aero) 367,917 398,122 406,576 387,651 18,924 4.9% 8,454 2.1% TOTAL 632,031 689,390 764,174 753,255 10,919 1.4% 74,784 10.8% 82 Portwide Operating Expense Summary Payroll expenses were $14.6M below budget primarily due to the Fav (UnFav) Incr (Decr) DRS Pension Plan True-up credit of 2017 2018 2019 2019 Budget Variance Change from 2018 $16.5M. $ in 000's Actual Actual Actual Budget $ % $ % Salaries & Benefits 112,837 127,575 137,399 142,611 5,212 3.7% 9,824 7.7% Outside Services were $8.0M Wages & Benefits 108,041 108,381 119,944 129,319 9,375 7.2% 11,562 10.7% favorable to budget due to project Payroll to Capital Projects 25,708 28,329 27,844 33,899 6,055 17.9% (485) -1.7% delays. Equipment Expense 11,118 10,622 11,871 8,035 (3,836) -47.7% 1,249 11.8% Supplies & Stock 10,238 10,781 11,200 8,755 (2,445) -27.9% 420 3.9% Utilities were $2.3M below budget Outside Services 83,603 99,885 107,207 115,243 8,036 7.0% 7,322 7.3% due to less spending in Surface Utilities 23,529 25,552 25,838 28,169 2,330 8.3% 286 1.1% Travel & Other Employee Expenses 4,767 4,848 5,467 6,936 1,468 21.2% 620 12.8% Water and Sewer Promotional Expenses 1,408 1,956 3,022 2,650 (372) -14.0% 1,067 54.5% Utilities, Electricity and Recycling. Other Expenses 37,134 32,789 47,931 41,912 (6,019) -14.4% 15,141 46.2% Equipment Expense Charges to Capital Projects/Overhead Alloc (45,401) (53,081) (54,634) (62,542) (7,908) 12.6% (1,553) 2.9% TOTAL 372,982 397,638 443,089 454,986 11,896 2.6% 45,452 11.4% and Supplies & Stock were $6.3M over budget mainly due to snow removals. Other Expenses were $6.0M above budget mainly due to Environmental Remediation Liability Expense. 83
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