Market Overview

Summary of ICA Business Plan

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MEXICO CITY, June 17, 2016 (GLOBE NEWSWIRE) -- Empresas ICA, S.A.B. de C.V. (BMV:ICA) (NYSE: ICA) made a preliminary summary of its business plan, attached to this press release, publicly available to creditors and investors.  This preliminary business plan does not take into account the signing of the US$215 million secured convertible loan announced today, and as a result should not be relied upon by any party in performing a valuation of ICA's assets.  In particular, these projections do not account for the dilution of ICA's interest in certain concession and construction subsidiaries and entities that would result from the exercise of the conversion feature or the payment-in-kind option under the convertible loan.

ICA encourages a more comprehensive discussion of its future plans, including any future restructuring of its existing debt, with all of its stakeholders. 

This press release contains projections or other forward-looking statements related to ICA that reflect ICA's current expectations or beliefs concerning future events. Forward-looking statements involve inherent risks and uncertainties. We caution you that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include cancellations of significant construction projects included in backlog, material changes in the performance or terms of our concessions, additional costs incurred in projects under construction, failure to comply with covenants contained in our debt agreements, developments in legal proceedings, unanticipated increases in financing and other costs or the inability to obtain additional debt or equity financing on attractive terms, changes to our liquidity, economic and political conditions and government policies in Mexico or elsewhere, changes in capital markets in general that may affect policies or attitudes towards lending to Mexico or Mexican companies, changes in inflation rates, exchange rates, regulatory developments, customer demand, competition and tax and other laws affecting ICA's businesses and other factors set forth in ICA's most recent filing on Form 20-F and in any filing or submission ICA has made with the SEC subsequent to its most recent filing on Form 20-F. All forward-looking statements are based on information available to ICA on the date hereof, and ICA assumes no obligation to update such statements.

Empresas ICA, S.A.B. de C.V., carries out large-scale civil and industrial construction projects and operates a portfolio of long-term assets, including airports, toll roads, water systems, and real estate. Founded in 1947, ICA is listed on the Mexican and New York Stock exchanges.  For more information, visit http://ir.ica.mx/

Summary of Empresas ICA, S.A.B. de C.V. ("ICA")'s Business Plan         

Basis of Preparation

  • The business plan was developed to be consistent with the expected ongoing businesses of the Construction and Concessions segments, while most of the other parts of the business are treated as long-term investments (equity method). 
     
 Legal EntityDivisionFinancial Statement Treatment (Q3 2015)Business Plan Treatment
 Controladora de Operaciones de Vivienda, S.A. de C.V.HousingConsolidatedHeld as an unconsolidated investment, proceeds to be paid to its creditors
 Grupo Aeroportuario del Centro Norte, S.A.B. de C.V.AirportConsolidatedEquity Investment
 Controladora de Operaciones de Infraestructura, S.A. de C.V.Concession>50% owned - Consolidated; < 50% owned - Equity Investment>52% owned - Consolidated; <52% owned - Equity Investment with the exception of DIPESA, MITLA & TUCA II which are treated as investments
  ConstructionAll Consolidated (Facchina, Mexican Construction, International Construction, San Martin) except for Los Portales (Equity Investment)Same but San Martin & Facchina treated as Equity Investments
 Constructoras ICA, S.A. de C.V.
 Ingenieros Civiles Asociados, S.A. de C.V.
  
  • Note: The reason that the threshold for consolidating concessions increases to 52% in the business plan (from 50%) is to reflect the fact that the OVT concessions (which ICA own 51%) are treated as equity investments in the business plan (vs. being consolidated in the Company's financial statements).  Also note that Facchina and ICA Fluor are incorporated in the business plan as long-term investments.

  • Accordingly, the Business Plan has been simplified, and does not follow the IFRS consolidating accounting policies that the Company follows for its financial statements. However, this method presents a clearer picture of these concessions' profits and cash generation that would be available for debt service.

Business Plan Principles

  • The Company has adopted the following principles in developing the Business Plan herein:

International and Housing / Real Estate Divisions

1. The international Division along with the Housing / Real Estate Division are being wound down.

2. In addition, the Company will be exiting its International Concession projects that have not yet started.

Concessions

3. The expansion of the Concession division will be limited to completing the Palmillas project in the near future. Post restructuring, ICA will assess investing in new concessions, although no such investments are reflected in the Business Plan.

4. The Company will return or have the Government invest in the Barranca Larga concession as it is not viable to complete on a stand alone basis.

Construction

5. Going forward, the Construction Business will be limited to the Mexican operations.

6. The strategy going forward will be to get back to the basics:

a) Minimize the amount of work that is performed out of scope and without a contractual change order.

b) Profitability will be the main driver.  

Airports

7. Continue to own the control shares in OMA.

High Level Summary of Projected Income Statement

  • Presented below is ICA's projected income statement from 2016 to 2020 in MXN million:
       
 (in millions of MXN)ProjProjProjProjProj
   2016  2017  2018  2019  2020 
 Revenue 14,479.9  12,659.3  11,890.8  9,982.8  11,266.2 
 Cost of Goods Sold (11,829.0) (9,411.5) (8,537.4) (6,606.0) (7,618.9)
 Gross Margin 2,650.9  3,247.8  3,353.5  3,376.7  3,647.3 
 Margin (%) 18.3 % 25.7 % 28.2 % 33.8 % 32.4 %
       
 Selling General and Administrative (1,691.9) (1,002.0) (1,048.1) (1,095.3) (1,146.8)
 % of Sales 11.7 % 7.9 % 8.8 % 11.0 % 10.2 %
 Operating Income 959.0  2,245.8  2,305.3  2,281.4  2,500.5 
 % of Sales 6.6 % 17.7 % 19.4 % 22.9 % 22.2 %
       
 Add Back: Depreciation and Amortization 194.9  477.4  441.9  395.6  395.6 
 EBITDA 1,153.9  2,723.1  2,747.2  2,677.0  2,896.2 
 Margin (%) 8.0 % 21.5 %
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