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MSD Series 2019B&C Investor PresentationThe Metropolitan St. Louis Sewer District Investor Presentation $322,680,000* $52,550,000* Wastewater System Revenue Bonds, Series 2019B $270,130,000* Taxable Wastewater System Refunding Revenue Bonds, Series 2019C November 8, 2019 *Preliminary; subject to change. Disclaimer This Investor Presentation is provided as of November 8,2019 for a proposed offering by The Metropolitan St.Louis Sewer District (the “District”or “MSD”)of its Wastewater System Revenue Bonds,Series 2019B (the “Series 2019B Bonds”)&Taxable Wastewater System Refunding Revenue Bonds, Series 2019C (the “Series 2019C Bonds”, together with the Series 2019B Bonds, the “Series 2019B&C Bonds”).If you are viewing this presentation after November 8,2019,there may have been events that occurred subsequent to such date that would have a material adverse effect on the financial information that is presented herein, and neither MSD nor Citigroup Global Markets Inc.(the “Underwriter”),as Representative of the Underwriters, has undertaken any obligation to update this Investor Presentation.All market prices,financial data and other information provided herein are not warranted as to completeness or accuracy and are subject to change without notice. This Investor Presentation is provided for your information and convenience only.Any investment decisions regarding the Series 2019B&C Bonds should only be made after a careful review of the complete Preliminary Official Statement, dated November 8,2019. By accessing this Investor Presentation,you agree not to duplicate, copy, download,screen capture, electronically store,or record this Investor Presentation, nor to produce, publish, or distribute this Investor Presentation in any form whatsoever. This Investor Presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Series 2019B&C Bonds, or to adopt any investment strategy. Any offer or solicitation with respect to the Series 2019B&C Bonds will be made solely by means of the Preliminary Official Statement and Official Statement, which describe the actual terms of such Series 2019B&C Bonds.In no event shall the Underwriter or MSD be liable for any use by any party of, for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from,the information contained herein and such information may not be relied upon by you in evaluating the merits of participating in any transaction mentioned herein.The Underwriter makes no representations as to the legal,tax,credit, or accounting treatment of any transactions mentioned herein, or any other effects such transactions may have on you and your affiliates or any other parties to such transactions and their respective affiliates.You should consult with your own advisors as to such matters and the consequences of the purchase and ownership of the Series 2019B&C Bonds.Nothing in these materials constitutes a commitment by the Underwriter or any of their affiliates to enter into any transaction.No assurance can be given that any transaction mentioned herein could in fact be executed. Past performance is not indicative of future returns,which will vary.Transactions involving the Series 2019B&C Bonds may not be suitable for all investors.You should consult with your own advisors as to the suitability of the Series 2019B&C Bonds for your particular circumstances.Clients should contact their salesperson at,and execute transactions through, an entity of the Underwriter or other syndicate member entity qualified in their home jurisdiction unless governing law permits otherwise. 1 Transaction Summary ___________________________ * Preliminary, subject to change. Issues Wastewater System Revenue Bonds, Series 2019B Taxable Wastewater System Refunding Revenue Bonds, Series 2019C Par Amount*Series 2019B: $52,550,000 Series 2019C: $270,130,000 Security The 2019B&C Bonds are revenue bonds secured by and payable from certain revenues of The Metropolitan St. Louis Sewer District (the “District” or “MSD”) received from operation of its sanitary sewer system (the “System”) on a parity with nine prior series of Senior Bonds (Series 2010B, Series 2011B, Series 2012A, Series 2012B, Series 2013B, Series 2015B, Series 2016C, Series 2017A and Series 2018A Bond) Use of Bond Proceeds Pay a portion of the costs of certain additions, extensions, and improvements to the System Refund a portion of the District’s outstanding Senior Bonds Pay costs of issuance Tax Status Series 2019B: Federal tax-exempt and State of Missouri tax-exempt Series 2019C: No Federal or State of Missouri tax-exemption Structure*Series 2019B: Fixed rate bonds due May 1, 2021 through 2049 Series 2019C: Fixed rate bonds due May 1, 2021 through 2044 Optional Redemption*Series 2019B: To be determined Series 2019C: To be determined Credit Ratings Standard and Poor’s: AAA (Stable) Fitch: AA+ (Stable) Underwriting Syndicate Citigroup, Barclays, Fidelity Capital Markets, Loop Capital Markets, Morgan Stanley, Raymond James, Stern Brothers Pricing Date*Retail order period: Monday, November 18, 2019 Institutional order period: Tuesday, November 19, 2019 Closing Date*Monday, December 4, 2019 2 Overview of the District Owns and operates sanitary, stormwater, and combined collection sewers, pumping stations, and wastewater treatment facilities Service area is 520 square miles encompassing The City of St. Louis and most of St. Louis County Approximately 87% of MSD customers are in St. Louis County Service area encompasses three major watershed areas Provides wastewater treatment and stormwater management for 1.3 million people, making it the fourth-largest wastewater treatment system in the United States District is an independent entity and its Board of Trustees has the ultimate authority to set rates In FY 2019, operating revenues totaled $400 million with approximately $3.9 billion in assets MSD is an essential service provider covering a large service area = Facilities 3 ___________________________ Sources: Series 2019B&C Preliminary Official Statement; District Comprehensive Annual Financial Report (Fiscal Years Ended June 30, 2019 and 2018). Authority, Governance, and Organization Strong and experienced management team continues to focus on budgetary controls and operational efficiencies Board of Trustees Governs MSD and includes three members appointed by the Mayor of the City of St. Louis and three members appointed by the St. Louis County Executive Rate Commission Reviews and makes recommendations to the Board of Trustees regarding all proposed rate changes and tax rates Civil Service Commission Serves in an advisory position regarding personnel administration and civil service matters Internal Auditor Secretary-Treasurer General Counsel Executive Director Information Systems OperationsEngineeringFinanceHuman Resources 4 System Facilities MSD operates and maintains: 9,347 miles of collection and trunk sewers and force mains 279 pumping stations Seven wastewater treatment facilities treating an average daily flow of 331 million gallons per day (“MGD”) Total System capacity of approximately 593 MGD; average daily flow comprises 56% of total capacity Largest plants are Bissell Point and Lemay, both serving the Mississippi River watershed The System recently withstood two 100-year flood events in 2015 and 2017 with minimal damage or service interruption The District’s facilities are currently in compliance with all environmental regulations The System has ample wastewater treatment capacity ___________________________ Sources: Series 2019B&C Preliminary Official Statement; District Comprehensive Annual Financial Report (Fiscal Years Ended June 30, 2019 and 2018). 5 Broad and Strengthening Regional Economy Declining Unemployment Rates Stable Population Base 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 2013 2014 2015 2016 2017 2018 (000s)City of St. Louis St. Louis County Rising Per Capita Income $40,000 $42,000 $44,000 $46,000 $48,000 $50,000 2013 2014 2015 2016 2017 2018 2019 District Service AreaHigher Education Washington University St. Louis University Corporations The Boeing Company Schnuck Markets Inc. Healthcare BJC HealthCare Mercy SSM Health Government City of St. Louis St. Louis County Regional Employers 4.3% 3.3% 4.1% 0 2 4 6 8 10 12 2012 2013 2014 2015 2016 2017 2018 (%)St. Louis, MO (City)St. Louis, MO (County)U.S. ___________________________ Source: Appendix B of Series 2019B&C Preliminary Official Statement. 6 0.57%1.06%1.65%2.07%1.89%2.16% 97.0%95.3% 97.7% 100.0% 98.4%98.4%99.7%98.8%97.6%97.9% 70% 80% 90% 100% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Stable and Diverse Customer Base The System serves approximately 426,671 wastewater accounts, 94% of which are single-or multi-family residential Ten largest customers contribute only 4.6% of total user charges FY 2019 collections as a percent of charges billed was 97.9% and has averaged over 98.1% for the last 10 years despite rate increases ___________________________ Source: Series 2019B&C Preliminary Official Statement. 0 100,000 200,000 300,000 400,000 500,000 2015 2016 2017 2018 2019 Single Family Residential Multi-Family Residential Commercial/Industrial 10-Largest Customers by User Charge (FY 2019)User Charge Collections (FY 2010-2019) Customer User Charges % of Total Anheuser-Busch InBev $5,380,744 1.36% The City of St.Louis, Missouri 2,626,558 0.67% Washington University in St.Louis 2,109,156 0.53% Sigma-Aldrich 1,674,339 0.42% The Boeing Company 1,251,265 0.32% Jost Real Estate,L.L.C.1,085,769 0.27% BJC HealthCare 1,036,583 0.26% Saint Louis University 1,033,565 0.26% Missouri-American Water Co.1,015,558 0.26% GKN Aerospace 891,863 0.23% Subtotal (10 largest)$18,105,400 4.58% Other customers $377,474,503 95.42% Total $395,579,903 100.00% Customers by Type (FY 2015-2019) 7 Elimination of SSOs $346mm 22.1% System Renewal and Capacity Projects $592mm 37.7% Reduction and Control of CSOs $134mm 8.5% Treatment Plant Improvements $497mm 31.7% Total: $1.6 billion FY 2021-2024 CIRP MSD is executing a long-term and programmatic plan to meet the $5 billion1, 28-year Consent Decree. With the initial phase of the CIRP successfully completed, the FY 2021-2024 CIRP is expected to deliver $1.7 billion in capital projects CIRP Sources (FY 2021-24) 340 360 380 400 420 440 460 2021 2022 2023 2024 ($mm) CIRP Needs FY 2021-24 CIRP Uses (FY 2021-24) MSD entered into a Consent Decree with the EPA in 2012 with the primary goal of reducing combined and sanitary sewer over flows and building backups On June 22, 2018, a United States District Judge approved an amendment to the Consent Decree that extends the schedule from 23 years to 28 years Consent Decree is the primary driver of the District’s long-term Capital Improvement and Replacement Plan (“CIRP”) Since entering into the Consent Decree, MSD has successfully delivered approximately $1.48 billion in projects Pay-as-you-go funding is expected to fund a larger share of FY 2021-2024 projects compared to FY 2017-2020 Major projects to be completed in the FY 2021-2024 CIRP are primarily focused on: Collection system improvements projects to meet the District’s Consent Decree requirements to eliminate sanitary sewer overflows and reduce or eliminate combined sewer overflows System improvements throughout the District that include asset management and collection system improvements Improvements related to existing treatment plants Bond Funded $943mm 65.1% Pay-Go $506mm 34.9% ___________________________ Sources: MSD; Series 2019B&C Preliminary Official Statement; Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Revenue Bonds, Series 2019B. 9 Rate Schedule The District’s autonomous Board of Trustees has a strong history of approved rate increases to meet MSD’s operating and capital needs ___________________________ Sources: MSD; Series 2019B&C Preliminary Official Statement; Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Revenue Bonds, Series 2019B. Rate Autonomy Board of Trustees has consistently demonstrated its willingness and ability to raise rates as needed No approvals from City or County governments are required The 15-member Rate Commission provides the Board of Trustees with feedback and rate recommendations, but the Board of Trustees has ultimate authority to set rates Rate History The Board of Trustees has consistently approved rate increases, an average of 11% annually from FY 2013 to FY 2020 Board of Trustees accepted a new rate schedule in October 2019 for FY 2021-2024 The Board is expected to introduce and approve an ordinance setting rates consistent with the Rate Commission’s report in early 2020 Rate Affordability After accounting for the rate schedule, residential rates remain competitive compared to other major wastewater systems subject to consent decrees Bill for Single Family Residence (7CCF/month) $29.11 $32.35 $35.99 $40.72 $44.59 $49.31 $54.63 $60.44 $0 $15 $30 $45 $60 $75 2013 2014 2015 2016 2017 2018 2019 2020 Average Monthly Bill for Cities Under Consent Decrees (8CCF) $0 $40 $80 $120 $160 Median 10 MSD Financial Results and Projections MSD Financial Results and Coverage –Actual and Projected ($000s) Actual Projected Fiscal Year 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Total revenues (A)$291,392 $322,358 $335,926 $374,649 $415,548 $452,640 $459,261 $475,917 $492,863 $512,199 Total expenses (B)1 163,312 168,259 168,835 163,026 170,585 179,674 194,305 194,557 201,294 205,945 Net revenues available for debt service (C=A-B)128,080 154,099 167,091 211,622 244,963 272,966 264,956 281,360 291,569 306,254 Senior debt service (D)38,352 46,381 58,182 67,923 77,941 79,150 84,018 91,357 98,317 109,129 Subordinate debt service (E)23,496 27,379 31,178 32,476 36,192 38,125 41,088 45,413 52,400 60,099 Total outstanding debt service (F=D+E)61,848 73,760 89,361 100,399 114,133 117,275 125,106 136,770 150,717 169,228 Senior debt service coverage (C/D)3.3x 3.3x 2.9x 3.1x 3.1x 3.4x 3.2x 3.1x 3.0x 2.8x Combined debt service coverage (C/F)2.1x 2.1x 1.9x 2.1x 2.1x 2.3x 2.1x 2.1x 1.9x 1.8x MSD forecasts steady financial growth and debt service coverage, consistent with the past, and has substantial debt service capacity to meet future capital borrowings The District’s additional bonds test and rate covenant establishes that Net Revenues available for debt service will equal at least 1.25x of senior debt service and 1.15x of total debt service Management’s policy target is 2.50x and 1.80x for senior and total debt service coverage, respectively ___________________________ 1Excludes Depreciation and Expenses related to GASB 68 and 75 Sources: MSD; Series 2019B&C Preliminary Official Statement; Report on the Financial Feasibility of The Metropolitan St. Louis Sewer District Wastewater System Revenue Bonds, Series 2019B. 11 Historically Strong Financial Performance $289 $318 $333 $368 $401 0 50 100 150 200 250 300 350 400 450 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 ($mm) Operating Revenues (Last Five Fiscal Years) ___________________________ 1Excludes Depreciation and Expenses related to GASB 68 and 75 Sources: Series 2019B&C Preliminary Official Statement. Operating Expenses (Last Five Fiscal Years)1 Unrestricted Cash & Investments (Last Five Fiscal Years)Debt Service Coverage (Last Five Fiscal Years) $163 $168 $169 $163 $171 0 20 40 60 80 100 120 140 160 180 200 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 ($mm) $299 $340 $348 $368 $410668737751825877 0 200 400 600 800 1000 0 100 200 300 400 500 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 (Days)($mm) Total Unrestricted Cash & Investments Days Cash on Hand (Including Long-Term Unrestricted Assets) 3.3x 3.3x 2.9x 3.1x 3.1x 2.1x 2.1x 1.9x 2.1x 2.1x 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 (x) Senior Debt Service Coverage Combined Debt Service Coverage 12 $0 $2 $4 $6 $8 $10 $12 $14 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Annual Contribution ($mm) Conservatively Managed Pension and OPEB Plans As of December 31, 2018, MSD’s defined benefit plan (the “Plan”) had 545 active plan members and an Actuarial Accrued Liability of $58.2 million (82.6% funded) Effective December 31, 2010, MSD closed the Plan to new entrants and shifted all future employees to a defined contribution plan Current employees with less than 10 years of service as of December 31, 2010, and all new employees commencing service on or after January 1, 2011 participate in a defined contribution plan Pension Fund Benefit provides healthcare for qualified retirees until the retiree becomes eligible for Medicare at age 65 OPEB is paid on a pay-as-you-go basis to ensure flexibility in future benefits MSD’s total OPEB unfunded accrued liability as of June 30, 2019 is estimated to be approximately $24 million OPEB Update ___________________________ Source: Series 2019B&C Preliminary Official Statement; District Comprehensive Annual Financial Report (Fiscal Years Ended June 30, 2019 and 2018); Metropolitan St. Louis Sewer District Employees’ Pension Plan Financial Statements, December 31, 2018 and 2017. Historical Pension Payments Pre-Reforms ($mm) 13 Bond Provisions and Covenants The Series 2019B&C Bonds will be issued with a senior lien on the Pledged Revenues of the System The Series 2019B&C Bonds will not be secured by the Debt Service Reserve Account Net Operating Revenues include service charges and other revenues, net of operating expenses Amounts on deposit in the Sinking Fund used to pay principal and interest on Senior Bonds Senior and total debt service coverage levels were 3.1x and 2.1x, respectively, in FY 2019 Rate covenant requires 1.25x senior and 1.15x total debt service coverage Additional bonds test for parity debt also requires 1.25x senior and 1.15x total debt service coverage After making deposits shown in the accompanying flow of funds, MSD may deposit excess revenues into the Renewal and Extension Fund MSD Customer Base Revenue Fund First Second Fourth Operating Revenues Third Fifth Sixth Seventh Eighth Operations and Maintenance Sinking Fund Rebate Fund Debt Service Reserve Account (Replenishment Payments) Reserve Account Credit Facility Provider Payments Subordinate Obligations Debt Service Reserve Account (Accumulation Payments) Other System Obligations Flow of Funds The Master Bond Ordinance provides bondholders with strong protections 14 Conservative Debt Portfolio MSD has $1.14 billion of outstanding Senior Bonds and $409.5 million of outstanding Subordinate Bonds as of November 1, 2019 Subordinate Bonds purchased by the State of Missouri through the Missouri State Revolving Fund Program and Direct Loan Program Debt portfolio is 100% fixed rate, with no exposure to variable rate debt or interest rate derivatives Outstanding Debt Service (FYE 6/30) ___________________________ Note: Does not account for the proposed Series 2019B&C Bonds or the potential refunding of the Refunded Bonds. 0 20 40 60 80 100 120 140 2020 2023 2026 2029 2032 2035 2038 2041 2044 2047 2050 2053 ($mm)Senior Lien Subordinate Lien Senior Bonds Debt Pay-Down 10-Year: 25% 20-Year: 63% Senior Lien 74% Subordinate Lien (SRF Bonds and Direct Loans) 26% Lien Composition Fixed Rate 100% Interest Rate Mode 15 MSD Credit Strengths S&P: AAA (Stable) Fitch: AA+ (Stable) High-Grade and Stable Credit Ratings Sole provider of wastewater treatment and stormwater management to 1.3 million residents in the St. Louis metropolitan area Service area supported by a large, stable, and diverse regional economy Essential Service Monopoly in a Broad Service Area Since entering into the Consent Decree, successfully met milestones and satisfied all regulatory requirements Continues to exceed goals relating to budget and timelines, management and engineering efficiencies Demonstrated Ability to Deliver CIRP On-Time and Under-Budget MSD is independent and has ultimate authority over rates and charges and budget Rates are affordable and are projected to remain so Consistent with prior MSD referendums, voters overwhelmingly approved $900 million bond authorization in 2016 to continue funding the CIRP Successful Rate Setting Process and Strong Public Support Strong management focuses on conservative budgeting and operational efficiencies Debt service coverage remains above management’s 2.50x senior and 1.80x total for senior and subordinate targets; strong liquidity with 877 days cash on hand Manageable pension and OPEB obligations Consistently Strong Financial Performance 16 Plan of Finance The District is planning to issue approximately $322.6 million in par as part of its Series 2019B&C plan of finance Series 2019B Bonds are being issued: To fund approximately $63.8 million of the costs of certain additions, extensions, and improvements to the System With a 30-year level debt service structure The Series 2019C Bonds are being issued: To taxably advance refund certain maturities of the Series 2011B, 2012A, 2012B, 2013B, and 2015B Bonds* To generate level or uniform annual savings The Series 2019B&C Bonds will be issued as fixed rate, Senior Bonds and will not be secured by the Debt Service Reserve Account ___________________________ Source: Series 2019B&C Preliminary Official Statement. *Preliminary, subject to change. 17 Proposed Amortization Schedule* Year (5/1)2019B (Tax-Exempt)Year (5/1)2019C (Taxable) 2021 845,000 2021 1,260,000 2022 885,000 2022 1,285,000 2023 930,000 2023 1,305,000 2024 975,000 2024 1,330,000 2025 1,025,000 2025 1,360,000 2026 1,075,000 2026 1,385,000 2027 1,130,000 2027 1,420,000 2028 1,185,000 2028 11,885,000 2029 1,245,000 2029 12,170,000 2030 1,310,000 2030 12,480,000 2031 1,375,000 2031 11,865,000 2032 1,440,000 2032 13,155,000 2033 1,515,000 2033 13,525,000 2034 1,590,000 2034 13,915,000 2035 1,670,000 2036 1,755,000 2037 1,840,000 2038 1,930,000 2039 2,030,000 Term 2039 27,250,000 Term 2044 11,770,000 Term 2044 144,540,000 Term 2049 15,030,000 Transaction Timeline and Contact Information Date Event November 8, 2019 Electronic Distribution of POS & Investor Presentation November 18-19, 2019 Retail and Institutional Pricing December 4, 2019 Closing Contact Information MSD Financial Advisors Senior Manager -Citigroup Tim Snoke, Secretary-Treasurer (314) 768-6222 tsnoke@stlmsd.com Bethany Pugh (PFM) (440) 863-5820 pughb@pfm.com Samantha Costanzo (312) 876-3564 samantha.costanzo@citi.com John Strahlman,Asst. Secretary-Treasurer (314) 768-6225 jstrahlman@stlmsd.com Tionna Pooler (Independent Public Advisors) (816) 521-6844 tpooler@independentpublicadvisors.com Robert Mellinger (312) 876-3555 robert.a.mellinger@citi.com November 2019 S M T W T F S 27 28 29 30 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Holiday Transaction Date December 2019 S M T W T F S 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 1 2 3 4 18