DBI’s $394m NECAP Investment Raises Distribution Guidance 6.5%

Strong Financial Performance and Predictable Revenue Model

Dalrymple Bay Infrastructure Limited (DBI) delivered a solid financial performance in FY-24, with earnings before interest, tax, depreciation, and amortisation (EBITDA) rising 7.1% to $279.8 million and Funds From Operations (FFO) increasing 11.1% to $156.7 million. This growth was driven by disciplined cost management and a steady increase in revenue, reflecting the strength of DBI’s low-risk business model.

Central to DBI’s financial stability is its long-term take-or-pay contracts securing the Dalrymple Bay Terminal’s (DBT) full capacity of 84.2 million tonnes per annum through to at least 2028, with evergreen renewal options. The terminal infrastructure charge (TIC), which customers pay per contracted tonne, is indexed annually to inflation, providing predictable revenue streams. For the upcoming TIC year starting 1 July 2025, DBI forecasts a TIC of approximately $3.72 per tonne, a 3.6% increase from the prior year.

Capital Investment Fuels Organic Growth

DBI is actively investing in its infrastructure through a $394 million Non-Expansionary Capital (NECAP) program aimed at maintaining and optimising terminal capacity. Key projects include a new shiploader and reclaimer, representing about $280 million of the committed capital, both on schedule and budget with unanimous customer approval. These investments are expected to increase the TIC over time, enhancing revenue and supporting future distribution growth.

The company’s approach to capital expenditure ensures that all NECAP investments earn a return on and of capital, with costs passed through to customers under the regulatory framework overseen by the Queensland Competition Authority (QCA). This disciplined capital deployment underpins DBI’s confidence in raising distribution guidance.

Distribution Growth and Strategic Outlook

Reflecting its strong cash flow and earnings growth, DBI announced distribution guidance of 24.5 cents per security for the TIC year 2025/26, a 6.5% increase over the prior year’s guidance. This reaffirms the company’s target to grow distributions by 3-7% annually, subject to market conditions and business developments. Distributions are expected to be paid quarterly and comprise both dividends and partial loan note repayments, with a policy to maximise franking credits.

Looking ahead, DBI is exploring organic growth opportunities including optimising terminal capacity and progressing the 8X expansion project, which could increase capacity beyond the current contracted volume. The company is also assessing external acquisition opportunities aligned with its low-risk infrastructure profile, focusing on assets with stable, contracted revenues and strong customer bases.

Robust Balance Sheet and Credit Profile

DBI maintains an investment grade credit rating from both S&P and Fitch, with stable outlooks. As of December 2024, the company had drawn $1.82 billion of its $2.33 billion debt facilities, leaving over $400 million undrawn to fund ongoing capital projects. The weighted average tenor of drawn debt is 7.9 years, with no refinancing required until late 2027, supporting financial flexibility and stability.

Overall, DBI’s combination of long-term contracts, inflation-linked pricing, disciplined capital investment, and strong credit metrics positions it well to deliver predictable cash flows and growing returns to securityholders.