MAJOR INITIATIVES COVID-19 Pandemic Impact and Response The outbreak in late 2019 of a novel strain of coronavirus, referred to as COVID-19, has spread throughout the world, including the U.S. and the State. COVID-19 was declared to be a pandemic (the “COVID-19 Pandemic”) by the World Health Organization, as well as a U.S. national emergency, and a statewide emergency in the State. The responses of governments, businesses, and individuals, which are intended to slow and limit the spread of the coronavirus, have resulted in widespread and significant adverse impacts upon economic activity. Reductions in business revenues and sales, while costs related to cleaning and disinfecting measures, as well as healthcare expenses for infected persons, have been significant. The COVID-19 Pandemic is a continuing and dynamic situation, and predictions as to when it will be contained and effectively eliminated are not possible at this time. As a result, the Authority continues to analyze and address the ongoing impact of the COVID 19 Pandemic. Prior to the onset of the COVID-19 Pandemic, and the government and public responses to it, the Authority was on a record-setting pace for FY 2020. The Authority’s container volumes were expected to increase at least 3.5% over FY2019 and revenues by 6.5%. The Authority’s operating income and cash flows from operations growth were expected to nearly mirror the increase in revenues. Post-COVID-19, the Authority’s container volumes were down just over 1.0% year-over-year, while revenues were up just over 1.7%. Those revenues represented an annual record level of revenues generated at that time but have since been superseded by FY2021’s reported revenues. The Authority’s operating income and cash flows from operations, adjusted for changes in current liabilities, were both down 6.5%. During FY2020, the Authority continued steady operations with normal, 24-hour vessel and terminal services. As the Authority is considered “essential” logistical infrastructure, its operations were exempted from many government actions that would have prevented employees from reporting to work (e.g., “shelter-in-place” orders). The Authority suspended most hiring of new employees but did continue to hire skilled people in critical operations roles that have a long training lead-time (e.g., ship-to-shore crane operators). To keep cargo moving smoothly at its facilities, the Authority implemented an “Isolate and Operate” strategy by spreading out workers, practicing social distancing, and disinfecting and deep-cleaning equipment, thereby attempting to minimize impact from the pandemic. Using the “Isolate and Operate” strategy, The Authority has worked day and night to protect the Authority’s employees, our partners in the ILA and all the truckers, contractors, vendors, and others who work on our terminals daily. Despite the challenges of the COVID-19 Pandemic, the Authority had a record-setting year in FY2021. TEU container volumes were up 20.1%, at 5.331M TEUs, and revenues of $615.4M were an increase of 27.8% year-over year and a new annual record. The Authority’s cash flows from operations, at $317.4M, were up $136.8M, or 75.7%. As the country’s third busiest port complex, the Authority clearly understands the importance of keeping our ports operational through this crisis to support the needs of our customers and the nation. iii
