MACQUARIE INFRASTRUCTURE HOLDINGS, LLC NEW YORK, Feb. 21, 2017 /PRNewswire/ -- Macquarie Infrastructure Corporation (NYSE: MIC) today reported its financial results for fourth quarter and full year 2016.
"The performance of our businesses in the fourth quarter and the full year 2016 resulted in the generation of a better than expected amount of Adjusted Free Cash Flow," said James Hooke, chief executive officer of MIC.
MIC reported full year 2016 net income of $154.9 million, compared with a net loss of $113.8 million in 2015. Included in the full year figure was net income of $71.1 million in the fourth quarter of 2016 compared with $31.9 million in the prior comparable period. The Company also reported generation of cash from operating activities of $123.3 million and $560.3 million in the quarter and full-year periods ended December 31, 2016, respectively, compared with $126.2 million and $381.2 million in the comparable periods in 2015.
MIC's businesses produced $118.6 million and $510.2 million of Adjusted Free Cash Flow in the fourth quarter and full year periods in 2016, respectively, up from $94.0 million and from $445.5 million in the comparable periods in 2015. The nominal increase in the full year amount of 14.5% was partially offset by a 3.7% increase in MIC's weighted average number of shares outstanding in 2016 versus 2015 resulting in a 10.5% real increase including the impact of the incremental share issuance.
Performance highlights for the reported periods included:
-- Atlantic Aviation: volume growth driven by market share gains, increased
flight activity and contributions from acquisitions and investments
-- IMTT: high utilization rates, stable storage pricing
-- Contracted Power: improved solar and wind resources
-- MIC Hawaii: successful acquisitions, increased gas sales
-- Implementation of shared services center with cost savings expected in
2017 and beyond
"We were also pleased that the continued improvement in our underlying business performance, particularly the growth in cash generation, allowed us to meaningfully increase our quarterly cash dividend," said Hooke.
The MIC board of directors authorized a cash dividend of $1.31 per share, or $5.24 annualized, for the fourth quarter of 2016. The dividend will be payable March 8, 2017 to shareholders of record on March 3, 2017. The payment represents a 13.9% increase over the dividend paid for the fourth quarter of 2015. Inclusive of the $1.31, MIC will have distributed approximately 80.0% of its 2016 Adjusted Free Cash Flow to shareholders.
On February 3, 2017, MIC provided the market with initial guidance regarding the expected performance of its businesses in 2017 and 2018. "We expect that MIC's operations will continue to perform well and generate increases in Free Cash Flow of between 10% and 15% per year," Hooke said. "Based on the anticipated performance improvement, we are also initiating guidance for growth in our cash dividend of 10% in 2017."
MIC expects effective deployment of capital to drive approximately one third of its anticipated annual growth in Free Cash Flow. The Company exceeded its targeted level for capital deployment into growth projects and bolt-on acquisitions in 2016. "Having successfully deployed over $335.0 million during the year, up from an average of $250.0 million historically, we are positioned to potentially exceed our growth capital deployment target of $350.0 million in 2017," Hooke said.
Capital deployment highlights for 2016 included:
-- Acquisitions of Fixed Base Operations assets
-- Acquisition or development of 87 MW of solar facilities in Utah and
Hawaii
-- Acquisition of a design/build mechanical contractor in Hawaii
-- Acquisition of a jet fuel storage and handling development company
-- Investment in a US renewable power facility developer
MIC reported a backlog of approved growth projects of $300.0 million at year-end, and expects to deploy capital on projects including:
-- The substantial majority of construction works at BEC II, MIC's
development of a 130 MW addition to its power facility in Bayonne, NJ
-- Ramp development and hangar construction at various Atlantic Aviation
sites
-- Storage tank and new dock construction at IMTT
Consistent with past performance, MIC also expects to complete bolt-on acquisitions that, together with growth projects, would result in the deployment of in excess of $350.0 million during the coming year.
"We are excited by the growth prospects we see emerging as a result of both the potential for tax reform as well as the focus on infrastructure redevelopment here in the U.S. We have the financial and human capital to deploy in the construction or acquisition of quality, cash generative opportunities in each of our four businesses and look forward to making the most of these trends for the benefit of our shareholders," said Hooke.
Summary Financial Information
Quarter Ended Change Favorable/ Year Ended Change Favorable/
December 31, (Unfavorable) December 31, (Unfavorable)
------------ ------------ ------------ ------------
2016 2015 $ % 2016 2015 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
GAAP Metrics
Net income (loss) $71,131 $31,883 39,248 123.1 $154,869 $(113,807) 268,676 NM
Weighted average number of 81,853,027 79,877,873 1,975,154 2.5 80,892,654 77,997,826 2,894,828 3.7
shares outstanding: basic
Net income (loss) per share $0.89 $0.41 0.48 117.1 $1.93 $(1.39) 3.32 NM
attributable to MIC
Cash provided by operating 123,332 126,237 (2,905) (2.3) 560,320 381,156 179,164 47.0
activities
MIC Non-GAAP Metrics:
EBITDA excluding non-cash $166,006 $153,911 12,095 7.9 $695,588 $633,101 62,487 9.9
items, adjusted(1)
Cash interest(2) (25,922) (27,816) 1,894 6.8 (107,930) (112,440) 4,510 4.0
Cash taxes(3) (2,027) 66 (2,093) NM (7,310) (532) (6,778) NM
Cash pension contribution (3,500) - (3,500) NM (3,500) - (3,500) NM
Maintenance capital (13,478) (30,333) 16,855 55.6 (58,203) (68,596) 10,393 15.2
expenditures
Noncontrolling interest(4) (2,446) (1,873) (573) (30.6) (8,400) (5,984) (2,416) (40.4)
------ ------ ---- ------ ------ ------
Adjusted Free Cash Flow(5) $118,633 $93,955 24,678 26.3 $510,245 $445,549 64,696 14.5
======== ======= ====== ======== ======== ======
NM - Not meaningful
(1) EBITDA excluding non-cash items,
adjusted, is calculated as net
income (loss) before interest
expense, net, taxes, depreciation
and amortization expense,
management fees, pension expense
and other non-cash (income)
expense recorded in the
consolidated statement of
operations. See below for
reconciliation of net income
(loss) to EBITDA excluding non-
cash items. For the quarter and
year ended December 31, 2015,
EBITDA excluding non-cash items,
adjusted, excludes $60,000 and
$9.3 million, respectively, of
transaction costs related to the
Bayonne Energy Center (BEC)
acquisition.
(2) Cash interest is calculated as
interest expense, net, excluding
the impact of non-cash
adjustments for unrealized (gains)
losses from derivative
instruments, amortization of
deferred financing costs and the
amortization of debt discount
recorded in the consolidated
statement of operations. Cash
interest excludes the payment of
interest rate swap breakage fees
of $17.8 million for the quarter
and year ended December 31, 2016
and $50.6 million for the year
ended December 31, 2015. For the
quarter and year ended December
31, 2016, cash interest also
excludes $8.6 million of interest
rate cap premiums paid.
(3) Cash taxes for the quarter and year
ended December 31, 2015 excludes
$6.9 million of tax refund
received in the fourth quarter of
2015 relating to the election of
bonus depreciation for 2014.
(4) Noncontrolling interest adjustment
represents the portion of Adjusted
Free Cash Flow not attributable to
MIC's ownership interest.
(5) Adjusted Free Cash Flow is
calculated as cash from operating
activities, which includes EBITDA
excluding non-cash items,
adjusted, less cash paid for
interest, taxes, pension
contribution, less maintenance
capital expenditures, which
includes principal repayment of
capital lease obligations used to
fund maintenance capital
expenditures, excludes the changes
in working capital and adjusted
for noncontrolling interest. See
below for a reconciliation from
cash from operating activities to
Adjusted Free Cash Flow. MIC
regards Adjusted Free Cash Flow as
a performance measure and does not
intend it to represent cash from
operating activities, the most
directly comparable GAAP measure,
or serve as a measure of liquidity
and notes that it is not
necessarily comparable to
similarly titled measures reported
by other companies.
Conference Call and Webcast
When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Wednesday, February 22, 2017 during which it will review and comment on MIC's results for the fourth quarter and full year 2016.
How: To listen to the conference call please dial +1(650) 521-5252 or +1(877) 852-2928 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company's website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.
Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company's website prior to the conference call.
Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on February 22, 2017 through midnight on February 28, 2017, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 48638082. An online archive of the webcast will be available on the Company's website for one year following the call.
About MIC
MIC owns and operates a diversified group of businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, entities comprising an energy services, production and distribution segment, MIC Hawaii, and entities comprising a Contracted Power segment. For additional information, please visit the MIC website at www.macquarie.com/mic. MIC-G
Use of Non-GAAP Measures
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics
In addition to MIC's results under U.S. GAAP, the Company uses certain non-GAAP measures to assess the performance and prospects of its businesses. In particular, MIC uses EBITDA excluding non-cash items, Free Cash Flow, Adjusted Free Cash Flow and certain proportionately combined financial metrics. Proportionately combined financial metrics, including Adjusted Free Cash Flow, reflect MIC Corporate and the Company's ownership interest in each of its businesses.
MIC measures EBITDA excluding non-cash items as it reflects its businesses' ability to effectively manage the volume of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses. The Company believes investors use EBITDA excluding non-cash items primarily as a measure of the operating performance of its businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from MIC's, particularly where acquisitions and other non-operating factors are involved. MIC defines EBITDA excluding non-cash items as net income (loss) or earnings -- the most comparable GAAP measure -- before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses, adjustments for other non-cash items and pension expense reflected in the statements of operations. EBITDA excluding non-cash items also excludes base management fees and performance fees, if any, whether paid in cash or stock.
Given MIC's varied ownership levels in some of its businesses, principally in the CP segment, together with obligations to report the results of these businesses on a consolidated basis, GAAP measures such as net income (loss) do not fully reflect all of the items management considers in assessing the amount of cash generated based on its ownership interest in its businesses. The Company notes that the proportionately combined metrics used may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Therefore, proportionately combined metrics should be used as a supplemental measure to help understand MIC's financial performance and not in lieu of financial results reported under GAAP.
The Company's businesses can be characterized as owners of high-value, long-lived assets capable of generating Free Cash Flow. MIC defines Free Cash Flow as cash from operating activities -- the most comparable GAAP measure -- which includes cash paid for interest, taxes and pension contributions, less maintenance capital expenditures, which includes principal repayments on capital lease obligations used to fund maintenance capital expenditures, and excludes changes in working capital.
Management uses Free Cash Flow as a measure of its ability to provide investors with an attractive risk-adjusted return by sustaining and potentially increasing MIC's quarterly cash dividend and funding a portion of the Company's growth. GAAP metrics such as net income (loss) do not provide MIC management with the same level of visibility into the performance and prospects of the business as a result of: (i) the capital intensive nature of MIC's businesses and the generation of non-cash depreciation and amortization; (ii) shares issued to the Company's external Manager under the Management Services Agreement, (iii) the Company's ability to defer all or a portion of current federal income taxes; (iv) non-cash unrealized gains or losses on derivative instruments; (v) amortization of tolling liabilities and gains (losses) on disposal of assets, and (vi) pension expense. Pension expenses primarily consist of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are reflected as a reduction to Free Cash Flow. Management believes that external consumers of its financial statements, including investors and research analysts, use Free Cash Flow both to assess the Company's performance and as an indicator of its success in generating an attractive risk-adjusted return.
In its Annual Report on Form 10-K, the Company has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate. Management believes that both Free Cash Flow and EBITDA excluding non-cash items support a more complete and accurate understanding of the financial and operating performance of its businesses than would otherwise be achieved using GAAP results alone.
Free Cash Flow/Adjusted Free Cash Flow do not take into consideration required payments on indebtedness and other fixed obligations or other cash items that are excluded from MIC's definition of Free Cash Flow. Examples of other cash items that may be excluded in the calculation of Adjusted Free Cash Flow include, but are not limited to, interest rate swap breakage costs, certain transaction-related expenses and reorganization costs. Management notes that Free Cash Flow and Adjusted Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Both Free Cash Flow and Adjusted Free Cash Flow should be used as a supplemental measure to help understand MIC's financial performance and not in lieu of its financial results reported under GAAP.
See tables below for a reconciliation of EBITDA excluding non-cash items to net income (loss) --most comparable GAAP measure -- and a reconciliation of Free Cash Flow and Adjusted Free Cash Flow to cash from operating activities -- most comparable GAAP measure.
Classification of Maintenance Capital Expenditures and Growth Capital Expenditures
MIC categorizes capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, the Company has adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain MIC's businesses at current levels of operations, capability, profitability or cash flow, while growth capital expenditures primarily provide new or enhanced levels of operations, capability, profitability or cash flow. Management considers a number of factors in determining whether a specific capital expenditure will be classified as maintenance or growth.
In some cases, specific capital expenditures contain characteristics of both maintenance and growth capital expenditures. MIC does not bifurcate specific capital expenditures into growth and maintenance components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.
Forward-Looking Statements
This press release contains forward-looking statements. MIC may, in some cases, use words such as "project", "believe", "anticipate", "plan", "expect", "estimate", "intend", "should", "would", "could", "potentially", or "may" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this release are subject to a number of risks and uncertainties, some of which are beyond MIC's control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; risks associated with development, investment and expansion in the power industry; its regulatory environment establishing rate structures and monitoring quality of service; demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks; fuel and gas and other commodity costs; its ability to recover increases in costs from customers, cybersecurity risks, work interruptions or other labor stoppages; risks related to its shared services initiative; reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.
MIC's actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which MIC is not currently aware could also cause its actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. MIC undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
"Macquarie Group" refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Corporation is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Corporation.
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED BALANCE SHEETS
($ in Thousands, Except Share Data)
As of December 31,
------------------
2016 2015
---- ----
ASSETS
Current assets:
Cash and cash equivalents $44,767 $22,394
Restricted cash 16,420 18,946
Accounts receivable, less allowance for doubtful accounts
of $1,434 and $1,690, respectively 124,846 95,597
Inventories 31,461 29,489
Prepaid expenses 14,561 21,690
Fair value of derivative instruments 5,514 -
Other current assets 7,099 28,453
----- ------
Total current assets 244,668 216,569
Property, equipment, land and leasehold improvements, net 4,346,536 4,116,163
Investment in unconsolidated business 8,835 8,274
Goodwill 2,024,409 2,017,211
Intangible assets, net 888,971 934,892
Fair value of derivative instruments 30,781 1,810
Other noncurrent assets 15,053 13,885
------ ------
Total assets $7,559,253 $7,308,804
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to Manager - related party $6,594 $73,317
Accounts payable 69,566 56,688
Accrued expenses 83,734 78,527
Current portion of long-term debt 40,016 40,099
Fair value of derivative instruments 9,297 19,628
Other current liabilities 41,802 40,531
------ ------
Total current liabilities 251,009 308,790
Long-term debt, net of current portion 3,039,966 2,746,525
Deferred income taxes 896,116 816,836
Fair value of derivative instruments 5,966 15,698
Tolling agreements - noncurrent 60,373 68,150
Other noncurrent liabilities 158,289 150,363
------- -------
Total liabilities 4,411,719 4,106,362
--------- ---------
Commitments and contingencies - -
Stockholders' equity:
Common stock ($0.001 par value; 500,000,000 authorized; 82,047,526 shares issued and $82 $80
outstanding at December 31, 2016 and 80,006,744 shares issued and outstanding at
December 31, 2015)
Additional paid in capital 2,089,407 2,317,421
Accumulated other comprehensive loss (28,960) (23,295)
Retained earnings 892,365 735,984
------- -------
Total stockholders' equity 2,952,894 3,030,190
Noncontrolling interests 194,640 172,252
------- -------
Total equity 3,147,534 3,202,442
--------- ---------
Total liabilities and equity $7,559,253 $7,308,804
========== ==========
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands, Except Share and Per Share Data)
Year Ended December 31,
-----------------------
2016 2015 2014
---- ---- ----
Revenue
Service revenue $1,288,562 $1,288,501 $1,064,682
Product revenue 363,169 350,749 284,400
Financing and equipment lease income - - 1,836
--- --- -----
Total revenues 1,651,731 1,639,250 1,350,918
--------- --------- ---------
Costs and expenses
Cost of services 524,423 551,029 546,609
Cost of product sales 142,731 168,954 192,881
Selling, general and administrative 303,033 304,862 265,254
Fees to Manager - related party 68,486 354,959 168,182
Depreciation 226,492 215,243 98,442
Amortization of intangibles 65,425 101,435 42,695
Loss from customer contract termination - - -
Total operating expenses 1,330,590 1,696,482 1,314,063
--------- --------- ---------
Operating income (loss) 321,141 (57,232) 36,855
Other income (expense)
Interest income 132 55 112
Interest expense(1) (116,933) (123,079) (73,196)
Equity in earnings and amortization charges of investee - - 26,391
Gain from acquisition/divestiture of businesses(2) - - 1,027,054
Other income (expense), net 21,786 1,288 (2,307)
------ ----- ------
Net income (loss) before income taxes 226,126 (178,968) 1,014,909
(Provision) benefit for income taxes(3) (71,257) 65,161 24,374
------- ------ ------
Net income (loss) $154,869 $(113,807) $1,039,283
Less: net loss attributable to noncontrolling interests (1,512) (5,270) (2,745)
------
Net income (loss) attributable to MIC $156,381 $(108,537) $1,042,028
======== ========= ==========
Basic income (loss) per share attributable to MIC $1.93 $(1.39) $16.54
Weighted average number of shares outstanding: basic 80,892,654 77,997,826 62,990,312
========== ========== ==========
Diluted income (loss) per share attributable to MIC $1.85 $(1.39) $16.10
Weighted average number of shares outstanding: diluted 82,218,627 77,997,826 64,925,565
==========
Cash dividends declared per share $5.05 $4.46 $3.8875
----- ----- -------
(1) Interest expense includes losses on derivative instruments of $5.0 million, $28.5 million and $19.5 million for the years ended December 31, 2016,
2015 and 2014, respectively, of which net loss of $856,000 was reclassified from accumulated other comprehensive loss for the year ended
December 31, 2014.
(2) Includes the gain of $948.1 million from the acquisition of the remaining 50% interest in IMTT (IMTT Acquisition) from the remeasuring to fair
value of the Company's previous 50% ownership interest and the gain of $78.9 million from the sale of the Company's interest in the district
energy business.
(3) Includes $340,000 of benefit for income taxes from accumulated other comprehensive loss reclassifications for the year ended December 31, 2014.
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
Year Ended December 31,
-----------------------
2016 2015 2014
---- ---- ----
Operating activities
Net income (loss) $154,869 $(113,807) $1,039,283
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization of property and equipment 226,492 215,243 102,816
Amortization of intangible assets 65,425 101,435 42,695
Equity in earnings and amortization charges of investee - - (26,391)
Equity distributions from investee - - 25,330
Gain from acquisition/divestiture of businesses - - (1,027,181)
Amortization of debt financing costs 21,041 9,075 5,376
Amortization of debt discount 1,007 - -
Adjustments to derivative instruments (54,549) (47,208) (567)
Fees to Manager- related party 68,486 287,139 103,182
Equipment lease receivable, net - - 2,805
Deferred taxes 63,947 (58,734) (27,942)
Pension expense 8,601 7,300 4,148
Other non-cash (income) expense, net (1,370) (1,047) 5,411
Changes in other assets and liabilities, net of acquisitions:
Restricted cash 525 722 35,858
Accounts receivable (8,415) 5,418 1,645
Inventories (2,343) (84) 4,779
Prepaid expenses and other current assets 7,794 (6,964) 5,448
Due to Manager - related party 135 (33) (11)
Accounts payable and accrued expenses 4,686 (8,002) (12,446)
Income taxes payable 8,251 (5,926) 288
Pension contribution (3,500) - (26,960)
Other, net (762) (3,371) (5,951)
------ ------
Net cash provided by operating activities 560,320 381,156 251,615
------- ------- -------
Investing activities
Acquisitions of businesses and investments, net of cash acquired (69,168) (266,895) (1,222,266)
Proceeds from sale of business, net of cash divested - - 265,295
Return of investment in unconsolidated business - - 12,319
Purchases of property and equipment (314,684) (194,148) (123,946)
Proceeds from insurance claim 11,068 - -
Change in restricted cash (84) 10,559 -
Other, net (3,977) 1,668 (208)
----- ----
Net cash used in investing activities (376,845) (448,816) (1,068,806)
-------- -------- ----------
Financing activities
Proceeds from long-term debt $1,311,000 $2,486,569 $412,884
Payment of long-term debt (1,476,228) (2,554,552) (548,431)
Proceeds from the issuance of shares 12,623 492,433 765,052
Dividends paid to common stockholders (396,093) (341,560) (240,535)
Contributions received from noncontrolling interests 15,431 532 -
Purchase of noncontrolling interest (9,909) - -
Distributions paid to noncontrolling interests (4,630) (2,546) (62,538)
Offering and equity raise costs paid (1,601) (16,984) (25,600)
Debt financing costs paid (17,392) (23,816) (15,142)
Proceeds from the issuance of convertible senior notes 402,500 - 350,000
Change in restricted cash 5,587 5,166 (999)
Payment of capital lease obligations (2,601) (2,346) (2,269)
Net cash (used in) provided by financing activities (161,313) 42,896 632,422
-------- ------ -------
Effect of exchange rate changes on cash and cash equivalents 211 (856) (590)
Net change in cash and cash equivalents 22,373 (25,620) (185,359)
------ ------- --------
Cash and cash equivalents, beginning of period 22,394 48,014 233,373
------ ------ -------
Cash and cash equivalents, end of period $44,767 $22,394 $48,014
======= ======= =======
Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued financing costs $3 $3 $112
=== === ====
Accrued purchases of property and equipment $28,288 $23,396 $8,122
======= ======= ======
Acquisition of equipment through capital leases $ - $398 $3,744
=== === ==== ======
Issuance of shares to Manager $135,345 $218,645 $101,345
======== ======== ========
Issuance of shares to independent directors $750 $750 $750
==== ==== ====
Issuance of shares for acquisition of business $ - $ - $115,000
=== === === === ========
Conversion of convertible senior notes to shares $4 $25 $ -
=== === === ===
Conversion of LLC interests to common stock $ - $79 $ -
=== === === === ===
Conversion of LLC interests to additional paid in capital $ - $2,428,334 $ -
=== === ========== === ===
Conversion of construction loan to term loan $ - $ - $60,360
=== === === === =======
Distributions payable to noncontrolling interests $42 $33 $441
=== === ====
Taxes (refund) paid, net $(898) $6,654 $19,704
===== ====== =======
Interest paid $108,737 $109,450 $69,256
======== ======== =======
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - MD&A
Quarter Ended Change Year Ended Change
December 31, Favorable/(Unfavorable) December 31, Favorable/(Unfavorable)
------------ ----------------------- ------------ -----------------------
2016 2015 $ % 2016 2015 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
Revenue
Service revenue $346,125 $314,863 31,262 9.9 $1,288,562 $1,288,501 61 0.0
Product revenue 91,116 86,491 4,625 5.3 363,169 350,749 12,420 3.5
------ ------ ----- ------- ------- ------
Total revenues 437,241 401,354 35,887 8.9 1,651,731 1,639,250 12,481 0.8
------- ------- ------ --------- --------- ------
Costs and expenses
Cost of services 152,591 130,842 (21,749) (16.6) 524,423 551,029 26,606 4.8
Cost of product sales 34,808 43,545 8,737 20.1 142,731 168,954 26,223 15.5
Selling, general and administrative 80,851 79,244 (1,607) (2.0) 303,033 304,862 1,829 0.6
Fees to Manager - related party 18,916 17,009 (1,907) (11.2) 68,486 354,959 286,473 80.7
Depreciation 54,367 52,950 (1,417) (2.7) 226,492 215,243 (11,249) (5.2)
Amortization of intangibles 15,508 17,779 2,271 12.8 65,425 101,435 36,010 35.5
Loss from customer contract termination - - - #DIV/0! - - -
--- --- --- --- --- ---
Total operating expenses 357,041 341,369 (15,672) (4.6) 1,330,590 1,696,482 365,892 21.6
------- ------- ------- --------- --------- -------
Operating income (loss) 80,200 59,985 20,215 33.7 321,141 (57,232) (378,373) NM
Other income (expense)
Interest income (expense), net(1) 382 (14,434) 14,816 102.6 (116,801) (123,024) 6,223 5.1
Other income (expense), net 1,397 (1,104) 2,501 NM 21,786 1,288 20,498 NM
----- ------ ----- ------ ----- ------
Net income (loss) before income taxes 81,979 44,447 37,532 84.4 226,126 (178,968) 405,094 NM
(Provision) benefit for income taxes (10,848) (12,564) 1,716 13.7 (71,257) 65,161 (136,418) NM
------- ------- ----- ------- ------ --------
Net income (loss) $71,131 $31,883 39,248 123.1 $154,869 $(113,807) 268,676 NM
Less: net loss attributable to noncontrolling interests (1,677) (1,040) 637 61.3 (1,512) (5,270) (3,758) (71.3)
Net income (loss) attributable to MIC $72,808 $32,923 39,885 121.1 $156,381 $(108,537) 264,918 NM
======= ======= ====== ======== ========= =======
Basic income (loss) per share attributable to MIC $0.89 $0.41 0.48 117.1 $1.93 $(1.39) 3.32 NM
Weighted average number of shares outstanding: basic 81,853,027 79,877,873 1,975,154 2.5 80,892,654 77,997,826 2,894,828 3.7
========== ========== ========= ========== ========== =========
NM - Not meaningful
(1) Interest income (expense), net, includes gains on derivative instruments of $38.0 million and losses on derivative instruments of $5.0 million for the quarter and year ended December 31, 2016, respectively. For the quarter and year ended December 31, 2015,
interest income (expense), net, includes gains on derivative instruments of $9.9 million and losses on derivative instruments of $28.5 million, respectively.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-
CASH ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE CASH FLOW
Quarter Ended Change Year Ended Change
December 31, Favorable/(Unfavorable) December 31, Favorable/(Unfavorable)
------------ ----------------------- ------------ -----------------------
2016 2015 $ % 2016 2015 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Net income (loss) $71,131 $31,883 $154,869 $(113,807)
Interest (income) expense, net(1) (382) 14,434 116,801 123,024
Provision (benefit) for income taxes 10,848 12,564 71,257 (65,161)
Depreciation 54,367 52,950 226,492 215,243
Amortization of intangibles 15,508 17,779 65,425 101,435
Fees to Manager- related party(2) 18,916 17,009 68,486 354,959
Pension expense(3) 2,088 1,916 8,601 7,300
Other non-cash (income) expense, net(4) (6,470) 5,316 (16,343) 792
EBITDA excluding non-cash items $166,006 $153,851 12,155 7.9 $695,588 $623,785 71,803 11.5
======== ======== ====== ======== ======== ======
EBITDA excluding non-cash items $166,006 $153,851 $695,588 $623,785
Interest income (expense), net(1) 382 (14,434) (116,801) (123,024)
Adjustments to derivative instruments recorded in interest expense(1) (40,816) (15,700) (13,177) 1,509
Amortization of debt financing costs(1) 13,505 2,318 21,041 9,075
Amortization of debt discount(1) 1,007 - 1,007 -
Interest rate swap breakage fees (17,770) - (17,770) (50,556)
Interest rate cap premium (8,629) - (8,629) -
Provision/benefit for income taxes, net of changes in deferred taxes(5) (2,027) 7,025 (7,310) 6,427
Pension contribution (3,500) - (3,500) -
Changes in working capital(2) 15,174 (6,823) 9,871 (86,060)
------ ------ ----- -------
Cash provided by operating activities 123,332 126,237 560,320 381,156
Changes in working capital(2) (15,174) 6,823 (9,871) 86,060
Maintenance capital expenditures (13,478) (30,333) (58,203) (68,596)
-------
Free cash flow $94,680 $102,727 (8,047) (7.8) $492,246 $398,620 93,626 23.5
======= ======== ====== ======== ======== ======
(1) Interest (income) expense, net, includes adjustment to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to convertible senior notes issued in October 2016. Interest (income)
expense, net, also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas, the October 2016 refinancing at Atlantic Aviation and the May 2015 refinancing at IMTT.
(2) Fees to Manager-related party includes base management fees and performance fees, if any. In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in
July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 volume weighted average share price of $71.84.
(3) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are not included in pension expense, but rather reflected as a
reduction to Free Cash Flow, as noted in the table above.
(4) Other non-cash (income) expense, net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges, adjustments to asset retirement obligations and non-cash gains (losses) related to disposal of assets.
See"Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics"above for further discussion.
(5) Includes $6.9 million of tax refund received in the fourth quarter of 2015 relating to the election of bonus depreciation for the year ended December 31, 2014.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO ADJUSTED
FREE CASH FLOW
Change
Favorable/(Unfavorable)
-----------------------
Quarter Ended Change Year Ended
December 31 Favorable/(Unfavorable) December 31,
----------- ----------------------- ------------
2016 2015 $ % 2016 2015 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Free Cash Flow-Consolidated basis $94,680 $102,727 (8,047) (7.8) $492,246 $398,620 93,626 23.5
100% of CP Free Cash Flow included in consolidated Free Cash Flow (16,099) (12,382) (72,631) (21,989)
MIC's share of CP Free Cash Flow 13,654 10,509 64,234 16,005
100% of MIC Hawaii Free Cash Flow included in consolidated Free Cash Flow (5,879) (8,390) (36,311) (44,118)
MIC's share of MIC Hawaii Free Cash Flow 5,878 8,390 36,308 44,118
Adjusted Free Cash Flow $92,234 $100,854 (8,620) (8.5) $483,846 $392,636 91,210 23.2
======= ======== ====== ======== ======== ======
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH
ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
IMTT
----
Quarter Ended Change Year Ended Change
December 31, Favorable/ (Unfavorable) December 31, Favorable/ (Unfavorable)
------------ ------------------------ ------------ ------------------------
2016 2015 2016 2015
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenues 135,686 134,160 1,526 1.1 532,472 550,041 (17,569) (3.2)
Cost of services 54,434 52,091 (2,343) (4.5) 204,279 222,724 18,445 8.3
Selling, general and administrative expenses 8,365 8,994 629 7.0 32,687 33,903 1,216 3.6
Depreciation and amortization 30,773 32,217 1,444 4.5 134,385 132,002 (2,383) (1.8)
------ ------ ----- ------- ------- ------
Operating income 42,114 40,858 1,256 3.1 161,121 161,412 (291) (0.2)
Interest income (expense), net(1) 2,710 (5,164) 7,874 152.5 (38,752) (37,378) (1,374) (3.7)
Other income, net 1,562 262 1,300 NM 18,509 2,212 16,297 NM
Provision for income taxes (19,019) (14,719) (4,300) (29.2) (57,736) (51,520) (6,216) (12.1)
Net income(2) 27,367 21,237 6,130 28.9 83,142 74,726 8,416 11.3
Less: net income attributable to noncontrolling interests - 56 56 100.0 59 586 527 89.9
Net income attributable to MIC(2) 27,367 21,181 6,186 29.2 83,083 74,140 8,943 12.1
====== ====== ===== ====== ====== =====
Reconciliation of net income to EBITDA excluding non-cash items and a
reconciliation of cash provided by operating activities to Free Cash Flow:
Net income(2) 27,367 21,237 83,142 74,726
Interest (income) expense, net(1) (2,710) 5,164 38,752 37,378
Provision for income taxes 19,019 14,719 57,736 51,520
Depreciation and amortization 30,773 32,217 134,385 132,002
Pension expense(3) 1,805 1,743 7,219 6,063
Other non-cash expense, net 26 74 657 378
--- --- --- ---
EBITDA excluding non-cash items 76,280 75,154 1,126 1.5 321,891 302,067 19,824 6.6
====== ====== ===== ======= ======= ======
EBITDA excluding non-cash items 76,280 75,154 321,891 302,067
Interest income (expense), net(1) 2,710 (5,164) (38,752) (37,378)
Adjustments to derivative instruments recorded in interest expense(1) (12,892) (5,052) (2,169) (2,912)
Amortization of debt financing costs(1) 412 407 1,654 2,344
Interest rate swap breakage fees - - - (31,385)
Provision for income taxes, net of changes in deferred taxes (2,367) (314) (5,438) (470)
Changes in working capital 7,992 (1,593) (3,734) (11,260)
----- ------ ------ -------
Cash provided by operating activities 72,135 63,438 273,452 221,006
Changes in working capital (7,992) 1,593 3,734 11,260
Maintenance capital expenditures (5,521) (17,146) (38,620) (37,696)
Free cash flow 58,622 47,885 10,737 22.4 238,566 194,570 43,996 22.6
====== ====== ====== ======= ======= ======
_____________________
NM - Not meaningful
(1) Interest income (expense), net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. For the year ended December 31, 2015, interest
income (expense), net,
also includes non-cash write-off of deferred financing costs related to the May 2015 refinancing.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses.
Atlantic Aviation
-----------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ (Unfavorable) December 31, Favorable/ (Unfavorable)
------------ ------------------------ ------------ ------------------------
2016 2015 2016 2015
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenues 196,180 180,703 15,477 8.6 740,209 738,460 1,749 0.2
Cost of services (exclusive of depreciation and amortization of 85,773 78,751 (7,022) (8.9) 303,899 328,305 24,406 7.4
intangibles shown separately below)
Gross margin 110,407 101,952 8,455 8.3 436,310 410,155 26,155 6.4
Selling, general and administrative expenses 55,312 53,836 (1,476) (2.7) 212,331 207,062 (5,269) (2.5)
Depreciation and amortization 21,618 22,332 714 3.2 90,659 126,351 35,692 28.2
------ ------ --- ------ ------- ------
Operating income 33,477 25,784 7,693 29.8 133,320 76,742 56,578 73.7
Interest expense, net(1) (6,524) (3,609) (2,915) (80.8) (33,961) (35,735) 1,774 5.0
Other (expense) income, net (123) (1,244) 1,121 90.1 68 (2,121) 2,189 103.2
Provision for income taxes (10,631) (8,641) (1,990) (23.0) (39,889) (16,081) (23,808) (148.1)
Net income(2) 16,199 12,290 3,909 31.8 59,538 22,805 36,733 161.1
====== ====== ===== ====== ====== ======
Reconciliation of net income to EBITDA excluding non-cash items
and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income(2) 16,199 12,290 59,538 22,805
Interest expense, net(1) 6,524 3,609 33,961 35,735
Provision for income taxes 10,631 8,641 39,889 16,081
Depreciation and amortization 21,618 22,332 90,659 126,351
Pension expense(3) 60 62 110 112
Other non-cash expense, net 457 1,115 905 2,533
--- ----- --- -----
EBITDA excluding non-cash items 55,489 48,049 7,440 15.5 225,062 203,617 21,445 10.5
====== ====== ===== ======= ======= ======
EBITDA excluding non-cash items 55,489 48,049 225,062 203,617
Interest expense, net(1) (6,524) (3,609) (33,961) (35,735)
Convertible senior notes interest(4) (1,969) - (1,969) -
Adjustments to derivative instruments recorded in interest expense(1) (8,574) (4,310) (4,158) 3,617
Amortization of debt financing costs(1) 11,699 803 14,195 3,221
Interest rate swap breakage fees (17,770) - (17,770) -
Interest rate cap premium (8,629) - (8,629) -
Provision for income taxes, net of changes in deferred taxes 384 652 (2,137) (242)
Changes in working capital (248) (2,927) 11,164 (2,635)
---- ------ ------ ------
Cash provided by operating activities 23,858 38,658 181,797 171,843
Changes in working capital 248 2,927 (11,164) 2,635
Maintenance capital expenditures (4,816) (8,489) (10,632) (21,455)
------- -------
Free cash flow 19,290 33,096 (13,806) (41.7) 160,001 153,023 6,978 4.6
====== ====== ======= ======= ======= =====
_____________________
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. For the quarter and year ended December 31, 2016, interest
expense, net, also
includes non-cash write-off of deferred financing costs related to the October 2016 refinancing.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses.
(4) Represents the cash interest expense reclassed from MIC Corporate for the October 2016 convertible senior notes of which proceeds were used to pay down a portion of Atlantic Aviation's
credit facility.
Contracted Power
----------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ (Unfavorable) December 31, Favorable/ (Unfavorable)
------------ ------------------------ ------------ ------------------------
2016 2015 2016 2015
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenues 35,993 32,540 3,453 10.6 150,010 123,797 26,213 21.2
Cost of product sales 5,807 4,416 (1,391) (31.5) 23,302 18,901 (4,401) (23.3)
Selling, general and administrative expenses 6,143 7,404 1,261 17.0 25,474 30,847 5,373 17.4
Depreciation and amortization 13,855 13,831 (24) (0.2) 55,548 48,990 (6,558) (13.4)
Loss from customer contract termination - - - - - - -
--- --- --- --- ---
Operating income 10,188 6,889 3,299 47.9 45,686 25,059 20,627 82.3
Interest income (expense), net(1) 10,328 (540) 10,868 NM (21,286) (28,390) 7,104 25.0
Other income, net 182 1 181 NM 4,021 1,066 2,955 NM
(Provision) benefit for income taxes (6,702) 1,244 (7,946) NM (14,328) (4,887) (9,441) (193.2)
Net income (loss)(2) 13,996 7,594 6,402 84.3 14,093 (7,152) 21,245 NM
Less: net income (loss) attributable to noncontrolling interest 1,875 (1,096) (2,971) NM 2,092 (5,856) (7,948) (135.7)
Net income (loss) attributable to MIC(2) 12,121 8,690 3,431 39.5 12,001 (1,296) 13,297 NM
====== ===== ===== ====== ====== ======
Reconciliation of net income (loss) to EBITDA excluding non-cash
items and a reconciliation of cash provided by operating activities
to Free Cash Flow:
Net income (loss)(2) 13,996 7,594 14,093 (7,152)
Interest (income) expense, net(1) (10,328) 540 21,286 28,390
Provision (benefit) for income taxes 6,702 (1,244) 14,328 4,887
Depreciation and amortization 13,855 13,831 55,548 48,990
Other non-cash income, net(3) (1,623) (1,987) (7,047) (6,959)
------ ------ ------
EBITDA excluding non-cash items 22,602 18,734 3,868 20.6 98,208 68,156 30,052 44.1
====== ====== ===== ====== ====== ======
EBITDA excluding non-cash items 22,602 18,734 98,208 68,156
Interest income (expense), net(1) 10,328 (540) (21,286) (28,390)
Adjustments to derivative instruments recorded in interest expense(1) (16,756) (6,186) (4,762) 819
Amortization of debt financing costs(1) 376 376 1,489 686
Interest rate swap breakage fees - - - (19,171)
Provision/benefit for income taxes, net of changes in deferred 2 (2) (6) (4)
taxes
Changes in working capital 780 1,573 (1,129) (2,331)
--- ----- ------ ------
Cash provided by operating activities 17,332 13,955 72,514 19,765
Changes in working capital (780) (1,573) 1,129 2,331
Maintenance capital expenditures (453) - (1,012) (107)
Free cash flow 16,099 12,382 3,717 30.0 72,631 21,989 50,642 NM
====== ====== ===== ====== ====== ======
_____________________
NM - Not meaningful
(1) Interest income (expense), net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Other non-cash income, net, primarily includes amortization of tolling liabilities.
MIC Hawaii
----------
Quarter Ended Change Year Ended Change
December 31, Favorable/ (Unfavorable) December 31, Favorable/ (Unfavorable)
------------ ------------------------ ------------ ------------------------
2016 2015 2016 2015
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenues 55,123 53,951 1,172 2.2 213,159 226,952 (13,793) (6.1)
Service revenues 15,504 - 15,504 NM 20,762 - 20,762 NM
Total revenues 70,627 53,951 16,676 30.9 233,921 226,952 6,969 3.1
Cost of product sales (exclusive of depreciation and amortization of 29,001 39,129 10,128 25.9 119,429 150,053 30,624 20.4
intangibles shown separately below)
Cost of services (exclusive of depreciation and amortization of 12,389 - (12,389) NM 16,335 - (16,335) NM
intangibles shown separately below)
Cost of revenue - total 41,390 39,129 (2,261) (5.8) 135,764 150,053 14,289 9.5
------- ------- ------
Gross margin 29,237 14,822 14,415 97.3 98,157 76,899 21,258 27.6
Selling, general and administrative expenses 8,046 6,095 (1,951) (32.0) 24,276 21,475 (2,801) (13.0)
Depreciation and amortization 3,629 2,349 (1,280) (54.5) 11,325 9,335 (1,990) (21.3)
----- ----- ------ ------ ----- ------
Operating income 17,562 6,378 11,184 175.4 62,556 46,089 16,467 35.7
Interest income (expense), net(1) 665 (1,706) 2,371 139.0 (5,559) (7,279) 1,720 23.6
Other expense, net (224) (124) (100) (80.6) (812) (556) (256) (46.0)
Provision for income taxes (5,578) (974) (4,604) NM (20,441) (14,261) (6,180) (43.3)
Net income(2) 12,425 3,574 8,851 NM 35,744 23,993 11,751 49.0
Less: net loss attributable to noncontrolling interests (3,552) - 3,552 NM (3,663) - 3,663 NM
Net income attributable to MIC(2) 15,977 3,574 12,403 NM 39,407 23,993 15,414 64.2
====== ===== ====== ====== ====== ======
Reconciliation of net income to EBITDA excluding non-cash items and a
reconciliation of cash provided by operating activities to Free Cash Flow:
Net income(2) 12,425 3,574 35,744 23,993
Interest (income) expense, net(1) (665) 1,706 5,559 7,279
Provision for income taxes 5,578 974 20,441 14,261
Depreciation and amortization 3,629 2,349 11,325 9,335
Pension expense(3) 223 111 1,272 1,125
Other non-cash (income) expense, net(4) (5,448) 5,927 (11,539) 4,090
------ ------- -----
EBITDA excluding non-cash items 15,742 14,641 1,101 7.5 62,802 60,083 2,719 4.5
====== ====== ===== ====== ====== =====
EBITDA excluding non-cash items 15,742 14,641 62,802 60,083
Interest income (expense), net(1) 665 (1,706) (5,559) (7,279)
Adjustments to derivative instruments recorded in interest expense(1) (2,594) (152) (2,088) (15)
Amortization of debt financing costs(1) 100 121 948 483
Provision for income taxes, net of changes in deferred taxes (1,846) 184 (8,353) 184
Pension contribution (3,500) - (3,500) -
Changes in working capital 3,788 (6,936) 9,342 (1,570)
----- ------ ----- ------
Cash provided by operating activities 12,355 6,152 53,592 51,886
Changes in working capital (3,788) 6,936 (9,342) 1,570
Maintenance capital expenditures (2,688) (4,698) (7,939) (9,338)
------ ------
Free cash flow 5,879 8,390 (2,511) (29.9) 36,311 44,118 (7,807) (17.7)
===== ===== ====== ====== ====== ======
_____________________
NM - Not meaningful
(1) Interest income (expense), net, includes adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees. For the year
ended December 31, 2016,
interest income (expense), net, also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to
pension plans are not included in
pension expense, but rather reflected as a reduction to Free Cash Flow, as noted in the table above.
(4) Other non-cash (income) expense, net, primarily includes non-cash adjustments related to unrealized gains (losses) on commodity hedges and asset retirement obligations.
Corporate and Other
-------------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ (Unfavorable) December 31, Favorable/ (Unfavorable)
------------ ------------
2016 2015 2016 2015
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Fees to Manager-related party(1) 18,916 17,009 (1,907) (11.2) 68,486 354,959 286,473 80.7
Selling, general and administrative expenses 4,225 2,915 (1,310) (44.9) 13,056 11,575 (1,481) (12.8)
----- ----- ------ ------ ------ ------
Operating loss (23,141) (19,924) (3,217) (16.1) (81,542) (366,534) 284,992 77.8
Interest expense, net(2) (6,797) (3,415) (3,382) (99.0) (17,243) (14,242) (3,001) (21.1)
Other income - 1 (1) (100.0) - 687 (687) (100.0)
Benefit for income taxes 31,082 10,526 20,556 195.3 61,137 151,910 (90,773) (59.8)
Net income (loss)(3) 1,144 (12,812) 13,956 108.9 (37,648) (228,179) 190,531 83.5
===== ======= ====== ======= ======== =======
Reconciliation of net income (loss) to EBITDA excluding non-cash items
and a reconciliation of cash (used in) provided by operating activities to
Free Cash Flow:
Net income (loss)(3) 1,144 (12,812) (37,648) (228,179)
Interest expense, net(2) 6,797 3,415 17,243 14,242
Benefit for income taxes (31,082) (10,526) (61,137) (151,910)
Fees to Manager-related party(1) 18,916 17,009 68,486 354,959
Other non-cash expense 118 187 681 750
--- --- --- ---
EBITDA excluding non-cash items (4,107) (2,727) (1,380) (50.6) (12,375) (10,138) (2,237) (22.1)
====== ====== ====== ======= ======= ======
EBITDA excluding non-cash items (4,107) (2,727) (12,375) (10,138)
Interest expense, net (2) (6,797) (3,415) (17,243) (14,242)
Convertible senior notes interest(4) 1,969 - 1,969 -
Amortization of debt financing costs(2) 918 611 2,755 2,341
Amortization of debt discount(2) 1,007 - 1,007 -
Benefit for income taxes, net of changes in deferred taxes(5) 1,800 6,505 8,624 6,959
Changes in working capital(1) 2,862 3,060 (5,772) (68,264)
----- ----- ------ -------
Cash (used in) provided by operating activities (2,348) 4,034 (21,035) (83,344)
Changes in working capital(1) (2,862) (3,060) 5,772 68,264
Free cash flow (5,210) 974 (6,184) NM (15,263) (15,080) (183) (1.2)
====== === ====== ======= ======= ====
_____________________
NM - Not meaningful
(1) Fees to Manager-related party includes base management fees and performance fees, if any. In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the
performance fee for the quarter
ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in shares by our Manager on August 1, 2016.
(2) Interest expense, net, includes non-cash amortization of deferred financing fees and amortization of debt discount related to the October 2016 convertible senior notes.
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(4) Represents the cash interest expense reclassed to Atlantic Aviation related to the October 2016 convertible senior notes of which proceeds were used to pay down a portion of
Atlantic Aviation's credit facility.
(5) Includes $6.9 million of tax refund received in the fourth quarter of 2015 relating to the election of bonus depreciation for 2014.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
EXCLUDING NON-CASH ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY
OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
($ in Thousands Unaudited)
For the Quarter Ended December 31, 2016
---------------------------------------
($ in Thousands) (Unaudited) IMTT Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
Net income 27,367 16,199 11,413 12,419 1,144 68,542 13,996 12,425
Interest (income) expense, net(3) (2,710) 6,524 (9,260) (657) 6,797 694 (10,328) (665)
Provision (benefit) for income taxes 19,019 10,631 6,702 5,578 (31,082) 10,848 6,702 5,578
Depreciation and amortization of intangibles 30,773 21,618 11,980 3,623 - 67,994 13,855 3,629
Fees to Manager-related party - - - - 18,916 18,916 - -
Pension expense(4) 1,805 60 - 223 - 2,088 - 223
Other non-cash expense (income), net(5) 26 457 (1,623) (5,448) 118 (6,470) (1,623) (5,448)
--- --- ------ ------ --- ------ ------ ------
EBITDA excluding non-cash items 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742
------ ------ ------ ------ ------ ------- ------ ------
EBITDA excluding non-cash items 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742
Interest income (expense), net(3) 2,710 (6,524) 9,260 657 (6,797) (694) 10,328 665
Convertible senior notes interest(6) - (1,969) - - 1,969 - - -
Adjustments to derivative instruments recorded in interest expense, net(3) (12,892) (8,574) (14,844) (2,583) - (38,893) (16,756) (2,594)
Amortization of deferred finance charges(3) 412 11,699 363 100 918 13,492 376 100
Amortization of debt discount(3) - - - - 1,007 1,007 - -
Interest rate swap breakage fees - (17,770) - - - (17,770) - -
Interest rate cap premium - (8,629) - - - (8,629) - -
Provision/benefit for income taxes, net of changes in deferred taxes (2,367) 384 2 (1,846) 1,800 (2,027) 2 (1,846)
Pension contribution - - - (3,500) - (3,500) - (3,500)
Changes in working capital 7,992 (248) 1,039 3,777 2,862 15,422 780 3,788
----- ---- ----- ----- ----- ------ --- -----
Cash provided by (used in) operating activities 72,135 23,858 15,032 12,343 (2,348) 121,020 17,332 12,355
Changes in working capital (7,992) 248 (1,039) (3,777) (2,862) (15,422) (780) (3,788)
Maintenance capital expenditures (5,521) (4,816) (339) (2,688) - (13,364) (453) (2,688)
------ ------ ---- ------ --- ------- ---- ------
Adjusted Free cash flow 58,622 19,290 13,654 5,878 (5,210) 92,234 16,099 5,879
====== ====== ====== ===== ====== ====== ====== =====
For the Quarter Ended December 31, 2015
---------------------------------------
IMTT(7) Atlantic Contracted MIC MIC Proportionately Contracted
Aviation Power(1) Hawaii Corporate Combined(2) Power
100%
---
Net income (loss) 21,237 12,290 6,959 3,574 (12,812) 31,248 7,594
Interest expense, net(3) 5,164 3,609 301 1,706 3,415 14,195 540
Provision (benefit) for income taxes 14,719 8,641 (1,244) 974 (10,526) 12,564 (1,244)
Depreciation and amortization of intangibles 32,217 22,332 11,958 2,349 - 68,856 13,831
Fees to Manager-related party - - - - 17,009 17,009 -
Pension expense(4) 1,743 62 - 111 - 1,916 -
Other non-cash expense (income), net(5) 74 1,115 (1,987) 5,927 187 5,316 (1,987)
--- ----- ------ ----- --- ----- ------
EBITDA excluding non-cash items 75,154 48,049 15,987 14,641 (2,727) 151,104 18,734
------ ------ ------ ------ ------ ------- ------
EBITDA excluding non-cash items 75,154 48,049 15,987 14,641 (2,727) 151,104 18,734
Interest expense, net(3) (5,164) (3,609) (301) (1,706) (3,415) (14,195) (540)
Adjustments to derivative instruments recorded in interest expense, net(3) (5,052) (4,310) (5,538) (152) - (15,052) (6,186)
Amortization of deferred finance charges(3) 407 803 363 121 611 2,305 376
Provision/benefit for income taxes, net of changes in deferred taxes(8) (314) 652 (2) 184 6,505 7,025 (2)
Changes in working capital (1,593) (2,927) 2,144 (6,936) 3,060 (6,252) 1,573
------ ------ ----- ------ ----- ------ -----
Cash provided by operating activities 63,438 38,658 12,653 6,152 4,034 124,935 13,955
Changes in working capital 1,593 2,927 (2,144) 6,936 (3,060) 6,252 (1,573)
Maintenance capital expenditures (17,146) (8,489) - (4,698) - (30,333) -
------- ------ --- ------ --- ------- ---
Adjusted Free cash flow 47,885 33,096 10,509 8,390 974 100,854 12,382
====== ====== ====== ===== === ======= ======
For the Year Ended December 31, 2016
------------------------------------
($ in Thousands) (Unaudited) IMTT(7) Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
Net income (loss) 83,142 59,538 12,309 35,741 (37,648) 153,082 14,093 35,744
Interest expense, net(3) 38,752 33,961 18,541 5,564 17,243 114,061 21,286 5,559
Provision (benefit) for income taxes 57,736 39,889 14,327 20,441 (61,137) 71,256 14,328 20,441
Depreciation and amortization of intangibles 134,385 90,659 48,047 11,317 - 284,408 55,548 11,325
Fees to Manager-related party - - - - 68,486 68,486 - -
Pension expense(4) 7,219 110 - 1,272 - 8,601 - 1,272
Other non-cash expense (income), net(5) 657 905 (7,028) (11,539) 681 (16,324) (7,047) (11,539)
--- --- ------ ------- --- ------- ------ -------
EBITDA excluding non-cash items 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802
------- ------- ------ ------ ------- ------- ------ ------
EBITDA excluding non-cash items 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802
Interest expense, net(3) (38,752) (33,961) (18,541) (5,564) (17,243) (114,061) (21,286) (5,559)
Convertible senior notes interest(6) - (1,969) - - 1,969 - - -
Adjustments to derivative instruments recorded in interest expense, net(3) (2,169) (4,158) (4,088) (2,080) - (12,495) (4,762) (2,088)
Amortization of deferred finance charges(3) 1,654 14,195 1,434 948 2,755 20,986 1,489 948
Amortization of debt discount(3) - - - - 1,007 1,007 - -
Interest rate swap breakage fees - (17,770) - - - (17,770) - -
Interest rate cap premium - (8,629) - - - (8,629) - -
Provision/benefit for income taxes, net of changes in deferred taxes (5,438) (2,137) (7) (8,353) 8,624 (7,311) (6) (8,353)
Pension contribution - - - (3,500) - (3,500) - (3,500)
Changes in working capital (3,734) 11,164 (1,148) 9,335 (5,772) 9,845 (1,129) 9,342
------ ------ ------ ----- ------ ----- ------ -----
Cash provided by (used in) operating activities 273,452 181,797 63,846 53,582 (21,035) 551,642 72,514 53,592
Changes in working capital 3,734 (11,164) 1,148 (9,335) 5,772 (9,845) 1,129 (9,342)
Maintenance capital expenditures (38,620) (10,632) (760) (7,939) - (57,951) (1,012) (7,939)
------- ------- ---- ------ --- ------- ------ ------
Adjusted Free cash flow 238,566 160,001 64,234 36,308 (15,263) 483,846 72,631 36,311
======= ======= ====== ====== ======= ======= ====== ======
For the Year Ended December 31, 2015
------------------------------------
IMTT(7) Atlantic Contracted MIC MIC Proportionately Contracted
Aviation Power(1) Hawaii Corporate Combined(2) Power
100%
---
Net income (loss) 74,726 22,805 (5,503) 23,993 (228,179) (112,158) (7,152)
Interest expense, net(3) 37,378 35,735 24,562 7,279 14,242 119,196 28,390
Provision (benefit) for income taxes 51,520 16,081 4,887 14,261 (151,910) (65,161) 4,887
Depreciation and amortization of intangibles 132,002 126,351 41,503 9,335 - 309,191 48,990
Fees to Manager-related party(9) - - - - 354,959 354,959 -
Pension expense(4) 6,063 112 - 1,125 - 7,300 -
Other non-cash expense (income), net(5) 378 2,533 (6,942) 4,090 750 809 (6,959)
--- ----- ------ ----- --- --- ------
EBITDA excluding non-cash items 302,067 203,617 58,507 60,083 (10,138) 614,136 68,156
------- ------- ------ ------ ------- ------- ------
EBITDA excluding non-cash items 302,067 203,617 58,507 60,083 (10,138) 614,136 68,156
Interest expense, net(3) (37,378) (35,735) (24,562) (7,279) (14,242) (119,196) (28,390)
Adjustments to derivative instruments recorded in interest expense, net(3) (2,912) 3,617 693 (15) - 1,383 819
Amortization of deferred finance charges(3) 2,344 3,221 649 483 2,341 9,038 686
Interest rate swap breakage fees (31,385) - (19,171) - - (50,556) (19,171)
Provision/benefit for income taxes, net of changes in deferred taxes(8) (470) (242) (4) 184 6,959 6,427 (4)
Changes in working capital(9) (11,260) (2,635) (2,286) (1,570) (68,264) (86,015) (2,331)
------- ------ ------ ------ ------- ------- ------
Cash provided by (used in) operating activities 221,006 171,843 13,826 51,886 (83,344) 375,217 19,765
Changes in working capital(9) 11,260 2,635 2,286 1,570 68,264 86,015 2,331
Maintenance capital expenditures (37,696) (21,455) (107) (9,338) - (68,596) (107)
------- ------- ---- ------ --- ------- ----
Adjusted Free cash flow 194,570 153,023 16,005 44,118 (15,080) 392,636 21,989
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___________________________
(1) Represents MIC's proportionately combined interests in the businesses comprising this reportable segment.
(2) The sum of the amounts attributable to MIC proportion to its ownership.
(3) Interest expense (income), net, includes adjustments to derivative instruments, non-cash amortization of deferred financing charges
and non-cash amortization of debt discount related to convertible senior notes issued in October 2016. Interest expense (income),
net, also includes a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas, the
October 2016 refinancing at Atlantic Aviation and the May 2015 refinancing at IMTT.
(4) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains
and losses. Any cash contributions to pension plans are not included in pension expense, but rather reflected as a reduction to
Adjusted Free Cash Flow, as noted in the table above.
(5) Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on
commodity hedges, adjustments to asset retirement obligations and non-cash gains (losses) related to disposal of assets. See"Earnings
Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined
Metrics" above for further discussion.
(6) Represents the cash interest expense reclassed from MIC Corporate to Atlantic Aviation for the October 2016 convertible senior notes of
which proceeds were used
to pay down a portion of Atlantic Aviation's credit facility.
(7) On March 31, 2016, IMTT acquired the remaining 33.3% interest in its Quebec terminal that it did not previously own. IMTT was
previously providing management services to this terminal and no operational changes are expected. Prior to the acquisition, IMTT
consolidated the results of the Quebec terminal in its financial statements and adjusted for the portion that it did not own through
noncontrolling interests. Since the IMTT Acquisition in July 2014 and prior to the acquisition of the noncontrolling interest, MIC
reported IMTT's EBITDA excluding non-cash items and Free Cash Flow including the 33.3% portion of the Quebec terminal. The
contribution from the minority interest was not significant. Therefore, there were no changes to our historical EBITDA excluding non-
cash items, Free Cash Flow or results generally as a function of acquiring this noncontrolling interest.
(8) Includes $6.9 million of tax refund received in the fourth quarter of 2015 relating to the election of bonus depreciation for 2014.
(9) Fees to Manager-related party includes base management fees and performance fees, if any. In July 2015, our Board requested, and our
Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to
minimize dilution. The remaining $67.8 million obligation was settled and reinvested in shares by our Manager on August 1, 2016.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mic-reports-2016-financial-results-in-line-with-guidance-increases-dividend-300411110.html
SOURCE Macquarie Infrastructure Corporation
