MACQUARIE INFRASTRUCTURE HOLDINGS, LLC NEW YORK, Aug. 2, 2017 /PRNewswire/ -- Macquarie Infrastructure Corporation (NYSE: MIC) today reported financial results for the second quarter of 2017.
"MIC's performance overall continued to be at levels consistent with our expectations for the full year and we have been able to improve our prospects with the attractive transactions announced today," said James Hooke, chief executive officer of MIC. "The improved cash generation by our existing operations supported an increase in MIC's quarterly cash distribution of 10.4%, consistent with our expectations and guidance. We continue to expect to increase cash generation in 2017 by between 10% and 15%, per share, and to grow our cash dividend by 10%."
MIC reported a 23.5% increase in net income compared with the second quarter of 2016. The Company reported net income of $26.0 million for the quarter ended June 30, 2017. For the first six months of the year, MIC's net income increased 42.2% to $58.7 million.
The Company reported cash generated by operating activities of $120.6 million and $249.2 million in the quarter and six months ended June 30, 2017, respectively, compared with $129.4 million and $277.9 million reported in the prior comparable periods. The decrease in cash from operations reflects primarily the absence of insurance proceeds, higher state taxes and changes in working capital related to higher inventory costs and the timing of payments in 2017 compared with 2016. The impact of these was partially offset by improved operating results and contributions from acquired businesses.
MIC's businesses produced an aggregate $141.1 million and $288.0 million of Adjusted Free Cash Flow in the second quarter and year to date periods ended June 30, 2017, respectively, up 11.7% and 10.9% from the amounts generated in the prior corresponding periods. The Company defines Adjusted Free Cash Flow as cash from operating activities (including from its proportionate interest in businesses in which it has a less than 100% equity interest), less maintenance capital expenditures, less changes in working capital, adjusted for certain one-time items. (See Summary Financial Information below)
The implementation of MIC's previously announced shared services initiative resulted in a reduction in the rate of increase in general and administrative expenses. As anticipated, the savings were offset by expenses including primarily severance payments and consulting fees totaling $3.1 million and $5.4 million in the June quarter and year to date periods, respectively, and incremental expenses associated with acquisitions completed in 2016. The Company does not expect to incur shared services implementation costs in 2018 and has excluded those incurred in 2017 from its presentation of both Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow in an effort to provide clarity with respect to the recurring cash flows being generated by its businesses.
MIC expects to realize annual general and administrative and procurement cost savings of between $12.0 million and $15.0 million in 2018, compared with its 2016 baseline, as a result of the shared services initiative. The expected savings will not be spread evenly, or even proportionately, across MIC's businesses and some businesses may simply benefit from an improvement in service levels. Shared services provides business support functions including Accounting, Human Resource, Tax, Information Technology and Risk Management support to each of MIC's operating entities.
As a result of a heightened level of activity associated with the evaluation of various investment and acquisition opportunities, MIC incurred approximately $4.9 million of transaction related expenses during the second quarter. These costs have been recorded as an expense in the Corporate and Other segment of its financial statements and have been excluded from the Company's presentation of both Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow in an effort to provide clarity with respect to the recurring cash flows being generated by its businesses.
The MIC board of directors authorized a cash dividend of $1.38 per share, or $5.52 annualized, for the second quarter of 2017. The dividend will be payable August 17, 2017 to shareholders of record on August 14, 2017. The payment represents a 10.4% increase over the dividend paid for the second quarter of 2016 and is consistent with MIC's guidance for a 10% increase in its annual dividend in 2017 over 2016.
In June, MIC increased its guidance with respect to growth capital deployment in 2017 to approximately $500.0 million from $400.0 million. Assuming the transactions announced today are successfully concluded, MIC will have deployed more than $450.0 million of growth capital in 2017 and has increased its full-year capital deployment target to between $600.0 million and $650.0 million.
"Earlier in the year we highlighted an increase in the number and size of investment opportunities that we were reviewing and a further increase in our growth capital deployment target for this year reflects our capitalizing on those opportunities," said Hooke. "In addition to increasing planned growth investments within our four existing segments, we continue to pursue opportunities outside of these, some of which could be transformative for the Company."
Acquisition and Investment Announced
On July 28, 2017, IMTT entered into an agreement to acquire Epic Midstream (Epic) from affiliates of White Deer Energy and Blue Water Energy for $171.5 million, not including working capital adjustments. The transaction is expected to close in the third quarter of 2017 and be accretive to MIC's Free Cash Flow in 2018. Closing is subject to customary regulatory approvals and satisfaction of other conditions precedent.
The purchase price reflects a multiple of Epic's full year 2018 Pro-Forma EBITDA (Earnings before Interest, Taxes, Depreciation, and Amortization) of approximately 11.0x. MIC expects to fund the acquisition with the issuance of $125.0 million in new MIC shares to the sellers and $46.5 million in cash, including with drawings on IMTT's revolving credit facility. The new shares will be issued at a 1.5% discount to the 30-day volume weighted average price of MIC's shares, as reported by the New York Stock Exchange, at the end of the second day prior to closing of the transaction.
Epic will continue to operate a portfolio of seven bulk liquid terminals in the U.S. Southeast and Southwest, with principal operations in the Port of Savannah, Georgia. Its facilities comprise more than 3.1 million barrels of storage capacity, a significant portion of which is in service for jet fuel. Revenue produced by the Epic business is generated pursuant to take-or-pay contracts similar to those at MIC's IMTT business. Customers include an affiliate of the U.S. Department of Defense that has been an Epic customer for more than 20 years.
"The addition of the Epic terminals will expand IMTT's operations into important new markets, including Savannah, and materially expand its jet fuel handling capability -- something we had been seeking to do for some time," noted Hooke.
On July 10, 2017, MIC formed a new joint venture with Intersect Power, a developer of renewable power generation and storage projects across the U.S., to fund and potentially acquire Intersect projects. Founded in 2016, Intersect Power is in the early stages of development of approximately 700MW of power in California and Texas and anticipates pursuing projects in Hawaii as well. MIC expects to invest up to $135.0 million of equity, contingent equity, and credit facilities that will be used to fund Intersect Power's operations and project development pipeline.
"The arrangement we have with Intersect Power is expected to provide MIC with access to a flow of high quality renewable energy projects beginning in 2019," said Hooke. "Including Intersect, we now expect to have access to opportunities in both wind and solar generation and power storage and are even better positioned to grow the size of our existing portfolio of approximately 350MW of generation without having to compete in costly auction processes."
Quarterly Segment Highlights
Utilization rates at IMTT decreased to historically normal levels of 94.0% and 95.2% in the quarter and six month periods ended June 30, 2017, respectively, from what had been elevated rates in the mid-96% range. An improved top line result that included deferred revenue resulting from termination of a construction project by a biodiesel customer was partially offset by higher repair and maintenance expenses in the quarter. Near term, the focus for the business remains on effective deployment of growth capital.
Continued strong growth in general aviation flight activity supported improvement in the financial performance of Atlantic Aviation. General aviation flight activity increased by approximately 3.7% in the second quarter, based on data reported by the Federal Aviation Administration. Activity levels across the Atlantic network, along with effective upselling of fuel, effective margin management and the operational leverage inherent in the business, resulted in growth in EBITDA and Free Cash Flow at multiples of the rate of increase in flight activity. Completing attractive bolt-on acquisition opportunities remains a priority for the business.
The renewable facilities in MIC's Contracted Power (CP) segment enjoyed improved wind and solar resources in the second quarter. Resources were at or slightly above long-term average levels. Contributions from facilities acquired in 2016 added to segment results. The formation of a new joint venture with a developer of renewable projects positions the segment for continued growth.
The Bayonne Energy Center (BEC), the thermal power generation facility in MIC's CP segment, underperformed as a result of previously announced lower capacity prices in NYISO Zone J and a reduction in utilization. The completion of construction projects, including a recent interconnection with a second pipeline serving BEC, is expected to improve utilization of the facility beginning in the third quarter.
Hawaii Gas, the largest component of the MIC Hawaii segment, benefitted from increased gas sales versus the same period last year. A portion of the increased contribution was offset at the segment level by costs associated with acquisitions completed in 2016. Following the quarter end, Hawaii Gas filed a general rate case seeking a $15.0 million annual increase in regulated utility revenue. To the extent new rates are approved by regulators, the Company expects that an interim increase, if any, could take effect in mid-2018.
Summary Financial Information
Quarter Ended Change Six Months Ended Change
June 30, Favorable/(Unfavorable) June 30, Favorable/(Unfavorable)
-------- ----------------------- -------- -----------------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
GAAP Metrics
Net income $26,025 $21,081 4,944 23.5 $58,663 $41,257 17,406 42.2
Weighted average
number of shares
outstanding: basic 82,430,324 80,369,575 2,060,749 2.6 82,285,053 80,241,293 2,043,760 2.5
Net income per share
attributable to MIC $0.32 $0.24 0.08 33.3 $0.75 $0.52 0.23 44.2
Cash provided by
operating activities 120,636 129,352 (8,716) (6.7) 249,204 277,918 (28,714) (10.3)
MIC Non-GAAP Metrics
EBITDA excluding non-
cash items(1) $170,924 $166,784 4,140 2.5 $351,239 $342,759 8,480 2.5
Shared service
implementation costs 3,091 - 3,091 NM 5,445 - 5,445 NM
Investment and
acquisition 4,850 - 4,850 NM 4,850 - 4,850 NM
costs
Adjusted EBITDA
excluding $178,865 $166,784 12,081 7.2 $361,534 $342,759 18,775 5.5
non-cash items
Cash interest(2) $(26,410) $(27,241) 831 3.1 $(52,284) $(54,619) 2,335 4.3
Cash taxes (2,618) (1,662) (956) (57.5) (6,339) (4,168) (2,171) (52.1)
Maintenance capital (6,480) (9,840) 3,360 34.1 (10,956) (20,253) 9,297 45.9
expenditures
Noncontrolling
interest(3) (2,244) (1,724) (520) (30.2) (3,915) (4,007) 92 2.3
------ ------ ---- ------ ------ ---
Adjusted Free Cash $141,113 $126,317 14,796 11.7 $288,040 $259,712 28,328 10.9
Flow
NM - Not meaningful
(1) EBITDA excluding non-cash items
is calculated as net income
before interest expense, 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.
(2) Cash interest is calculated as
interest expense 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.
(3) Noncontrolling interest
adjustment represents the
portion of Free Cash Flow not
attributable to MIC's ownership
interest.
Conference Call and Webcast
When: MIC has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, August 3, 2017 during which management will review and comment on the second quarter 2017 results.
How: To listen to the conference call 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. Allow extra time prior to the call to visit the site and download the software needed to listen to the webcast.
Slides: MIC will prepare materials in support of its conference call. The materials will be available for downloading from the Company's website prior to the call.
Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on August 3, 2017 through midnight on August 10, 2017, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 48792183. 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 primarily 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 and certain proportionately combined financial metrics. Proportionately combined financial metrics, including 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 a reflection of 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 to assess 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 expenses 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 its CP and MIC Hawaii segments, 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 and not in lieu of its financial results reported under GAAP.
The Company's businesses are characteristically owners of high-value, long-lived assets capable of generating substantial 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; (vi) gains (losses) on disposal of assets; and (vii) pension expenses. Pension expenses primarily consist of interest expense, 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 Quarterly Report on Form 10-Q, 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 EBITDA excluding non-cash items and Free Cash Flow 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 does 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. Management notes that Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure and not in lieu of its financial results reported under GAAP.
See also "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" below.
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 maintenance and growth 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 CONDENSED BALANCE SHEETS
($ in Thousands, Except Share Data)
June 30, December 31,
2017 2016
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $28,873 $44,767
Restricted cash 23,368 16,420
Accounts receivable, less allowance
for doubtful accounts of $871 and
$1,434, respectively 133,562 124,846
Inventories 35,474 31,461
Prepaid expenses 16,406 14,561
Fair value of derivative
instruments 4,902 5,514
Other current assets 9,433 7,099
----- -----
Total current assets 252,018 244,668
Property, equipment, land and
leasehold improvements, net 4,408,254 4,346,536
Investment in unconsolidated
business 9,192 8,835
Goodwill 2,031,720 2,024,409
Intangible assets, net 884,112 888,971
Fair value of derivative
instruments 19,432 30,781
Other noncurrent assets 30,183 15,053
------ ------
Total assets $7,634,911 $7,559,253
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Due to Manager - related party $6,200 $6,594
Accounts payable 60,200 69,566
Accrued expenses 91,390 83,734
Current portion of long-term debt 45,544 40,016
Fair value of derivative
instruments 5,527 9,297
Other current liabilities 39,783 41,802
------ ------
Total current liabilities 248,644 251,009
Long-term debt, net of current
portion 3,205,733 3,039,966
Deferred income taxes 930,565 896,116
Fair value of derivative
instruments 6,157 5,966
Tolling agreements - noncurrent 56,484 60,373
Other noncurrent liabilities 155,812 158,289
------- -------
Total liabilities 4,603,395 4,411,719
--------- ---------
Commitments and contingencies - -
Stockholders' equity(1):
Common stock ($0.001 par value;
500,000,000 authorized; 82,589,776
shares issued and outstanding at
June 30, 2017 and 82,047,526
shares issued and outstanding at
December 31, 2016) $83 $82
Additional paid in capital 1,915,626 2,089,407
Accumulated other comprehensive
loss (27,863) (28,960)
Retained earnings 954,400 892,365
------- -------
Total stockholders' equity 2,842,246 2,952,894
Noncontrolling interests 189,270 194,640
------- -------
Total equity 3,031,516 3,147,534
--------- ---------
Total liabilities and equity $7,634,911 $7,559,253
========== ==========
The Company is authorized to
issue 100,000,000 shares of
preferred stock, par value
$0.001 per share. At June 30,
2017 and December 31, 2016,
no preferred stock were
issued or outstanding. The
Company has 100 shares of
special stock issued and
outstanding to its Manager at
June 30, 2017 and December
31, 2016.
(1)
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ in Thousands, Except Share and Per Share Data)
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue
Service revenue $345,045 $306,221 $708,849 $618,462
Product revenue 93,945 91,358 181,598 175,504
------ ------ ------- -------
Total revenue 438,990 397,579 890,447 793,966
------- ------- ------- -------
Costs and expenses
Cost of services 147,114 120,857 301,820 237,320
Cost of product sales 40,249 35,018 87,474 68,078
Selling, general and
administrative 82,967 72,430 159,919 144,714
Fees to Manager - related
party 18,433 16,392 36,656 31,188
Depreciation 57,063 59,662 114,744 112,883
Amortization of intangibles 15,898 16,713 33,591 34,500
------ ------ ------ ------
Total operating expenses 361,724 321,072 734,204 628,683
------- ------- ------- -------
Operating income 77,266 76,507 156,243 165,283
Other income (expense)
Interest income 41 25 75 58
Interest expense(1) (35,356) (39,502) (60,838) (96,397)
Other income, net 1,738 271 2,920 3,700
----- --- ----- -----
Net income before income
taxes 43,689 37,301 98,400 72,644
Provision for income taxes (17,664) (16,220) (39,737) (31,387)
------- ------- ------- -------
Net income $26,025 $21,081 $58,663 $41,257
Less: net income (loss)
attributable to
noncontrolling interests 5 1,889 (3,372) (290)
--- ----- ------ ----
Net income attributable to
MIC $26,020 $19,192 $62,035 $41,547
======= ======= ======= =======
Basic income per share
attributable to MIC $0.32 $0.24 $0.75 $0.52
----- ----- ----- -----
Weighted average number of
shares outstanding: basic 82,430,324 80,369,575 82,285,053 80,241,293
========== ========== ========== ==========
Diluted income per share
attributable to MIC $0.32 $0.24 $0.75 $0.51
----- ----- ----- -----
Weighted average number of
shares outstanding: diluted 82,439,840 81,323,294 82,294,608 81,194,505
========== ========== ========== ==========
Cash dividends declared per
share $1.38 $1.25 $2.70 $2.45
----- ----- ----- -----
Interest expense includes
losses on derivative
instruments of $7.7 million
and $6.8 million for the
quarter and six months ended
June 30, 2017, respectively.
For the quarter and six months
ended June 30, 2016, interest
expense includes losses on
derivative instruments of
$14.9 million and $46.7
million, respectively.
(1)
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in Thousands)
Six Months Ended
June 30,
--------
2017 2016
---- ----
Operating activities
Net income $58,663 $41,257
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization of
property and equipment 114,744 112,883
Amortization of intangible assets 33,591 34,500
Amortization of debt financing
costs 4,301 5,249
Amortization of debt discount 1,495 -
Adjustments to derivative
instruments 8,382 29,030
Fees to Manager-related party 36,656 31,188
Deferred taxes 33,398 27,219
Pension expense 4,321 4,395
Other non-cash income, net (2,935) (1,749)
Changes in other assets and
liabilities, net of acquisitions:
Restricted cash 567 2,368
Accounts receivable (7,871) (1,788)
Inventories (4,256) (2,104)
Prepaid expenses and other current
assets (2,529) 9,498
Due to Manager - related party (122) 90
Accounts payable and accrued
expenses (15,782) (13,789)
Income taxes payable (1,506) 1,393
Other, net (11,913) (1,722)
------- ------
Net cash provided by operating
activities 249,204 277,918
------- -------
Investing activities
Acquisitions of businesses and
investments, net of cash acquired (66,321) (16,613)
Purchases of property and equipment (130,351) (118,734)
Proceeds from insurance claim - 7,235
Loan to project developer (14,675) -
Loan repayment from project
developer 1,396 -
Change in restricted cash (8,001) -
Other, net 60 513
--- ---
Net cash used in investing
activities (217,892) (127,599)
-------- --------
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - (continued)
(Unaudited)
($ in Thousands)
Six Months Ended
June 30,
--------
2017 2016
---- ----
Financing activities
Proceeds from long-term debt $264,500 $251,000
Payment of long-term debt (98,542) (216,581)
Proceeds from the issuance of
shares 5,321 1,323
Dividends paid to common
stockholders (216,508) (188,608)
Contributions received from
noncontrolling interests - 15,431
Purchase of noncontrolling
interest - (9,909)
Distributions paid to
noncontrolling interests (2,040) (2,505)
Offering and equity raise costs
paid (182) (149)
Debt financing costs paid (447) (1,203)
Change in restricted cash 557 2,096
Payment of capital lease
obligations (53) (789)
--- ----
Net cash used in financing
activities (47,394) (149,894)
------- --------
Effect of exchange rate changes
on cash and cash equivalents 188 442
Net change in cash and cash
equivalents (15,894) 867
------- ---
Cash and cash equivalents,
beginning of period 44,767 22,394
------ ------
Cash and cash equivalents, end
of period $28,873 $23,261
======= =======
Supplemental disclosures of cash
flow information
Non-cash investing and
financing activities:
Accrued equity offering costs $44 $260
=== ====
Accrued financing costs $ - $443
=== === ====
Accrued purchases of property
and equipment $41,354 $20,794
======= =======
Issuance of shares to Manager $36,927 $30,977
======= =======
Issuance of shares to
independent directors $681 $750
==== ====
Conversion of convertible senior
notes to shares $17 $4
=== ===
Taxes paid, net $7,845 $2,766
====== ======
Interest paid $54,601 $55,956
======= =======
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS - MD&A
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
Revenue
Service revenue $345,045 $306,221 38,824 12.7 $708,849 $618,462 90,387 14.6
Product revenue 93,945 91,358 2,587 2.8 181,598 175,504 6,094 3.5
------ ------ ----- ------- ------- -----
Total revenue 438,990 397,579 41,411 10.4 890,447 793,966 96,481 12.2
------- ------- ------ ------- ------- ------
Costs and expenses
Cost of services 147,114 120,857 (26,257) (21.7) 301,820 237,320 (64,500) (27.2)
Cost of product sales 40,249 35,018 (5,231) (14.9) 87,474 68,078 (19,396) (28.5)
Selling, general and
administrative 82,967 72,430 (10,537) (14.5) 159,919 144,714 (15,205) (10.5)
Fees to Manager - related
party 18,433 16,392 (2,041) (12.5) 36,656 31,188 (5,468) (17.5)
Depreciation 57,063 59,662 2,599 4.4 114,744 112,883 (1,861) (1.6)
Amortization of 15,898 16,713 815 4.9 33,591 34,500 909 2.6
intangibles
Total operating expenses 361,724 321,072 (40,652) (12.7) 734,204 628,683 (105,521) (16.8)
------- ------- ------- ------- ------- --------
Operating income 77,266 76,507 759 1.0 156,243 165,283 (9,040) (5.5)
Other income (expense)
Interest income 41 25 16 64.0 75 58 17 29.3
Interest expense(1) (35,356) (39,502) 4,146 10.5 (60,838) (96,397) 35,559 36.9
Other income, net 1,738 271 1,467 NM 2,920 3,700 (780) (21.1)
----- --- ----- ----- ----- ----
Net income before income
taxes 43,689 37,301 6,388 17.1 98,400 72,644 25,756 35.5
Provision for income taxes (17,664) (16,220) (1,444) (8.9) (39,737) (31,387) (8,350) (26.6)
------- ------- ------ ------- ------- ------
Net income $26,025 $21,081 4,944 23.5 $58,663 $41,257 17,406 42.2
Less: net income (loss)
attributable to
noncontrolling interests 5 1,889 1,884 99.7 (3,372) (290) 3,082 NM
--- ----- ----- ------ ---- -----
Net income attributable to
MIC $26,020 $19,192 6,828 35.6 $62,035 $41,547 20,488 49.3
======= ======= ===== ======= ======= ======
Basic income per share
attributable to MIC $0.32 $0.24 0.08 33.3 $0.75 $0.52 0.23 44.2
----- ----- ---- ----- ----- ----
Weighted average number of
shares outstanding: 82,430,324 80,369,575 2,060,749 2.6 82,285,053 80,241,293 2,043,760 2.5
basic
NM - Not meaningful
Interest expense includes
losses on derivative
instruments of $7.7 million
and $6.8 million for the
quarter and six months ended
June 30, 2017, respectively.
For the quarter and six months
ended June 30, 2016, interest
expense includes losses on
derivative instruments of
$14.9 million and $46.7
million, respectively.
(1)
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA EXCLUDING NON-CASH ITEMS AND A
RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Net income $26,025 $21,081 $58,663 $41,257
Interest expense, net(1) 35,315 39,477 60,763 96,339
Provision for income taxes 17,664 16,220 39,737 31,387
Depreciation 57,063 59,662 114,744 112,883
Amortization of intangibles 15,898 16,713 33,591 34,500
Fees to Manager-related 18,433 16,392 36,656 31,188
party
Pension expense(2) 1,627 2,197 4,321 4,395
Other non-cash (income)
expense, net(3) (1,101) (4,958) 2,764 (9,190)
------ ------ ----- ------
EBITDA excluding non-cash items $170,924 $166,784 4,140 2.5 $351,239 $342,759 8,480 2.5
======== ======== ===== ======== ======== =====
EBITDA excluding non-cash items $170,924 $166,784 $351,239 $342,759
Interest expense, net(1) (35,315) (39,477) (60,763) (96,339)
Adjustments to derivative
instruments recorded in
interest expense(1) 5,930 9,866 2,683 36,471
Amortization of debt financing
costs(1) 2,099 2,370 4,301 5,249
Amortization of debt 876 - 1,495 -
discount(1)
Provision for income taxes, net
of changes in deferred taxes (2,618) (1,662) (6,339) (4,168)
Changes in working capital (21,260) (8,529) (43,412) (6,054)
------- ------ ------- ------
Cash provided by operating
activities 120,636 129,352 249,204 277,918
Changes in working capital 21,260 8,529 43,412 6,054
Maintenance capital expenditures (6,480) (9,840) (10,956) (20,253)
------ ------ ------- -------
Free cash flow $135,416 $128,041 7,375 5.8 $281,660 $263,719 17,941 6.8
======== ======== ===== ======== ======== ======
Interest expense, net,
includes adjustments to
derivative instruments, non-
cash amortization of deferred
financing fees and non-cash
amortization of debt discount
related to the 2.00%
Convertible Senior Notes due
October 2023. For the six
months ended June 30, 2016,
interest expense also
included a non-cash write-
off of deferred financing
fees related to the February
2016 refinancing at Hawaii
Gas.
(1)
Pension expense primarily
consists of interest cost,
expected return on plan assets
and amortization of actuarial
and performance gains and
losses.
(2)
Other non-cash (income) expense,
net, primarily includes non-cash
amortization of tolling liabilities,
unrealized gains (losses) on
commodity hedges 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.
(3)
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO PROPORTIONATELY COMBINED FREE CASH
FLOW
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Free Cash Flow - Consolidated
basis $135,416 $128,041 7,375 5.8 $281,660 $263,719 17,941 6.8
100% of CP Free Cash Flow
included in consolidated Free
Cash Flow (20,704) (17,871) (30,543) (29,814)
MIC's share of CP Free Cash Flow 18,462 16,147 26,633 25,807
100% of MIC Hawaii Free Cash
Flow included in consolidated
Free Cash Flow (9,295) (10,874) (24,231) (21,736)
MIC's share of MIC Hawaii Free
Cash Flow 9,293 10,874 24,226 21,736
----- ------ ------ ------
Free Cash Flow - Proportionately
Combined basis $133,172 $126,317 6,855 5.4 $277,745 $259,712 18,033 6.9
======== ======== ===== ======== ======== ======
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND A
RECONCILIATION FROM CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW
IMTT
----
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenue 137,144 128,218 8,926 7.0 275,961 263,643 12,318 4.7
Cost of services 49,224 46,459 (2,765) (6.0) 99,070 96,760 (2,310) (2.4)
Selling, general and administrative
expenses 7,485 7,790 305 3.9 16,523 15,964 (559) (3.5)
Depreciation and amortization 30,795 35,282 4,487 12.7 62,315 67,903 5,588 8.2
------ ------ ----- ------ ------ -----
Operating income 49,640 38,687 10,953 28.3 98,053 83,016 15,037 18.1
Interest expense, net(1) (11,763) (13,764) 2,001 14.5 (20,520) (33,635) 13,115 39.0
Other income, net 452 464 (12) (2.6) 1,160 3,452 (2,292) (66.4)
Provision for income taxes (15,716) (10,409) (5,307) (51.0) (32,264) (21,638) (10,626) (49.1)
------- ------- ------ ------- ------- -------
Net income(2) 22,613 14,978 7,635 51.0 46,429 31,195 15,234 48.8
Less: net income attributable to
noncontrolling interests - - - - - 59 59 100.0
--- --- --- --- --- ---
Net income attributable to MIC(2) 22,613 14,978 7,635 51.0 46,429 31,136 15,293 49.1
====== ====== ===== ====== ====== ======
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) 22,613 14,978 46,429 31,195
Interest expense, net(1) 11,763 13,764 20,520 33,635
Provision for income taxes 15,716 10,409 32,264 21,638
Depreciation and amortization 30,795 35,282 62,315 67,903
Pension expense(3) 1,350 1,831 3,766 3,662
Other non-cash expense, net 69 115 137 558
--- --- --- ---
EBITDA excluding non-cash items 82,306 76,379 5,927 7.8 165,431 158,591 6,840 4.3
====== ====== ===== ======= ======= =====
EBITDA excluding non-cash items 82,306 76,379 165,431 158,591
Interest expense, net(1) (11,763) (13,764) (20,520) (33,635)
Adjustments to derivative
instruments recorded in interest
expense(1) 1,587 3,546 267 13,156
Amortization of debt financing
costs(1) 412 411 823 831
Provision for income taxes, net of
changes in deferred taxes (1,155) (937) (3,413) (2,167)
Changes in working capital (16,881) (7,676) (16,145) (10,483)
------- ------ ------- -------
Cash provided by operating
activities 54,506 57,959 126,443 126,293
Changes in working capital 16,881 7,676 16,145 10,483
Maintenance capital expenditures (2,987) (6,942) (5,447) (13,239)
------ ------ ------ -------
Free cash flow 68,400 58,693 9,707 16.5 137,141 123,537 13,604 11.0
====== ====== ===== ======= ======= ======
Interest expense, net,
includes adjustments to
derivative instruments and
non-cash amortization of
deferred financing fees.
(1)
Corporate allocation expense,
intercompany fees and the tax
effect have been excluded from
the above table as they are
eliminated on consolidation.
(2)
Pension expense primarily
consists of interest cost,
expected return on plan assets
and amortization of actuarial
and performance gains and
losses.
(3)
Atlantic Aviation
-----------------
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenue 196,939 179,218 17,721 9.9 409,692 357,206 52,486 14.7
Cost of services
(exclusive of
depreciation and
amortization of
intangibles shown
separately below) 86,957 74,440 (12,517) (16.8) 180,879 140,602 (40,277) (28.6)
------ ------ ------- ------- ------- -------
Gross margin 109,982 104,778 5,204 5.0 228,813 216,604 12,209 5.6
Selling, general and
administrative expenses 52,596 51,381 (1,215) (2.4) 106,486 103,992 (2,494) (2.4
Depreciation and
amortization 23,575 24,702 1,127 4.6 48,608 46,893 (1,715) (3.7)
------ ------ ----- ------ ------ ------
Operating income 33,811 28,695 5,116 17.8 73,719 65,719 8,000 12.2
Interest expense, net(1) (5,907) (8,924) 3,017 33.8 (9,353) (22,238) 12,885 57.9
Other (expense) income,
net (19) (49) 30 61.2 (105) 341 (446) (130.8
Provision for income taxes (11,077) (7,973) (3,104) (38.9) (25,627) (17,715) (7,912) (44.7)
------- ------ ------ ------- ------- ------
Net income(2) 16,808 11,749 5,059 43.1 38,634 26,107 12,527 48.0
====== ====== ===== ====== ====== ======
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) 16,808 11,749 38,634 26,107
Interest expense, net(1) 5,907 8,924 9,353 22,238
Provision for income taxes 11,077 7,973 25,627 17,715
Depreciation and
amortization 23,575 24,702 48,608 46,893
Pension expense(3) 5 17 10 34
Other non-cash (income)
expense, net (22) 339 40 248
--- --- --- ---
EBITDA excluding non-cash
items 57,350 53,704 3,646 6.8 122,272 113,235 9,037 8.0
====== ====== ===== ======= ======= =====
EBITDA excluding non-cash
items 57,350 53,704 122,272 113,235
Interest expense, net(1) (5,907) (8,924) (9,353) (22,238)
Convertible senior notes
interest(4) (2,013) - (3,757) -
Adjustments to derivative
instruments recorded in
interest expense(1) 2,553 1,179 2,686 6,787
Amortization of debt
financing costs(1) 221 905 535 1,705
Provision for income
taxes, net of changes in
deferred taxes (1,730) (910) (4,602) (2,362)
Changes in working capital 784 226 (5,332) 6,270
--- --- ------ -----
Cash provided by operating
activities 51,258 46,180 102,449 103,397
Changes in working capital (784) (226) 5,332 (6,270)
Maintenance capital
expenditures (1,981) (1,457) (2,906) (3,741)
------ ------ ------ ------
Free cash flow 48,493 44,497 3,996 9.0 104,875 93,386 11,489 12.3
====== ====== ===== ======= ====== ======
Interest expense, net,
includes adjustments to
derivative instruments and
non-cash amortization of
deferred financing fees.
(1)
Corporate allocation expense,
intercompany fees and the tax
effect have been excluded from
the above table as they are
eliminated on consolidation.
(2)
Pension expense primarily
consists of interest cost,
expected return on plan assets
and amortization of actuarial
and performance gains and
losses.
(3)
Represents the cash interest
expense reclassified from
MIC Corporate related to the
2.00% Convertible Senior
Notes due October 2023,
proceeds of which were used
to pay down a portion of
Atlantic Aviation's credit
facility in October 2016.
(4)
Contracted Power
----------------
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenue 40,166 38,300 1,866 4.9 68,236 68,479 (243) (0.4)
Cost of product sales 5,498 5,794 296 5.1 10,357 10,151 (206) (2.0)
Selling, general and
administrative expenses 6,244 6,547 303 4.6 11,409 12,507 1,098 8.8
Depreciation and
amortization 14,861 13,847 (1,014) (7.3) 30,201 27,693 (2,508) (9.1)
------ ------ ------ ------ ------ ------
Operating income 13,563 12,112 1,451 12.0 16,269 18,128 (1,859) (10.3)
Interest expense, net(1) (8,767) (11,002) 2,235 20.3 (14,150) (28,850) 14,700 51.0
Other income, net 1,341 3 1,338 NM 2,106 308 1,798 NM
(Provision) benefit for
income taxes (1,845) (1,917) 72 3.8 (1,872) 387 (2,259) NM
------ ------ --- ------ --- ------
Net income (loss)(2) 4,292 (804) 5,096 NM 2,353 (10,027) 12,380 123.5
Less: net income (loss)
attributable to
noncontrolling interest 16 1,889 1,873 99.2 (3,333) (349) 2,984 NM
--- ----- ----- ------ ---- -----
Net income (loss)
attributable to MIC(2) 4,276 (2,693) 6,969 NM 5,686 (9,678) 15,364 158.8
===== ====== ===== ===== ====== ======
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) 4,292 (804) 2,353 (10,027)
Interest expense, net(1) 8,767 11,002 14,150 28,850
Provision (benefit) for
income taxes 1,845 1,917 1,872 (387)
Depreciation and
amortization 14,861 13,847 30,201 27,693
Other non-cash income,
net (3) (2,232) (1,945) (4,256) (3,965)
------ ------ ------ ------
EBITDA excluding non-cash
items 27,533 24,017 3,516 14.6 44,320 42,164 2,156 5.1
====== ====== ===== ====== ====== =====
EBITDA excluding non-cash
items 27,533 24,017 44,320 42,164
Interest expense, net(1) (8,767) (11,002) (14,150) (28,850)
Adjustments to derivative
instruments recorded in
interest expense(1) 1,474 4,504 (360) 15,772
Amortization of debt
financing costs(1) 379 354 758 737
Provision/benefit for
income taxes, net of
changes in deferred taxes 85 (2) (3) (9)
Changes in working capital (8,003) (5,470) (7,861) (2,858)
------ ------ ------ ------
Cash provided by operating
activities 12,701 12,401 22,704 26,956
Changes in working capital 8,003 5,470 7,861 2,858
Maintenance capital
expenditures - - (22) -
--- --- --- ---
Free cash flow 20,704 17,871 2,833 15.9 30,543 29,814 729 2.4
====== ====== ===== ====== ====== ===
NM - Not meaningful
Interest expense, net,
includes adjustments to
derivative instruments and
non-cash amortization of
deferred financing fees.
(1)
Corporate allocation expense,
intercompany fees and the tax
effect have been excluded from
the above table as they are
eliminated on consolidation.
(2)
Other non-cash income, net,
primarily includes amortization of
tolling liabilities. See "Earnings
Before Interest, Taxes, Depreciation
and Amortization (EBITDA) excluding
non-cash items, Free Cash Flow and
Proportionately Combined Metrics"
above for further discussion.
(3)
MIC Hawaii
----------
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenue 53,779 53,058 721 1.4 113,362 107,025 6,337 5.9
Service revenue 12,193 - 12,193 NM 25,650 - 25,650 NM
------ --- ------ ------ --- ------
Total revenue 65,972 53,058 12,914 24.3 139,012 107,025 31,987 29.9
Cost of product sales
(exclusive of
depreciation and
amortization of
intangibles shown
separately below) 34,751 29,224 (5,527) (18.9) 77,117 57,927 (19,190) (33.1)
Cost of services
(exclusive of
depreciation and
amortization of
intangibles shown
separately below) 10,944 - (10,944) NM 21,884 - (21,884) NM
------ --- ------- ------ --- -------
Cost of revenue - total 45,695 29,224 (16,471) (56.4) 99,001 57,927 (41,074) (70.9)
------ ------ ------- ------ ------ -------
Gross margin 20,277 23,834 (3,557) (14.9) 40,011 49,098 (9,087) (18.5)
Selling, general and
administrative expenses 6,770 4,434 (2,336) (52.7) 12,855 9,690 (3,165) (32.7)
Depreciation and
amortization 3,730 2,544 (1,186) (46.6) 7,211 4,894 (2,317) (47.3)
----- ----- ------ ----- ----- ------
Operating income 9,777 16,856 (7,079) (42.0) 19,945 34,514 (14,569) (42.2)
Interest expense, net(1) (2,207) (2,229) 22 1.0 (3,918) (4,653) 735 15.8
Other expense, net (36) (147) 111 75.5 (241) (401) 160 39.9
Provision for income taxes (2,563) (5,706) 3,143 55.1 (5,942) (11,617) 5,675 48.9
------ ------ ----- ------ ------- -----
Net income(2) 4,971 8,774 (3,803) (43.3) 9,844 17,843 (7,999) (44.8)
Less: net loss
attributable to
noncontrolling interests (11) - 11 NM (39) - 39 NM
--- --- --- --- --- ---
Net income attributable to
MIC(2) 4,982 8,774 (3,792) (43.2) 9,883 17,843 (7,960) (44.6)
===== ===== ====== ===== ====== ======
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) 4,971 8,774 9,844 17,843
Interest expense, net(1) 2,207 2,229 3,918 4,653
Provision for income taxes 2,563 5,706 5,942 11,617
Depreciation and
amortization 3,730 2,544 7,211 4,894
Pension expense(3) 272 349 545 699
Other non-cash expense
(income), 897 (3,654) 6,468 (6,406)
net(4)
EBITDA excluding non-cash
items 14,640 15,948 (1,308) (8.2) 33,928 33,300 628 1.9
====== ====== ====== ====== ====== ===
EBITDA excluding non-cash
items 14,640 15,948 33,928 33,300
Interest expense, net(1) (2,207) (2,229) (3,918) (4,653)
Adjustments to derivative
instruments recorded in
interest expense(1) 316 637 90 756
Amortization of debt
financing 99 88 204 752
costs(1)
Provision for income
taxes, net of changes in
deferred taxes (2,041) (2,129) (3,492) (5,146)
Changes in working capital (1,837) 4,011 (10,317) 6,948
------ ----- ------- -----
Cash provided by operating
activities 8,970 16,326 16,495 31,957
Changes in working capital 1,837 (4,011) 10,317 (6,948)
Maintenance capital
expenditures (1,512) (1,441) (2,581) (3,273)
------ ------ ------ ------
Free cash flow 9,295 10,874 (1,579) (14.5) 24,231 21,736 2,495 11.5
===== ====== ====== ====== ====== =====
NM - Not meaningful
Interest expense, net,
includes adjustments to
derivative instruments
related to interest rate
swaps and non-cash
amortization of deferred
financing fees. For the six
months ended June 30, 2016,
interest expense also
included a non-cash write-
off of deferred financing
fees related to the February
2016 refinancing at Hawaii
Gas.
(1)
Corporate allocation expense,
intercompany fees and the tax
effect have been excluded from
the above table as they are
eliminated on consideration.
(2)
Pension expense primarily
consists of interest cost,
expected return on plan assets
and amortization of actuarial
and performance gains and
losses.
(3)
Other non-cash expense (income),
net, primarily includes non-cash
adjustments related to unrealized
gains (losses) on commodity hedges.
See "Earnings Before Interest,
Taxes, Depreciation and Amortization
(EBITDA) excluding non-cash items,
Free Cash Flow and Proportionately
Combined Metrics" above for further
discussion.
(4)
Corporate and Other
-------------------
Quarter Ended Change Six Months Ended Change
June 30, Favorable/ June 30, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Fees to Manager-related
party 18,433 16,392 (2,041) (12.5) 36,656 31,188 (5,468) (17.5)
Selling, general and
administrative
expenses(1) 11,092 3,451 (7,641) NM 15,087 4,906 (10,181) NM
------ ----- ------ ------ ----- -------
Operating loss (29,525) (19,843) (9,682) (48.8) (51,743) (36,094) (15,649) (43.4)
Interest expense, net(2) (6,671) (3,558) (3,113) (87.5) (12,822) (6,963) (5,859) (84.1)
Benefit for income taxes 13,537 9,785 3,752 38.3 25,968 19,196 6,772 35.3
------ ----- ----- ------ ------ -----
Net loss(3) (22,659) (13,616) (9,043) (66.4) (38,597) (23,861) (14,736) (61.8)
======= ======= ====== ======= ======= =======
Reconciliation of net loss
to EBITDA excluding non-
cash items and a
reconciliation of cash
used in operating
activities to Free Cash
Flow:
Net loss(3) (22,659) (13,616) (38,597) (23,861)
Interest expense, net(2) 6,671 3,558 12,822 6,963
Benefit for income taxes (13,537) (9,785) (25,968) (19,196)
Fees to Manager-related
party 18,433 16,392 36,656 31,188
Other non-cash expense 187 187 375 375
--- --- --- ---
EBITDA excluding non-cash
items (10,905) (3,264) (7,641) NM (14,712) (4,531) (10,181) NM
======= ====== ====== ======= ====== =======
EBITDA excluding non-cash
items (10,905) (3,264) (14,712) (4,531)
Interest expense, net(2) (6,671) (3,558) (12,822) (6,963)
Convertible senior notes
interest(4) 2,013 - 3,757 -
Amortization of debt
financing 988 612 1,981 1,224
costs(2)
Amortization of debt
discount(2) 876 - 1,495 -
Benefit for income taxes,
net of changes in
deferred taxes 2,223 2,316 5,171 5,516
Changes in working capital 4,677 380 (3,757) (5,931)
----- --- ------ ------
Cash used in operating
activities (6,799) (3,514) (18,887) (10,685)
Changes in working capital (4,677) (380) 3,757 5,931
------ ---- ----- -----
Free cash flow (11,476) (3,894) (7,582) (194.7) (15,130) (4,754) (10,376) NM
======= ====== ====== ======= ====== =======
NM - Not meaningful
For the quarter and six months
ended June 30, 2017, selling,
general and administrative
expenses included $3.1 million
and $5.4 million, respectively,
of costs related to the
implementation of a shared
service initiative. Selling,
general and administrative
expenses for the quarter and six
months ended June 30, 2017 also
includes $4.9 million of costs
incurred in connection with the
evaluation of various investment
and acquisition opportunities.
(1)
Interest expense, net,
included non-cash
amortization of deferred
financing fees and
amortization of debt discount
related to the 2.00%
Convertible Senior Notes due
October 2023.
(2)
Corporate allocation expense,
intercompany fees and the tax
effect have been excluded from
the above table as they are
eliminated on consolidation.
(3)
Represents the cash interest
expense reclassified to
Atlantic Aviation related to
the 2.00% Convertible Senior
Notes due October 2023,
proceeds of which were used
to pay down a portion of
Atlantic Aviation's credit
facility in October 2016.
(4)
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
EXCLUDING NON-CASH ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY/(USED
IN) OPERATING ACTIVITIES TO PROPORTIONATELY COMBINED FREE CASH FLOW
For the Quarter Ended June 30, 2017
-----------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted
Power MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) 100% Hawaii
100%
---
($ in Thousands) (Unaudited)
Net income (loss) 22,613 16,808 4,107 4,973 (22,659) 25,842 4,292 4,971
Interest expense, net(3) 11,763 5,907 7,789 2,204 6,671 34,334 8,767 2,207
Provision (benefit) for income 15,716 11,077 1,845 2,563 (13,537) 17,664 1,845 2,563
taxes
Depreciation and amortization of
intangibles 30,795 23,575 12,980 3,726 - 71,076 14,861 3,730
Fees to Manager-related party - - - - 18,433 18,433 - -
Pension expense(4) 1,350 5 - 272 - 1,627 - 272
Other non-cash expense (income),
net(5) 69 (22) (2,232) 898 187 (1,100) (2,232) 897
--- --- ------ --- --- ------ ------ ---
EBITDA excluding non-cash 82,306 57,350 24,489 14,636 (10,905) 167,876 27,533 14,640
items
EBITDA excluding non-cash 82,306 57,350 24,489 14,636 (10,905) 167,876 27,533 14,640
items
Interest expense, net(3) (11,763) (5,907) (7,789) (2,204) (6,671) (34,334) (8,767) (2,207)
Convertible senior notes - (2,013) - - 2,013 - - -
interest(6)
Adjustments to derivative
instruments recorded in interest
expense, net(3) 1,587 2,553 1,312 315 - 5,767 1,474 316
Amortization of debt financing
charges(3) 412 221 365 99 988 2,085 379 99
Amortization of debt - - - - 876 876 - -
discount(3)
Provision/benefit for income taxes,
net of changes in deferred taxes (1,155) (1,730) 85 (2,041) 2,223 (2,618) 85 (2,041)
Changes in working capital (16,881) 784 (7,392) (1,817) 4,677 (20,629) (8,003) (1,837)
------- --- ------ ------ ----- ------- ------ ------
Cash provided by (used in) operating
activities 54,506 51,258 11,070 8,988 (6,799) 119,023 12,701 8,970
Changes in working capital 16,881 (784) 7,392 1,817 (4,677) 20,629 8,003 1,837
Maintenance capital expenditures (2,987) (1,981) - (1,512) - (6,480) - (1,512)
------ ------ --- ------ --- ------ --- ------
Proportionately Combined Free Cash
Flow 68,400 48,493 18,462 9,293 (11,476) 133,172 20,704 9,295
====== ====== ====== ===== ======= ======= ====== =====
For the Quarter Ended June 30, 2016
-----------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted
Aviation Power(1) Hawaii Corporate Combined(2) Power
100%
---
($ in Thousands) (Unaudited)
Net income (loss) 14,978 11,749 (153) 8,774 (13,616) 21,732 (804)
Interest expense, net(3) 13,764 8,924 9,661 2,229 3,558 38,136 11,002
Provision (benefit) for
income taxes 10,409 7,973 1,915 5,706 (9,785) 16,218 1,917
Depreciation and
amortization of
intangibles 35,282 24,702 11,973 2,544 - 74,501 13,847
Fees to Manager-related
party - - - - 16,392 16,392 -
Pension expense(4) 1,831 17 - 349 - 2,197 -
Other non-cash expense
(income), net(5) 115 339 (1,945) (3,654) 187 (4,958) (1,945)
--- --- ------ ------ --- ------ ------
EBITDA excluding non-cash
items 76,379 53,704 21,451 15,948 (3,264) 164,218 24,017
====== ====== ====== ====== ====== ======= ======
EBITDA excluding non-cash
items 76,379 53,704 21,451 15,948 (3,264) 164,218 24,017
Interest expense, net(3) (13,764) (8,924) (9,661) (2,229) (3,558) (38,136) (11,002)
Adjustments to derivative
instruments recorded in
interest expense, net(3) 3,546 1,179 4,019 637 - 9,381 4,504
Amortization of debt
financing charges(3) 411 905 340 88 612 2,356 354
Provision/benefit for
income taxes, net of
changes in deferred taxes (937) (910) (2) (2,129) 2,316 (1,662) (2)
Changes in working capital (7,676) 226 (5,446) 4,011 380 (8,505) (5,470)
------ --- ------ ----- --- ------ ------
Cash provided by (used in)
operating activities 57,959 46,180 10,701 16,326 (3,514) 127,652 12,401
Changes in working capital 7,676 (226) 5,446 (4,011) (380) 8,505 5,470
Maintenance capital (6,942) (1,457) - (1,441) - (9,840) -
expenditures
Proportionately Combined
Free 58,693 44,497 16,147 10,874 (3,894) 126,317 17,871
Cash Flow
For the Six Months Ended June 30, 2017
--------------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
($ in Thousands) (Unaudited)
Net income (loss) 46,429 38,634 2,153 9,848 (38,597) 58,467 2,353 9,844
Interest expense, net(3) 20,520 9,353 12,579 3,914 12,822 59,188 14,150 3,918
Provision (benefit) for
income 32,264 25,627 1,872 5,942 (25,968) 39,737 1,872 5,942
taxes
Depreciation and
amortization of
intangibles 62,315 48,608 26,441 7,202 - 144,566 30,201 7,211
Fees to Manager-related
party - - - - 36,656 36,656 - -
Pension expense(4) 3,766 10 - 545 - 4,321 - 545
Other non-cash expense
(income), net(5) 137 40 (4,235) 6,469 375 2,786 (4,256) 6,468
--- --- ------ ----- --- ----- ------ -----
EBITDA excluding non-cash 165,431 122,272 38,810 33,920 (14,712) 345,721 44,320 33,928
items
EBITDA excluding non-cash 165,431 122,272 38,810 33,920 (14,712) 345,721 44,320 33,928
items
Interest expense, net(3) (20,520) (9,353) (12,579) (3,914) (12,822) (59,188) (14,150) (3,918)
Convertible senior notes - (3,757) - - 3,757 - - -
interest(6)
Adjustments to derivative
instruments recorded in
interest expense, net(3) 267 2,686 (302) 89 - 2,740 (360) 90
Amortization of debt
financing charges(3) 823 535 729 204 1,981 4,272 758 204
Amortization of debt
discount(3) - - - - 1,495 1,495 - -
Provision/benefit for
income taxes, net of
changes in deferred taxes (3,413) (4,602) (3) (3,492) 5,171 (6,339) (3) (3,492)
Changes in working capital (16,145) (5,332) (7,540) (10,299) (3,757) (43,073) (7,861) (10,317)
------- ------ ------ ------- ------ ------- ------ -------
Cash provided by (used in)
operating activities 126,443 102,449 19,115 16,508 (18,887) 245,628 22,704 16,495
Changes in working capital 16,145 5,332 7,540 10,299 3,757 43,073 7,861 10,317
Maintenance capital
expenditures (5,447) (2,906) (22) (2,581) - (10,956) (22) (2,581)
------ ------ --- ------ --- ------- --- ------
Proportionately Combined
Free Cash Flow 137,141 104,875 26,633 24,226 (15,130) 277,745 30,543 24,231
======= ======= ====== ====== ======= ======= ====== ======
For the Six Months Ended June 30, 2016
--------------------------------------
IMTT(7) Atlantic Contracted MIC MIC Proportionately
Combined(2) Contracted
Aviation Power(1) Hawaii Corporate Power
100%
---
($ in Thousands) (Unaudited)
Net income (loss) 31,195 26,107 (8,593) 17,843 (23,861) 42,691 (10,027)
Interest expense, net(3) 33,635 22,238 25,449 4,653 6,963 92,938 28,850
Provision (benefit) for
income taxes 21,638 17,715 (389) 11,617 (19,196) 31,385 (387)
Depreciation and
amortization of
intangibles 67,903 46,893 23,945 4,894 - 143,635 27,693
Fees to Manager-related
party - - - 31,188 31,188 -
-
Pension expense(4) 3,662 34 - 699 - 4,395 -
Other non-cash expense
(income), net(5) 558 248 (3,946) (6,406) 375 (9,171) (3,965)
--- --- ------ ------ --- ------ ------
EBITDA excluding non-cash
items 158,591 113,235 36,466 33,300 (4,531) 337,061 42,164
======= ======= ====== ====== ====== ======= ======
EBITDA excluding non-cash
items 158,591 113,235 36,466 33,300 (4,531) 337,061 42,164
Interest expense, net(3) (33,635) (22,238) (25,449) (4,653) (6,963) (92,938) (28,850)
Adjustments to derivative
instruments recorded in
interest expense, net(3) 13,156 6,787 14,090 756 - 34,789 15,772
Amortization of debt
financing charges(3) 831 1,705 709 752 1,224 5,221 737
Provision/benefit for
income taxes, net of
changes in deferred taxes (2,167) (2,362) (9) (5,146) 5,516 (4,168) (9)
Changes in working capital (10,483) 6,270 (3,062) 6,948 (5,931) (6,258) (2,858)
------- ----- ------ ----- ------ ------ ------
Cash provided by (used in)
operating activities 126,293 103,397 22,745 31,957 (10,685) 273,707 26,956
Changes in working capital 10,483 (6,270) 3,062 (6,948) 5,931 6,258 2,858
Maintenance capital (13,239) (3,741) - (3,273) - (20,253) -
expenditures
Proportionately Combined
Free Cash Flow 123,537 93,386 25,807 21,736 (4,754) 259,712 29,814
======= ====== ====== ====== ====== ======= ======
Represents MIC's proportionately
combined interests in the
businesses comprising this
reportable segment.
(1)
The sum of the amounts
attributable to MIC in
proportion to its
ownership.
(2)
Interest expense, net,
includes adjustments to
derivative instruments, non-
cash amortization of deferred
financing charges and non-
cash amortization of debt
discount related to the 2.00%
Convertible Senior Notes due
October 2023. For the six
months ended June 30, 2016,
interest expense, net, also
included a non-cash write-
off of deferred financing
fees related to the February
2016 refinancing at Hawaii
Gas.
(3)
Pension expense primarily
consists of interest cost,
expected return on plan assets
and amortization of actuarial
and performance gains and
losses.
(4)
Other non-cash expense (income),
net, primarily includes non-cash
amortization of tolling liabilities,
unrealized gains (losses) on
commodity hedges 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)
Represents the cash interest
expense reclassified from
MIC Corporate to Atlantic
Aviation related to the
2.00% Convertible Senior
Notes due October 2023,
proceeds of which were used
to pay down a portion of
Atlantic Aviation's credit
facility in October 2016.
(6)
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.
(7)
View original content:http://www.prnewswire.com/news-releases/mic-reports-second-quarter-2017-financial-results-announces-acquisition-and-investment-increases-quarterly-cash-dividend-300498692.html
SOURCE Macquarie Infrastructure Corporation
