- Total Free Cash Flow increases 89.0% to
$122.7 million from $64.9 million
- Proportionately Combined Free Cash Flow
per share increases 45.6% to $1.68 from $1.15
- Cash dividend of $1.07 ($4.28
annualized) per share authorized
- Anticipated federal income tax
liability extended to late 2018
Macquarie Infrastructure Company LLC (NYSE:MIC) reported an
89.0% increase in proportionately combined Free Cash Flow to $122.7
million in the first quarter of 2015 from $64.9 million in the
first quarter of 2014. The increase reflects the acquisition of the
second half of the Company’s International-Matex Tank Terminals
(“IMTT”) bulk liquid terminals business in July of 2014 and the
improved operating performance of MIC’s businesses.
Proportionately combined Free Cash Flow per share increased
45.6% to $1.68 versus $1.15 in the prior comparable period. The
smaller per share increase compared with the growth in total Free
Cash Flow reflects the impact on a weighted average basis of the
issuance of 16.8 million additional shares over the 12 months ended
March 31, 2015.
MIC issued additional shares in capital raisings conducted in
relation to the acquisitions of IMTT in July of 2014 and the
Bayonne Energy Center (“BEC”) in March of 2015 and to MIC’s manager
in satisfaction of base and performance fees that became payable
during the twelve months ended March 31, 2015.
The growth in MIC’s Free Cash Flow and Free Cash Flow per share
in the first quarter of 2015 continues a track record of operating
performance improvement across its portfolio of infrastructure
businesses including:
- year-on-year growth in key performance
measures at Atlantic Aviation reflective of the ongoing recovery in
general aviation in the U.S. and market share gain;
- continued growth in terminal operations
at IMTT together with lower than anticipated maintenance capital
expenditures (approximately $0.03 per share versus expected $0.15),
partially offset by lower heating and spill response revenue
compared with unusually high levels in 2014; and,
- increased contributions to MIC’s
results from its Hawaii Gas business and Contracted Power and
Energy segment (net of dispositions).
Reflecting the improved cash generation, the MIC Board of
Directors has authorized a cash dividend of $1.07 per share, or
$4.28 annualized, for the first quarter of 2015. The dividend will
be payable on May 19, 2015 to shareholders of record on May 14,
2015. The quarterly cash payment represents a 4.9% increase over
the dividend paid for the fourth quarter of 2014.
“The generation of Free Cash Flow in the first quarter was ahead
of our guidance on an annualized basis,” said James Hooke, chief
executive officer of MIC. “With only one quarter of results in and
with what we believe will be the normalization of certain items
over the remainder of the year, it is too early to revise our
guidance of 14% year-on-year growth. However, I am pleased to have
started the year ahead of plan.”
In addition to contributions from acquisitions concluded in
2014, MIC expects to benefit from the continued deployment of
capital across all of its businesses. “We expect to deploy
approximately $250.0 million over the course of the year,” said
Hooke. “We continue to anticipate deploying approximately $150.0
million in growth projects that have already been identified and
approximately $100.0 million in smaller acquisitions executed on
behalf of our existing businesses.”
Consolidated Results for the First Quarter
MIC’s consolidated revenue for the first quarter of 2015
increased by 44.3% compared with the first quarter in 2014
primarily as a result of the inclusion of results for IMTT
following the acquisition of the second half of that business in
July of 2014. The increase was partially offset by lower cost
energy inputs in 2015 compared with 2014 resulting from the decline
in the price of oil and oil products. MIC notes that these
decreases in revenue reflect the pass-through nature of
energy-related costs.
Gross profit removes the volatility in revenue associated with
fluctuations in energy inputs and highlights underlying trends in
aggregate volume and margins at MIC. The Company’s consolidated
gross profit doubled to $226.0 million in the first quarter of 2015
from $113.0 in the first quarter in 2014. The gross profit increase
again reflects the consolidation of IMTT and contributions from
acquisitions concluded by Atlantic Aviation as well as improved
underlying operating performance at each of MIC’s other
businesses.
MIC reported a consolidated net loss, before taxes, of $145.8
million in the first quarter of 2015 compared with consolidated net
income of $28.6 million in the first quarter of 2014. The net loss
reflects primarily the impact of the performance fees incurred in
the 2015 quarter.
Segment Results for the First Quarter
MIC’s bulk liquid marine terminals business, IMTT, one of the
largest independent terminal operations in the country, generated a
54.5% increase in Free Cash Flow in the first quarter of 2015
compared with the first quarter in 2014. The increase reflects a
reduction in cash taxes, maintenance capital expenditures and cash
interest versus the prior comparable quarter. EBITDA excluding
non-cash items was down 1.3% versus the first quarter in 2014 as a
result of reduced heating gross profit and a reduced contribution
from OMI Environmental Services.
“IMTT generated a significant amount of Free Cash Flow in the
quarter, driven by the progress we continued to make with respect
to improving operations,” said Hooke. “Excluding the impact of the
reduction in heating gross profit and OMI spill response
activity, EBITDA generated by IMTT in the first quarter of 2015
would have increased by 8.5% compared with the first quarter in
2014.”
Heating revenue and gross profit related to heating heavy
liquids declined by $5.1 million and $3.9 million, respectively, in
the first quarter of 2015 versus the prior comparable period.
Consumption of natural gas – and the price of natural gas – spiked
unusually in 2014 as a result of what is commonly referred to as
the Polar Vortex.
Spill response activity at IMTT subsidiary OMI Environmental
Solutions (“OMI”) was lower in the first quarter of 2015 as well.
Spill response revenue and gross profit declined by $7.5 million
and $3.3 million, respectively, compared with the first quarter in
2014. OMI was involved in several clean-up operations including a
substantial event on the Houston Ship Channel in the first half of
2014.
“We continue to make good progress in our efforts to reduce
expenses and would expect to realize annualized savings of $10.0
million by the end of 2015,” Hooke noted. “Maintenance capital
expenditures were very low in the first quarter of the year as we
continued to put policies and processes around management of these
in place, although we expect a normalization in the remainder of
2015 and continue to believe that IMTT will spend approximately
$45.0 million on maintenance over the whole of the year.”
The Company anticipates completing a refinancing of IMTT’s long
term debt in the second quarter of 2015. The current capitalization
of the business includes an approximately $1.3 billion revolving
credit facility that matures in February of 2018. As previously
disclosed, management intends to increase the tenor of the facility
or facilities used to capitalize the business.
MIC’s Atlantic Aviation business continued to benefit from the
upswing in general aviation flight activity in the U.S., the impact
of acquisitions of additional fixed base operations (“FBOs”) by the
business in 2014, positive trends in the industry generally and
market share gains. The Free Cash Flow generated by Atlantic
Aviation increased by 45.0% in the first quarter of 2015 compared
with the first quarter in 2014. The increase reflects a 40.5%
increase in EBITDA excluding non-cash items as well as a decrease
in cash taxes partially offset by an increase in maintenance
capital expenditures and cash interest.
“The outstanding cash generation reported by Atlantic Aviation
in the first quarter reflect trends including an increase in the
size of general aviation jets, and market share gains that have
come at the expense of competitors,” said Hooke. “The Atlantic
network has been strengthened considerably with the addition of the
FBOs in Florida that we acquired during the past 12 months and
others are struggling to match Atlantic’s service levels,
particularly in the east coast corridor.” Atlantic Aviation’s
network of 69 FBOs includes six facilities in Florida.
Atlantic Aviation generated strong results on same store basis –
excluding the impact the acquisitions – as well. Same store gross
profit increased 9.4% on growth in fuel gross profit and rental
revenue.
During the first quarter of 2015 MIC’s Contracted Power &
Energy segment consisted of five solar and two wind power
generation facilities. The wind power facilities were acquired
during the second half of 2014. In the prior comparable period the
segment also included results for a district energy business that
was sold in August of 2014.
As a result of the acquisition and divestiture activity over the
trailing twelve months, comparison of the performance of the
segment with prior periods is not meaningful and a same store
comparison is not material. In the first quarter of 2015 CP&E
generated EBITDA of $6.5 million including approximately $700,000
of expenses incurred in connection with the acquisition of BEC.
Free Cash Flow generated by the segment totaled $2.7 million for
the quarter.
Including BEC, MIC expects the segment to generate EBITDA of
approximately $75.0 million over the whole of 2015.
Gas sales increased by 3.6% at MIC’s Hawaii Gas business during
the first quarter of 2015 compared with the first quarter in 2014
primarily driven by an increase in average margins and growth in
sales to commercial accounts as customers continue to switch from
electricity and diesel to gas. The resulting increase in gross
profit, together with a modest reduction in selling, general and
administrative expenses, contributed to growth in EBITDA excluding
non-cash items of $1.9 million or 12.4%.
Hawaii Gas generated $14.2 million in Free Cash Flow for the
quarter, up 63.8% on the prior comparable period, as a result of
the improved operating performance, lower taxes and the absence of
pension contributions.
MIC’s Corporate and Other segment includes public company
expenses, board of directors costs and expenses associated with
capital markets activities including interest expense on corporate
level debt securities and revolving credit facilities. The segment
result also reflects the impact of (non-cash) base management and
performance fees paid by the Company to its external manager.
The Company’s Corporate and Other segment results for the first
quarter of 2015 include $165.3 million of base and performance
fees, all of which were settled with the issuance of additional
shares. An increase in selling, general and administrative expenses
resulted in EBITDA excluding non-cash items totaling ($2.8) million
for the first quarter in 2015 compared with ($0.9) million in the
first quarter in 2014. Including interest expense on convertible
notes issued in July of 2014 and commitment fees on a revolving
credit facility, Free Cash Flow generated by the Corporate and
Other segment decreased to ($5.3) million from $1.5 million in the
prior comparable period.
The BEC Transaction
MIC raised a net $471.6 million of additional equity in March
2015 to fund, in part, the acquisition of BEC and general corporate
needs. The acquisition of BEC was concluded on April 1, 2015. The
$215.2 million cash portion of the $724.3 million acquisition
(including preliminary adjustments for working capital) was funded
using a portion of the capital raised in March. MIC expects BEC to
be immediately accretive to its Free Cash Flow.
Special Meeting
As previously announced, MIC will hold a Special Meeting of
shareholders on Friday, May 15, 2015. Among other matters,
shareholders will be asked to approve the conversion of the Company
from a Delaware Limited Liability Company to a Delaware
corporation. The meeting will be held at 10:00am at the Company’s
offices in New York City.
Cash Generation, Proportionately Combined and Reconciled to
GAAP
MIC reports EBITDA excluding non-cash items on a consolidated
and operating segment basis and reconciles each to consolidated net
income (loss). EBITDA excluding non-cash items is a measure relied
upon by management in evaluating the performance of its businesses.
EBITDA excluding non-cash items is defined as earnings before
interest, taxes, depreciation and amortization and non-cash items,
which include impairments, gains and losses on derivatives and
adjustments for certain other non-cash items reflected in the
statement of operations including base and performance fees.
The Company believes that EBITDA excluding non-cash items
provides additional insight into the performance of its operating
businesses, relative to each other and to similar businesses,
without regard to capital structure, their ability to service or
reduce debt, fund capital expenditures and/or support distributions
to the holding company.
MIC also reports Free Cash Flow, as defined below, on both a
consolidated and operating segment basis as a means of assessing
the amount of cash generated by its businesses and as a supplement
to other information provided in accordance with GAAP, and
reconciles each to cash from operating activities. MIC believes
that reporting Free Cash Flow provides additional insight into its
ability to deploy cash, as GAAP measures, such as net income (loss)
and cash from operating activities, do not reflect all of the items
that management considers in estimating the amount of cash
generated by its operating businesses. MIC defines Free Cash Flow
as cash from operating activities, less maintenance capital
expenditures which includes principal repayment on capital lease
obligations used to fund maintenance capital expenditures, cash
interest, cash taxes, pension contributions and changes in working
capital. See the attached reconciliation of EBITDA excluding
non-cash items and Free Cash Flow to their most comparable GAAP
measures.
/--------------------------------------------------For the
Quarter Ended March 31,
2015-------------------------------------------------/
IMTT
100%(1)
Atlantic Aviation
Contracted
Power and
Energy(2)
Hawaii
Gas
MIC Corporate
Proportionately
Combined(3)
Contracted
Power and
Energy
100%
Gross profit 84,470 108,115 6,820 24,184 N/A
223,589
9,185 EBITDA excluding non-cash items 78,404 56,259 4,451 16,854
(2,758)
153,210 6,485 Free cash flow 66,184
46,070 1,593 14,150
(5,316)
122,681 2,689
/----------------------------------------------------------------------For
the Quarter Ended March 31,
2014------------------------------------------------------------------------/
IMTT
50%(4)
Atlantic Aviation
Contracted
Power and
Energy(2)
Hawaii
Gas
MIC Corporate
Proportionately
Combined(3)
IMTT
100%(5)
Contracted
Power and
Energy
100%
Gross profit 42,496 87,209 3,567 19,972
N/A
153,243 84,991 5,821 EBITDA excluding non-cash items
39,737 40,036 3,878 14,991 (858)
97,783 79,473 6,496 Free
cash flow 21,416 31,767 1,612
8,636 1,489
64,920 42,832
2,775
_______________________
N/A- Not applicable. (1) Represents our 100% ownership
interest in IMTT subsequent to July 16, 2014. (2)
Proportionately combined Free Cash Flow for Contracted Power and
Energy is equal to MIC's controlling ownership interest in its
solar and wind power generation businesses and the district energy
business, up to August 21, 2014, date of sale. (3)
Proportionately combined Free Cash Flow is equal to the sum of Free
Cash Flow attributable to MIC's ownership interest in each of its
operating businesses and MIC Corporate. (4) Our
proportionate interest in IMTT prior to the acquisition of the
remaining 50% interest on July 16, 2014. (5) Represents 100%
of IMTT as a stand-alone business.
Conference Call and Webcast
When: Management has scheduled a conference call for 8:00 a.m.
Eastern Time on Tuesday, May 5, 2015 during which it will review
and comment on the Company’s results for the first quarter.
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 the morning of May 5, 2015
prior to the conference call. A link to the materials will be
located on the homepage of the MIC website.
Replay: For interested individuals unable to participate in the
live conference call, a replay will be available after 2:00 p.m. on
May 5, 2014 through midnight on May 12, 2015, at +1(404) 537-3406
or +1(855) 859-2056, Passcode: 21960275. An online archive of the
webcast will be available on the Company’s website for one year
following the call. MIC-G
About Macquarie Infrastructure Company
Macquarie Infrastructure Company owns, operates and invests in a
diversified group of infrastructure businesses providing basic
services to customers in the United States. Its businesses consist
of a bulk liquid marine terminals business, International-Matex
Tank Terminals, an airport services business, Atlantic Aviation, a
gas processing and distribution business, Hawaii Gas, and several
entities comprising a Contracted Power and Energy segment. MIC is
managed by a wholly-owned subsidiary of the Macquarie Group. For
additional information, please visit the Macquarie Infrastructure
Company website at www.macquarie.com/mic. MIC-G.
Forward-Looking Statements
This filing 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 report 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; its shared decision-making with co-investors over
investments including the distribution of dividends; 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 costs; its
ability to recover increases in costs from customers, 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 Company LLC
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 Company LLC.
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED BALANCE SHEETS ($ in Thousands,
Except Share Data)
March 31,
2015
December 31,
2014
(Unaudited)
ASSETS Current assets: Cash and cash equivalents
$ 101,312 $ 48,014 Restricted cash 9,565 21,282 Accounts
receivable, less allowance for doubtful accounts of $1,328 and
$771, respectively 96,928 96,885 Inventories 26,114 28,080 Prepaid
expenses 14,642 14,276 Deferred income taxes 25,412 25,412 Other
18,355 22,941 Total current assets
292,328 256,890 Property, equipment, land and leasehold
improvements, net 3,331,537 3,362,585 Investment in unconsolidated
business 9,166 9,773 Goodwill 1,992,742 1,996,259 Intangible
assets, net 916,515 959,634 Deferred financing costs, net of
accumulated amortization 30,548 32,037 Other 11,936
8,010 Total assets $ 6,584,772 $ 6,625,188
LIABILITIES AND MEMBERS' EQUITY Current
liabilities: Due to manager - related party $ 154,822 $ 4,858
Accounts payable 42,119 49,733 Accrued expenses 62,152 77,248
Current portion of long-term debt 28,187 27,655 Fair value of
derivative instruments 29,499 32,111 Other 25,820
32,727 Total current liabilities 342,599 224,332
Long-term debt, net of current portion 1,940,406 2,364,866 Deferred
income taxes 845,486 904,108 Fair value of derivative instruments
32,620 27,724 Other 139,828 133,990
Total liabilities 3,300,939 3,655,020
Commitments and contingencies - - Members’ equity: LLC interests,
or shares, no par value; 500,000,000 authorized; 77,412,136 shares
issued and outstanding at March 31, 2015
and 71,089,590 shares issued and
outstanding at December 31, 2014
2,351,612 1,942,745 Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (23,975 ) (21,550 ) Retained
earnings 755,519 844,521 Total members’
equity 3,104,603 2,787,163 Noncontrolling interests 179,230
183,005 Total equity 3,283,833
2,970,168 Total liabilities and equity $ 6,584,772
$ 6,625,188
MACQUARIE INFRASTRUCTURE
COMPANY LLC CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS (Unaudited) ($ in Thousands, Except Share
and Per Share Data)
Quarter Ended
March 31,
2015
Quarter Ended
March 31,
2014
Revenue Service revenue $ 326,002
$
202,439
Product revenue
72,496 73,009 Financing and equipment lease income -
747 Total revenue 398,498 276,195
Costs and expenses Cost of services 133,417 112,954
Cost of product sales 39,127 50,239 Selling, general and
administrative 70,653 55,464 Fees to manager - related party
165,273 8,994 Depreciation 57,422 12,154 Amortization of
intangibles 47,971 8,765 Loss on disposal of assets 545
- Total operating expenses 514,408
248,570
Operating (loss) income (115,910 ) 27,625
Other income (expense) Dividend income 531 - Interest
income 6 64 Interest expense(1) (31,521 ) (14,011 ) Equity in
earnings and amortization charges of investee - 14,287 Other
income, net 1,046 681 Net (loss) income
before income taxes (145,848 ) 28,646 Benefit (provision) for
income taxes(2) 55,333 (8,486 ) Net (loss)
income $ (90,515 )
$
20,160 Less: net loss attributable to noncontrolling interests
(1,513 ) (206 ) Net (loss) income attributable to MIC
LLC $ (89,002 )
$
20,366 Basic (loss) income per share attributable to
MIC LLC $ (1.22 )
$
0.36 Weighted average number of shares outstanding: basic
73,150,111 56,369,295 Diluted (loss)
income per share attributable to MIC LLC $ (1.22 )
$
0.36 Weighted average number of shares outstanding: diluted
73,150,111 56,382,205 Cash dividends
declared per share $ 1.07
$
0.9375
_____________________
(1) Interest expense includes losses on derivative instruments of
$12.9 million and $5.3 million for the quarters ended March 31,
2015 and 2014, respectively, of which net loss of 239,000 was
reclassified from accumulated other comprehensive loss for the
quarter ended March 31, 2014. (2) Includes $95,000 of
benefit for income taxes from accumulated other comprehensive loss
reclassification for the quarter ended March 31, 2014.
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited) ($ in Thousands)
Quarter Ended
March 31,
2015
Quarter Ended
March 31,
2014
Operating activities Net (loss) income $
(90,515 ) $ 20,160 Adjustments to reconcile net (loss) income to
net cash provided by operating activities: Depreciation and
amortization of property and equipment 57,422 13,858 Amortization
of intangible assets 47,971 8,765 Loss on disposal of assets 453 -
Equity in earnings and amortization charges of investee - (14,287 )
Equity distributions from investee - 8,127 Amortization of debt
financing costs 1,615 1,041 Adjustments to derivative instruments
2,833 1,094 Base management fees to be settled/settled in shares
16,545 8,994 Performance fees to be settled in shares 148,728 -
Equipment lease receivable, net - 996 Deferred rent 233 50 Deferred
taxes (56,138 ) 6,439 Other non-cash expenses, net 745 692 Changes
in other assets and liabilities, net of acquisitions: Restricted
cash 669 14,643 Accounts receivable 222 (6,431 ) Inventories 2,087
1,973 Prepaid expenses and other current assets 5,901 (492 ) Due to
manager - related party (88 ) (116 ) Accounts payable and accrued
expenses (18,153 ) (4,166 ) Income taxes payable (853 ) (69 )
Pension contribution - (310 ) Other, net (2,661 )
(1,884 ) Net cash provided by operating activities 117,016
59,077
Investing activities
Acquisitions of businesses and investments, net of cash acquired
(18,137 ) (1,052 ) Purchases of property and equipment (25,481 )
(21,613 ) Other, net 544 52 Net cash
used in investing activities (43,074 ) (22,613 )
Financing activities Proceeds from long-term debt $
29,000 $ 4,884 Payment of long-term debt (452,628 ) (11,084 )
Proceeds from the issuance of shares 487,937 - Dividends paid to
shareholders (78,075 ) (51,469 ) Distributions paid to
noncontrolling interests (1,000 ) (656 ) Offering and equity raise
costs paid (15,964 ) (5 ) Debt financing costs paid - (1,050 )
Proceeds from the issuance of shares pursuant to MIC Direct 95 72
Change in restricted cash 11,047 (1,506 ) Payment of capital lease
obligations (758 ) (454 ) Net cash used in financing activities
(20,346 ) (61,268 ) Effect of exchange rate changes on cash and
cash equivalents (298 ) - Net change in cash and cash equivalents
53,298 (24,804 ) Cash and cash equivalents,
beginning of period 48,014 233,373 Cash
and cash equivalents, end of period $ 101,312 $ 208,569
Supplemental disclosures of cash flow
information Non-cash investing and financing activities:
Accrued equity offering costs $ 349 $ 1 Accrued
financing costs $ 126 $ - Accrued purchases of
property and equipment $ 5,239 $ 1,797 Acquisition of
equipment through capital leases $ 398 $ - Issuance
of shares to manager for base management fees $ 15,221 $
8,777 Conversion of convertible senior notes to shares $ 2
$ - Conversion of construction loan to term loan $ -
$ 60,360 Distributions payable to noncontrolling
interests $ 75 $ 128 Taxes paid $ 1,657 $
2,116 Interest paid $ 26,887 $ 11,351
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS – MD&A
Quarter Ended March 31,
Change
Favorable/(Unfavorable)
2015 2014 $ % ($ In
Thousands) (Unaudited)
Revenue Service revenue $
326,002 $ 202,439 123,563 61.0 Product revenue 72,496 73,009 (513 )
(0.7 ) Financing and equipment lease income - 747
(747 ) (100.0 ) Total revenue 398,498
276,195 122,303 44.3
Costs and expenses
Cost of services 133,417 112,954 (20,463 ) (18.1 ) Cost of product
sales 39,127 50,239 11,112 22.1
Gross profit 225,954 113,002 112,952 100.0 Selling, general
and administrative 70,653 55,464 (15,189 ) (27.4 ) Fees to manager
- related party 165,273 8,994 (156,279 ) NM Depreciation 57,422
12,154 (45,268 ) NM Amortization of intangibles 47,971 8,765
(39,206 ) NM Loss on disposal of assets 545 -
(545 ) NM Total operating expenses 341,864
85,377 (256,487 ) NM
Operating (loss) income
(115,910 ) 27,625 (143,535 ) NM
Other income
(expense) Dividend income 531 - 531 NM Interest income 6 64 (58
) (90.6 ) Interest expense(1) (31,521 ) (14,011 ) (17,510 ) (125.0
) Equity in earnings and amortization charges of investee - 14,287
(14,287 ) (100.0 ) Other income, net 1,046 681
365 53.6 Net (loss) income before income taxes
(145,848 ) 28,646 (174,494 ) NM Benefit (provision) for income
taxes 55,333 (8,486 ) 63,819 NM Net
(loss) income $ (90,515 ) $ 20,160 (110,675 ) NM Less: net loss
attributable to noncontrolling interests (1,513 ) (206 )
1,307 NM Net (loss) income attributable to MIC LLC $ (89,002
) $ 20,366 (109,368 ) NM
_____________________
NM - Not meaningful (1) Interest expense includes losses on
derivative instruments of $12.9 million and $5.3 million for the
quarters ended March 31, 2015 and 2014, respectively.
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF CONSOLIDATED NET (LOSS)
INCOME ATTRIBUTABLE TO MIC LLC TO EBITDA
EXCLUDING NON-CASH ITEMS AND CASH FROM
OPERATING ACTIVITIES TO FREE CASH
FLOW
Quarter Ended March 31,
Change
Favorable/(Unfavorable)
2015 2014 $ %
($ in Thousands) (Unaudited)
Net (loss) income attributable to MIC LLC(1) $ (89,002 ) $
20,366 Interest expense, net(2) 31,515 13,947 (Benefit) provision
for income taxes (55,333 ) 8,486 Depreciation(3) 57,422 12,154
Depreciation - cost of services(3) - 1,704 Amortization of
intangibles(4) 47,971 8,765 Loss on disposal of assets 453 - Equity
in earnings and amortization charges of investee - (14,287 ) Equity
distributions from investee(5) - 8,127 Base management fees to be
settled/settled in shares 16,545 8,994 Performance fees to be
settled in shares 148,728 - Other non-cash (income) expense, net
(3,055 ) 536 EBITDA excluding non-cash items $
155,244 $ 68,792 86,452 125.7 EBITDA excluding
non-cash items $ 155,244 $ 68,792 Interest expense, net(2) (31,515
) (13,947 ) Adjustments to derivative instruments recorded in
interest expense(2) 5,353 1,094 Amortization of debt financing
costs(2) 1,615 1,041 Equipment lease receivable, net - 996
Benefit/provision for income taxes, net of changes in deferred
taxes (805 ) (2,047 ) Pension contribution - (310 ) Changes in
working capital (12,876 ) 3,458 Cash provided
by operating activities 117,016 59,077 Changes in working capital
12,876 (3,458 ) Maintenance capital expenditures (6,115 )
(2,825 ) Free cash flow $ 123,777 $ 52,794
70,983 134.5
_________________
(1) Net (loss) income attributable to MIC LLC excludes net loss of
$1.5 million and $206,000 attributable to noncontrolling interests
for the quarters ended March 31, 2015 and 2014, respectively.
(2) Interest expense, net, includes adjustments to
derivative instruments related to interest rate swaps and non-cash
amortization of deferred financing fees. (3) Depreciation -
cost of services includes depreciation expense for our previously
owned district energy business, a component of CP&E segment,
which was reported in cost of services in our consolidated
condensed statements of operations. Depreciation and Depreciation -
cost of services did not include acquisition-related step-up
depreciation expense of $2.0 million for the quarter ended March
31, 2014 in connection with our previous 50% investment in IMTT,
which was reported in equity in earnings and amortization charges
of investee in our consolidated condensed statement of operations.
(4) Amortization of intangibles did not include
acquisition-related step-up amortization expense of $85,000 for the
quarter ended March 31, 2014 in connection with our previous 50%
investment in IMTT, which was reported in equity in earnings and
amortization charges of investee in our consolidated condensed
statement of operations. (5) Equity distributions from
investee in the above table includes distributions we received only
up to our share of the earnings recorded in the calculation for
EBITDA excluding non-cash items.
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION FROM CONSOLIDATED FREE CASH
FLOW TO PROPORTIONATELY
COMBINED FREE CASH FLOW
Quarter Ended March 31,
Change
Favorable/(Unfavorable)
2015 2014 $ %
($ in Thousands) (Unaudited)
Free Cash Flow- Consolidated basis $ 123,777 $ 52,794
70,983 134.5 Equity distributions from investee(1) - (8,127 )
100% of CP&E Free Cash Flow included
in consolidated Free Cash Flow
(2,689 ) (2,775 ) MIC's share of IMTT Free Cash Flow(2) - 21,416
MIC's share of CP&E Free Cash Flow 1,593
1,612 Free Cash Flow- Proportionately Combined basis
$ 122,681 $ 64,920 57,761 89.0
_________________
(1) Equity distributions from investee represent the portion of
distributions received from IMTT that are recorded in cash from
operating activities prior to the IMTT Acquisition on July 16,
2014. (2) Represents our proportionate share of IMTT's Free
Cash Flow prior to the IMTT Acquisition on July 16, 2014.
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF SEGMENT NET INCOME
(LOSS) TO EBITDA EXCLUDING NON-CASH
ITEMS AND CASH FROM OPERATING ACTIVITIES
TO FREE CASH FLOW
IMTT
Quarter Ended March 31, 2015
2014 Change
Favorable/(Unfavorable)
$ $ $ % ($ In Thousands)
(Unaudited) Revenues 138,061 148,078 (10,017 ) (6.8 ) Cost
of services 53,591 63,087 9,496 15.1
Gross
Profit 84,470 84,991 (521 ) (0.6 ) General and administrative
expenses 7,704 7,866 162 2.1 Depreciation and amortization 35,879
18,274 (17,605 ) (96.3 ) Operating income 40,887
58,851 (17,964 ) (30.5 ) Interest expense, net(1) (6,906 ) (7,133 )
227 3.2 Other income, net 632 494 138 27.9 Provision for income
taxes (14,089 ) (21,102 ) 7,013 33.2 Noncontrolling interest (250 )
(129 ) (121 ) (93.8 )
Net income(2) 20,274
30,981 (10,707 ) (34.6 )
Reconciliation of net income to EBITDA
excluding non-cash
items and cash provided by operating
activities to Free Cash
Flow:
Net income(2) 20,274 30,981 Interest expense, net(1) 6,906
7,133 Provision for income taxes 14,089 21,102 Depreciation and
amortization 35,879 18,274 Other non-cash expenses 1,256
1,983 EBITDA excluding non-cash items 78,404
79,473 (1,069 ) (1.3 ) EBITDA excluding non-cash
items 78,404 79,473 Interest expense, net(1) (6,906 ) (7,133 )
Adjustments to derivative instruments recorded in interest
expense(1) (2,379 ) (4,136 ) Amortization of debt financing
costs(1) 113 844 Provision for income taxes, net of changes in
deferred taxes (577 ) (15,109 ) Changes in working capital (11,612
) 5,248 Cash provided by operating activities 57,043 59,187
Changes in working capital 11,612 (5,248 ) Maintenance capital
expenditures (2,471 ) (11,107 ) Free cash flow 66,184
42,832 23,352 54.5 _____________________ (1)
Interest 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.
Atlantic
Aviation
Quarter Ended March 31, 2015 2014
Change
Favorable/(Unfavorable)
$ $ $ % ($ In Thousands)
(Unaudited) Revenues 187,941 193,961 (6,020 ) (3.1 ) Cost of
services 79,826 106,752 26,926 25.2
Gross
Profit 108,115 87,209 20,906 24.0 Selling, general and
administrative expenses 52,009 47,243 (4,766 ) (10.1 ) Depreciation
and amortization 59,715 14,933 (44,782 ) NM Loss on disposal of
assets 545 - (545 ) NM Operating (loss) income (4,154
) 25,033 (29,187 ) (116.6 ) Interest expense, net(1) (13,085 )
(9,565 ) (3,520 ) (36.8 ) Other (expense) income (27 ) 2 (29 ) NM
Benefit (provision) for income taxes 15,639 (4,915 ) 20,554
NM
Net (loss) income(2) (1,627 ) 10,555
(12,182 ) (115.4 )
Reconciliation of net (loss) income to
EBITDA excluding non-
cash items and cash provided by
operating activities to Free
Cash Flow:
Net (loss) income(2) (1,627 ) 10,555 Interest expense,
net(1) 13,085 9,565 (Benefit) provision for income taxes (15,639 )
4,915 Depreciation and amortization 59,715 14,933 Loss on disposal
of assets 453 - Other non-cash expenses 272 68
EBITDA excluding non-cash items 56,259 40,036 16,223
40.5 EBITDA excluding non-cash items 56,259 40,036
Interest expense, net(1) (13,085 ) (9,565 ) Adjustments to
derivative instruments recorded in interest expense(1) 5,066 2,626
Amortization of debt financing costs(1) 808 731 Benefit/provision
for income taxes, net of changes in deferred taxes (355 ) (1,244 )
Changes in working capital (4,206 ) (971 ) Cash provided by
operating activities 44,487 31,613 Changes in working capital 4,206
971 Maintenance capital expenditures (2,623 ) (817 ) Free
cash flow 46,070 31,767 14,303 45.0
_____________________ NM - Not meaningful (1) Interest
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.
Contracted Power and
Energy Quarter
Ended March 31, 2015 2014
Change
Favorable/(Unfavorable)
$ $ $ % ($ In Thousands)
(Unaudited) Service revenues - 8,478 (8,478 ) (100.0 )
Product revenues 11,832 3,658 8,174 NM Finance lease revenues -
747 (747 ) (100.0 ) Total revenues 11,832
12,883 (1,051 ) (8.2 ) Cost of revenue — service(1) -
6,202 6,202 100.0 Cost of revenue — product 2,647 860
(1,787 ) NM Cost of revenue — total 2,647 7,062 4,415 62.5
Gross profit
9,185 5,821 3,364 57.8 Selling, general and administrative expenses
2,638 1,552 (1,086 ) (70.0 ) Depreciation and amortization 7,445
3,728 (3,717 ) (99.7 ) Operating (loss) income (898 )
541 (1,439 ) NM Interest expense, net(2) (6,338 ) (2,645 ) (3,693 )
(139.6 ) Other income 1,116 761 355 46.6 Benefit (provision) for
income taxes 818 (599 ) 1,417 NM Noncontrolling interest 1,763
527 1,236 NM
Net loss (3,539 ) (1,415 )
(2,124 ) (150.1 )
Reconciliation of net loss to EBITDA
excluding non-cash items
and cash provided by operating
activities to Free Cash Flow:
Net loss (3,539 ) (1,415 ) Interest expense, net(2) 6,338
2,645 (Benefit) provision for income taxes (818 ) 599 Depreciation
and amortization (1) 7,445 5,432 Other non-cash income (2,941 )
(765 ) EBITDA excluding non-cash items 6,485 6,496
(11 ) (0.2 ) EBITDA excluding non-cash items 6,485
6,496 Interest expense, net(2) (6,338 ) (2,645 ) Adjustments to
derivative instruments recorded in interest expense(2) 2,527 (1,525
) Amortization of debt financing costs(2) 17 192 Equipment lease
receivable, net - 996 Benefit/provision for income taxes, net of
changes in deferred taxes (2 ) (389 ) Changes in working capital
1,743 12,423 Cash provided by operating activities
4,432 15,548 Changes in working capital (1,743 ) (12,423 )
Maintenance capital expenditures - (350 ) Free cash
flow 2,689 2,775 (86 ) (3.1 )
_____________________ NM - Not meaningful (1) Includes
depreciation expense of $1.7 million related to the district energy
business for the quarter ended March 31, 2014. (2) Interest
expense, net, includes adjustments to derivative instruments and
non-cash amortization of deferred financing fees.
Hawaii Gas
Quarter Ended March 31, 2015
2014 Change
Favorable/(Unfavorable)
$ $ $ % ($ In Thousands)
(Unaudited) Revenues 60,664 69,351 (8,687 ) (12.5 ) Cost of
product sales 36,480 49,379 12,899 26.1
Gross profit 24,184 19,972 4,212 21.1 Selling, general and
administrative expenses 5,356 5,623 267 4.7 Depreciation and
amortization 2,354 2,258 (96 ) (4.3 )
Operating
income 16,474 12,091 4,383 36.3 Interest expense, net(1) (1,943
) (1,787 ) (156 ) (8.7 ) Other expense (144 ) (82 ) (62 ) (75.6 )
Provision for income taxes (5,532 ) (4,027 ) (1,505 ) (37.4 )
Net income(2) 8,855 6,195 2,660
42.9
Reconciliation of net income to EBITDA
excluding non-cash
items and cash provided by operating
activities to Free Cash
Flow:
Net income(2) 8,855 6,195 Interest expense, net(1) 1,943
1,787 Provision for income taxes 5,532 4,027 Depreciation and
amortization 2,354 2,258 Other non-cash (income) expenses (1,830 )
724 EBITDA excluding non-cash items 16,854
14,991 1,863 12.4 EBITDA excluding non-cash
items 16,854 14,991 Interest expense, net(1) (1,943 ) (1,787 )
Adjustments to derivative instruments recorded in interest
expense(1) 139 (7 ) Amortization of debt financing costs(1) 121 118
Provision for income taxes, net of changes in deferred taxes -
(2,711 ) Pension contribution - (310 ) Changes in working capital
2,523 (5,488 ) Cash provided by operating activities 17,694
4,806 Changes in working capital (2,523 ) 5,488 Maintenance capital
expenditures (1,021 ) (1,658 ) Free cash flow 14,150
8,636 5,514 63.8 _____________________ (1)
Interest expense, net, includes adjustments to derivative
instruments related to interest rate swaps 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.
Corporate and
Other
Quarter Ended March 31, 2015 2014
Change
Favorable/(Unfavorable)
$ $ $ % ($ In Thousands)
(Unaudited) Base management fees 16,545 8,994 (7,551 ) (84.0
) Performance fees 148,728 - (148,728 ) NM Selling, general and
administrative expenses 2,946 1,046 (1,900 ) (181.6 )
Operating loss (168,219 ) (10,040 ) (158,179 ) NM Interest
(expense) income, net(1) (3,243 ) 50 (3,293 ) NM Benefit for income
taxes 58,497 1,055 57,442 NM Noncontrolling interest - (321
) 321 100.0
Net loss(2) (112,965 ) (9,256 )
(103,709 ) NM
Reconciliation of net loss to EBITDA
excluding non-cash items
and cash used in operating activities
to Free Cash Flow:
Net loss(2) (112,965 ) (9,256 ) Interest expense (income),
net(1) 3,243 (50 ) Benefit for income taxes (58,497 ) (1,055 ) Base
management fees to be settled/settled in shares 16,545 8,994
Performance fee to be settled in shares 148,728 - Other non-cash
expense 188 509 EBITDA excluding non-cash
items (2,758 ) (858 ) (1,900 ) NM EBITDA excluding non-cash
items (2,758 ) (858 ) Interest (expense) income, net (1) (3,243 )
50 Amortization of debt financing costs(1) 556 - Benefit for income
taxes, net of changes in deferred taxes 129 2,297 Changes in
working capital (1,324 ) (2,506 ) Cash used in operating activities
(6,640 ) (1,017 ) Changes in working capital 1,324 2,506
Free cash flow (5,316 ) 1,489 (6,805 ) NM
_____________________ NM- Not meaningful (1) Interest
(expense) income, net, includes 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.
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF PROPORTIONATELY COMBINED
NET INCOME (LOSS) TO EBITDA
EXCLUDING NON-CASH ITEMS AND CASH FROM
OPERATING ACTIVITIES TO FREE CASH
FLOW
/---------------------------------------------------For the
Quarter Ended March 31,
2015---------------------------------------------------/
($ in Thousands) (Unaudited)
IMTT
100% (1)
Atlantic Aviation
100%
Contracted
Power and
Energy(2)
Hawaii Gas 100%
MIC
Corporate
100%
Proportionately Combined(3)
Contracted
Power and
Energy 100%
Net income (loss) attributable
to MIC LLC 20,274 (1,627) (2,374) 8,855 (112,965)
(87,837)
(3,539) Interest expense, net(4) 6,906 13,085 4,760 1,943 3,243
29,937 6,338 Provision (benefit) for income taxes 14,089
(15,639) (818) 5,532 (58,497)
(55,333) (818) Depreciation
33,115 14,999 5,441 2,042 -
55,597 7,266 Amortization of
intangibles 2,764 44,716 133 312 -
47,925 179 Base
management fee settled/to be settled in shares - - - - 16,545
16,545 - Performance fees to be settled in shares - - - -
148,728
148,728 - Loss on disposal of assets - 453 - - -
453 - Other non-cash expense (income) 1,256 272
(2,691) (1,830) 188
(2,805)
(2,941) EBITDA excluding non-cash items 78,404 56,259
4,451 16,854 (2,758)
153,210 6,485
EBITDA excluding non-cash items 78,404 56,259 4,451 16,854
(2,758)
153,210 6,485 Interest expense, net(4) (6,906)
(13,085) (4,760) (1,943) (3,243)
(29,937) (6,338)
Adjustments to derivative instruments recorded in interest expense,
net(4) (2,379) 5,066 1,891 139 -
4,717 2,527 Amortization of
deferred finance charges(4) 113 808 13 121 556
1,611 17
Provision/benefit for income taxes, net of changes in deferred
taxes (577) (355) (2) - 129
(805) (2) Changes in working
capital (11,612) (4,206) 1,354 2,523
(1,324)
(13,265) 1,743 Cash provided by (used in)
operating activities 57,043 44,487 2,947 17,694 (6,640)
115,531 4,432 Changes in working capital 11,612 4,206
(1,354) (2,523) 1,324
13,265 (1,743) Maintenance capital
expenditures (2,471) (2,623) - (1,021)
-
(6,115) - Free cash flow 66,184 46,070
1,593 14,150 (5,316)
122,681
2,689
/--------------------------------------------------------------For
the Quarter Ended March 31,
2014----------------------------------------------------------------/
($ in Thousands) (Unaudited)
IMTT
50% (5)
Atlantic Aviation
100%
Contracted
Power and
Energy(2)
Hawaii Gas 100%
MIC
Corporate 100%
Proportionately Combined(3)
IMTT 100%
(6)
Contracted
Power and
Energy 100%
Net income (loss)
attributable to MIC LLC 15,491 10,555 525 6,195 (9,256)
23,510 30,981 (1,415) Interest expense (income), net(4)
3,567 9,565 1,731 1,787 (50)
16,600 7,133 2,645 Provision
(benefit) for income taxes 10,551 4,915 429 4,027 (1,055)
18,867 21,102 599 Depreciation 8,905 6,802 3,354 1,946 -
21,007 17,809 5,110 Amortization of intangibles 233 8,131
161 312 -
8,837 465 322 Base management fee settled in
shares - - - - 8,994
8,994 - - Other non-cash expense
(income) 992 68 (2,323) 724 509
(30) 1,983 (765) EBITDA excluding non-cash items
39,737 40,036 3,878 14,991 (858)
97,783 79,473 6,496 EBITDA excluding non-cash
items 39,737 40,036 3,878 14,991 (858)
97,783 79,473 6,496
Interest (expense) income, net(4) (3,567) (9,565) (1,731) (1,787)
50
(16,600) (7,133) (2,645) Adjustments to derivative
instruments recorded in interest expense, net (4) (2,068) 2,626
(763) (7) -
(212) (4,136) (1,525) Amortization of deferred
finance charges(4) 422 731 101 118 -
1,372 844 192 Equipment
lease receivables, net - - 498 - -
498 - 996
Provision/benefit for income taxes, net of changes in deferred
taxes (7,555) (1,244) (196) (2,711) 2,297
(9,408) (15,109)
(389) Pension contribution - - - (310) -
(310) - - Changes
in working capital 2,624 (971) 10,530 (5,488)
(2,506)
4,189 5,248 12,423 Cash
provided by (used in) operating activities 29,594 31,613 12,318
4,806 (1,017)
77,313 59,187 15,548 Changes in working
capital (2,624) 971 (10,530) 5,488 2,506
(4,189) (5,248)
(12,423) Maintenance capital expenditures (5,554) (817)
(175) (1,658) -
(8,204) (11,107)
(350) Free cash flow 21,416 31,767 1,612
8,636 1,489
64,920 42,832 2,775
___________________________ (1) Represents our 100%
ownership interest in IMTT subsequent to July 16, 2014. (2)
Proportionately combined Free Cash Flow for Contracted Power and
Energy is equal to MIC's controlling ownership interest in its
solar and wind power generation businesses and the district energy
business, up to August 21, 2014, date of sale. (3)
Proportionately combined Free Cash Flow is equal to the sum of Free
Cash Flow attributable to MIC's ownership interest in each of its
operating businesses and MIC Corporate. (4) Interest
(expense) income, net, includes adjustments to derivative
instruments related to interest rate swaps and non-cash
amortization of deferred financing fees. (5) Our
proportionate interest in IMTT prior to the acquisition of the
remaining 50% interest on July 16, 2014. (6) Represents 100%
of IMTT as a stand-alone business.
For further information:Macquarie Infrastructure CompanyInvestor
enquiriesJay A. Davis, 212-231-1825Investor RelationsorMacquarie
Infrastructure CompanyMedia enquiriesPaula Chirhart,
212-231-1310Corporate Communications
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