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Macquarie Infrastructure Company LLC Reports Third Quarter 2012 Financial Results, Increases Cash Dividend To $2.75 Annualized

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)
 
 

September 30,

 

December 31,

2012

2011

ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 150,797 $ 22,786

Accounts receivable, less allowance for doubtful accounts of $492 and $445, respectively

64,981 56,458
Inventories 22,370 23,106
Prepaid expenses 5,743 7,338
Deferred income taxes 16,844 19,102
Other   15,684     14,523  
Total current assets 276,419 143,313
Property, equipment, land and leasehold improvements, net 559,096 561,022
Equipment lease receivables 29,258 32,189
Investment in unconsolidated business 125,299 230,401
Goodwill 514,640 516,175
Intangible assets, net 635,611 662,135
Other   22,568     23,398  
Total assets $ 2,162,891   $ 2,168,633  
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 29,498 $ 4,300
Accounts payable 31,908 29,199
Accrued expenses 26,994 23,827
Current portion of long-term debt 97,577 34,535
Fair value of derivative instruments 9,216 39,339
Other   19,428     17,702  
Total current liabilities 214,621 148,902
Long-term debt, net of current portion 1,010,726 1,086,053
Deferred income taxes 192,101 177,262
Fair value of derivative instruments 7,280 15,576
Other   47,282     46,980  
Total liabilities   1,472,010     1,474,773  
Commitments and contingencies - -
Members’ equity:

LLC interests, no par value; 500,000,000 authorized; 46,758,875 LLC interests issued and outstanding at September 30, 2012 and 46,338,225 LLC interests issued and outstanding at December 31, 2011

918,562 951,729
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (19,654 ) (27,412 )
Accumulated deficit   (218,731 )   (242,082 )
Total members’ equity 701,624 703,682
Noncontrolling interests   (10,743 )   (9,822 )
Total equity   690,881     693,860  
Total liabilities and equity $ 2,162,891   $ 2,168,633  
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)
 
  Quarter Ended   Nine Months Ended
September 30, 2012   September 30, 2011 September 30, 2012   September 30, 2011
 
Revenue
Revenue from product sales $ 166,385 $ 159,834 $ 508,468 $ 474,480
Revenue from product sales - utility 35,535 35,088 110,656 105,782
Service revenue 56,214 55,420 160,053 154,590
Financing and equipment lease income   1,119     1,236     3,448     3,784  
Total revenue   259,253     251,578     782,625     738,636  
 
Costs and expenses
Cost of product sales 111,677 107,475 346,778 326,026
Cost of product sales - utility 31,001 29,205 94,497 86,842
Cost of services 15,044 15,860 41,489 40,704
Selling, general and administrative 51,571 50,706 157,301 150,685
Fees to manager - related party 29,353 3,465 39,108 11,253
Depreciation 7,596 10,072 22,704 25,905
Amortization of intangibles 8,800 8,637 25,892 33,400
(Gain) loss on disposal of assets   (1,706 )   518     (1,379 )   1,743  
Total operating expenses   253,336     225,938     726,390     676,558  
 
Operating income 5,917 25,640 56,235 62,078
Other income (expense)
Interest income 110 3 116 104
Interest expense (1) (15,144 ) (14,638 ) (39,076 ) (48,973 )
Equity in earnings and amortization charges of investee 6,989 2,436 23,295 14,068
Other income, net   249     1,200     245     805  
Net (loss) income before incomes taxes (1,879 ) 14,641 40,815 28,082
Benefit (provision) for income taxes   1,758     (5,137 )   (14,698 )   (11,635 )
Net (loss) income $ (121 ) $ 9,504 $ 26,117 $ 16,447
Less: net income attributable to noncontrolling interests   1,758     3,128     2,766     1,396  
Net (loss) income attributable to MIC LLC $ (1,879 ) $ 6,376   $ 23,351   $ 15,051  
 
 
Basic (loss) income per share attributable to MIC LLC interest holders $ (0.04 ) $ 0.14   $ 0.50   $ 0.33  
Weighted average number of shares outstanding: basic   46,684,627     46,088,783     46,524,980     45,908,258  
Diluted (loss) income per share attributable to MIC LLC interest holders $ (0.04 ) $ 0.14   $ 0.50   $ 0.33  
Weighted average number of shares outstanding: diluted   46,684,627     46,109,539     46,545,903     45,934,967  
Cash dividends declared per share $ 0.6875   $ 0.20   $ 1.5125   $ 0.60  

_____________________

(1)

 

Interest expense includes non-cash losses on derivative instruments of $9.4 million and $20.3 million for the quarter and nine months ended September 30, 2012, respectively. For the quarter and nine months ended September 30, 2011, interest expense includes non-cash losses on derivative instruments of $8.7 million and $31.2 million, respectively.

 
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
 
  Nine Months Ended
September 30, 2012   September 30, 2011
 
Operating activities
Net income $ 26,117 $ 16,447

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization of property and equipment 27,740 30,874
Amortization of intangible assets 25,892 33,400
(Gain) loss on disposal of assets (1,803 ) 949
Equity in earnings and amortization charges of investee (23,295 ) (14,068 )
Equity distributions from investees 77,920 -
Amortization of debt financing costs 3,290 3,074
Adjustments to derivative instruments (23,680 ) (9,573 )
Base management fees settled in LLC interests 15,599 11,253
Performance fees settled in LLC interests 23,509 -
Equipment lease receivable, net 2,595 2,271
Deferred rent 314 272
Deferred taxes 10,459 8,680
Other non-cash expenses, net 2,340 2,305
Changes in other assets and liabilities:
Accounts receivable (8,882 ) (11,380 )
Inventories 2,232 (791 )
Prepaid expenses and other current assets 395 (3,450 )
Due to manager - related party 68 1
Accounts payable and accrued expenses 4,622 (1,455 )
Income taxes payable 727 548
Other, net   (1,576 )   (2,192 )
Net cash provided by operating activities 164,583 67,165
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired - (23,068 )
Proceeds from sale of assets 5,625 16,999
Purchases of property and equipment (25,443 ) (23,496 )
Investment in capital leased assets - (24 )
Return of investment in unconsolidated business 50,899 -
Other   72     52  
Net cash provided by (used in) investing activities 31,153 (29,537 )
 
Financing activities
Proceeds from long-term debt 191,142 13,406
Net proceeds on line of credit facilities - 4,400
Dividends paid to holders of LLC interests (47,716 ) (18,376 )
Distributions paid to noncontrolling interests (4,286 ) (5,123 )
Payment of long-term debt (203,428 ) (34,570 )
Debt financing costs paid (2,815 ) (4 )
Payment of notes and capital lease obligations   (622 )   (107 )
Net cash used in financing activities   (67,725 )   (40,374 )
 
Net change in cash and cash equivalents 128,011 (2,746 )
Cash and cash equivalents, beginning of period   22,786     24,563  
Cash and cash equivalents, end of period $ 150,797   $ 21,817  
 
Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued purchases of property and equipment $ 1,742   $ 2,226  
Acquisition of equipment through capital leases $ 2,624   $ -  
Issuance of LLC interests to manager for base management fees $ 13,977   $ 11,002  
Issuance of LLC interests to independent directors $ 571   $ 450  
Taxes paid $ 3,734   $ 2,382  
Interest paid $ 50,863   $ 55,178  
 

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS – MD&A

 
 

Quarter Ended

 

Change

 

Nine Months Ended

 

Change

September 30,

Favorable/(Unfavorable)

September 30,

Favorable/(Unfavorable)

2012   2011 $   % 2012   2011 $   %
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 166,385 $ 159,834 6,551 4.1 $ 508,468 $ 474,480 33,988 7.2
Revenue from product sales - utility 35,535 35,088 447 1.3 110,656 105,782 4,874 4.6
Service revenue 56,214 55,420 794 1.4 160,053 154,590 5,463 3.5
Financing and equipment lease income   1,119     1,236   (117 ) (9.5 )   3,448     3,784   (336 ) (8.9 )
Total revenue   259,253     251,578   7,675   3.1   782,625     738,636   43,989   6.0
Costs and expenses
Cost of product sales 111,677 107,475 (4,202 ) (3.9 ) 346,778 326,026 (20,752 ) (6.4 )
Cost of product sales - utility 31,001 29,205 (1,796 ) (6.1 ) 94,497 86,842 (7,655 ) (8.8 )
Cost of services   15,044     15,860   816   5.1   41,489     40,704   (785 ) (1.9 )
Gross profit 101,531 99,038 2,493 2.5 299,861 285,064 14,797 5.2
Selling, general and administrative 51,571 50,706 (865 ) (1.7 ) 157,301 150,685 (6,616 ) (4.4 )
Fees to manager - related party 29,353 3,465 (25,888 ) NM 39,108 11,253 (27,855 ) NM
Depreciation 7,596 10,072 2,476 24.6 22,704 25,905 3,201 12.4
Amortization of intangibles 8,800 8,637 (163 ) (1.9 ) 25,892 33,400 7,508 22.5
(Gain) loss on disposal of assets   (1,706 )   518   2,224   NM   (1,379 )   1,743   3,122   179.1
Total operating expenses   95,614     73,398   (22,216 ) (30.3 )   243,626     222,986   (20,640 ) (9.3 )
Operating income 5,917 25,640 (19,723 ) (76.9 ) 56,235 62,078 (5,843 ) (9.4 )
Other income (expense)
Interest income 110 3 107 NM 116 104 12 11.5
Interest expense (1) (15,144 ) (14,638 ) (506 ) (3.5 ) (39,076 ) (48,973 ) 9,897 20.2
Equity in earnings and amortization charges of investee 6,989 2,436 4,553 186.9 23,295 14,068 9,227 65.6
Other income, net   249     1,200   (951 ) (79.3 )   245     805   (560 ) (69.6 )
Net (loss) income before income taxes (1,879 ) 14,641 (16,520 ) (112.8 ) 40,815 28,082 12,733 45.3
Benefit (provision) for income taxes   1,758     (5,137 ) 6,895   134.2   (14,698 )   (11,635 ) (3,063 ) (26.3 )
Net (loss) income $ (121 ) $ 9,504 (9,625 ) (101.3 ) $ 26,117 $ 16,447 9,670 58.8
Less: net income attributable to noncontrolling interests   1,758     3,128   1,370   43.8   2,766     1,396   (1,370 ) (98.1 )
Net (loss) income attributable to MIC LLC $ (1,879 ) $ 6,376   (8,255 ) (129.5 ) $ 23,351   $ 15,051   8,300   55.1

______________________

NM - Not meaningful

(1)

 

Interest expense includes non-cash losses on derivative instruments of $9.4 million and $20.3 million for the quarter and nine months ended September 30, 2012, respectively. For the quarter and nine months ended September 30, 2011, interest expense includes non-cash losses on derivative instruments of $8.7 million and $31.2 million, 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

 

Change

 

Nine Months Ended

 

Change

September 30,

Favorable/(Unfavorable)

September 30,

Favorable/(Unfavorable)

2012   2011 $   % 2012   2011 $   %

($ In Thousands) (Unaudited)

 

Net (loss) income attributable to MIC LLC (1) $ (1,879 ) $ 6,376 $ 23,351 $ 15,051
Interest expense, net (2) 15,034 14,635 38,960 48,869
(Benefit) provision for income taxes (1,758 ) 5,137 14,698 11,635
Depreciation (3) 7,596 10,072 22,704 25,905
Depreciation - cost of services (3) 1,685 1,664 5,036 4,969
Amortization of intangibles (4) 8,800 8,637 25,892 33,400
(Gain) loss on disposal of assets (1,850 ) (204 ) (1,803 ) 949
Equity in earnings and amortization charges of investee (5) - (2,436 ) - (14,068 )
Base management fees settled/to be settled in LLC interests 5,844 3,465 15,599 11,253
Performance fees to be settled in LLC interests 23,509 - 23,509 -
Other non-cash expense, net   2,695     4,286         5,420     3,973      
EBITDA excluding non-cash items $ 59,676   $ 51,632   8,044   15.6 $ 173,366   $ 141,936   31,430   22.1
 
EBITDA excluding non-cash items $ 59,676 $ 51,632 $ 173,366 $ 141,936
Interest expense, net (2) (15,034 ) (14,635 ) (38,960 ) (48,869 )
Interest rate swap breakage fees - Hawaii Gas (2) (8,701 ) - (8,701 ) -
Interest rate swap breakage fees - Atlantic Aviation (2) (95 ) (515 ) (595 ) (2,247 )
Adjustments to derivative instruments recorded in interest expense (2) (1,770 ) (4,093 ) (14,384 ) (7,326 )
Amortization of debt financing costs (2) 1,347 1,014 3,290 3,074

Cash distributions received in excess of equity in earnings and amortization charges of investee (6)

- - 54,625 -
Equipment lease receivables, net 885 778 2,595 2,271
Benefit/provision for income taxes, net of changes in deferred taxes (1,913 ) (1,827 ) (4,239 ) (2,955 )
Changes in working capital   5,357     (6,476 )   (2,414 )   (18,719 )
Cash provided by operating activities 39,752 25,878 164,583 67,165
Changes in working capital (5,357 ) 6,476 2,414 18,719
Maintenance capital expenditures   (5,371 )   (5,197 )       (13,832 )   (12,271 )    
Free cash flow $ 29,024   $ 27,157   1,867   6.9 $ 153,165   $ 73,613   79,552   108.1

___________________

(1)

 

Net (loss) income attributable to MIC LLC excludes net income attributable to noncontrolling interests of $1.8 million and $2.8 million for the quarter and nine months ended September 30, 2012, respectively, and net income attributable to noncontrolling interests of $3.1 million and $1.4 million for the quarter and nine months ended September 30, 2011, respectively.

(2)

Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees at Hawaii Gas and Atlantic Aviation.

(3)

Depreciation - cost of services includes depreciation expense for District Energy, which is reported in cost of services in our consolidated condensed statements of operations. Depreciation and Depreciation - cost of services does not include acquisition- related step-up depreciation expense of $2.0 million and $5.9 million for the quarter and nine months ended September 30, 2012, respectively, and $2.0 million and $5.5 million for the quarter and nine months ended September 30, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.

(4)

Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $256,000 for the quarter and nine months ended September 30, 2012, respectively, and $85,000 and $520,000 for the quarter and nine months ended September 30, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.

(5)

Equity in earnings and amortization charges of investee in the above table includes our 50% share of IMTT's earnings, offset by the distributions we received only up to our share of the earnings recorded in the calculation for EBITDA excluding non-cash items. For the quarter and nine months ended September 30, 2012, we recognized equity in earnings and amortization charges of investee income of $7.0 million and $23.3 million, respectively, in the consolidated condensed statement of operations, which was fully offset by the cash distributions received during the nine months ended September 30, 2012.

(6)

Cash distributions received in excess of equity in earnings and amortization charges of investee in the above table is the excess cumulative distributions received to the cumulative earnings recorded in equity in earnings and amortization charges of investee, since our investment in IMTT, adjusted for the current periods equity in earnings and amortization charges of investee in the calculation from net (loss) income attributable to MIC LLC to EBITDA excluding non-cash items above. The cumulative allocation of the $128.8 million distributions received during the nine months ended September 30, 2012 was $77.9 million recorded in net cash provided by operating activities and $50.9 million recorded in net cash provided by investing activities, as a return of investment, on the consolidated condensed statements of cash flows.

 

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

       

Nine Months Ended

   

September 30,

September 30,

 

Change

 

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 111,532 102,794 8,738 8.5 332,316 310,245 22,071 7.1
Environmental response revenue 7,069   11,775   (4,706 ) (40.0 ) 18,052   22,105   (4,053 ) (18.3 )
Total revenue 118,601 114,569 4,032 3.5 350,368 332,350 18,018 5.4
Costs and expenses
Terminal operating costs 49,509 46,289 (3,220 ) (7.0 ) 141,886 140,459 (1,427 ) (1.0 )
Environmental response operating costs 5,913   7,288   1,375   18.9 15,515   16,031   516   3.2
Total operating costs 55,422 53,577 (1,845 ) (3.4 ) 157,401 156,490 (911 ) (0.6 )
Terminal gross profit 62,023 56,505 5,518 9.8 190,430 169,786 20,644 12.2
Environmental response gross profit 1,156   4,487   (3,331 ) (74.2 ) 2,537   6,074   (3,537 ) (58.2 )
Gross profit 63,179 60,992 2,187 3.6 192,967 175,860 17,107 9.7
General and administrative expenses 7,605 7,995 390 4.9 22,405 23,575 1,170 5.0
Depreciation and amortization 16,992   16,052   (940 ) (5.9 ) 51,016   48,087   (2,929 ) (6.1 )
Operating income 38,582 36,945 1,637 4.4 119,546 104,198 15,348 14.7
Interest expense, net (1) (10,533 ) (24,319 ) 13,786 56.7 (28,914 ) (45,313 ) 16,399 36.2
Other income 417 94 323 NM 1,680 1,214 466 38.4
Provision for income taxes (11,631 ) (5,537 ) (6,094 ) (110.1 ) (37,867 ) (24,984 ) (12,883 ) (51.6 )
Noncontrolling interest (451 ) 94   (545 ) NM (636 ) 185   (821 ) NM
Net income 16,384   7,277   9,107   125.1 53,809   35,300   18,509   52.4
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 16,384 7,277 53,809 35,300
Interest expense, net (1) 10,533 24,319 28,914 45,313
Provision for income taxes 11,631 5,537 37,867 24,984
Depreciation and amortization 16,992 16,052 51,016 48,087
Other non-cash expense (income) 369   (102 )   647   (156 )  
EBITDA excluding non-cash items 55,909   53,083   2,826   5.3 172,253   153,528   18,725   12.2
 
EBITDA excluding non-cash items 55,909 53,083 172,253 153,528
Interest expense, net (1) (10,533 ) (24,319 ) (28,914 ) (45,313 )
Adjustments to derivative instruments recorded in interest expense (1) 461 15,345 98 18,653
Amortization of debt financing costs (1) 805 808 2,419 2,426
Provision for income taxes, net of changes in deferred taxes (5,962 ) (6,181 ) (14,565 ) (13,765 )
Changes in working capital 5,382   (17,621 ) 17,680   (30,468 )
Cash provided by operating activities 46,062 21,115 148,971 85,061
Changes in working capital (5,382 ) 17,621 (17,680 ) 30,468
Maintenance capital expenditures (15,303 ) (14,539 )   (30,756 ) (36,058 )  
Free cash flow 25,377   24,197   1,180   4.9 100,535   79,471   21,064   26.5
_____________________
NM - Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
 
 

Hawaii Gas

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 26,894 28,056 (1,162 ) (4.1 ) 88,271 82,342 5,929 7.2
Cost of revenue - non-utility 11,393   15,041   3,648   24.3 40,520   45,413   4,893   10.8
Contribution margin - non-utility 15,501 13,015 2,486 19.1 47,751 36,929 10,822 29.3
Revenue - utility 35,535 35,088 447 1.3 110,656 105,782 4,874 4.6
Cost of revenue - utility 26,202   25,547   (655 ) (2.6 ) 81,568   76,758   (4,810 ) (6.3 )
Contribution margin - utility 9,333 9,541 (208 ) (2.2 ) 29,088 29,024 64 0.2
Total contribution margin 24,834 22,556 2,278 10.1 76,839 65,953 10,886 16.5
Production 2,819 1,867 (952 ) (51.0 ) 6,952 5,321 (1,631 ) (30.7 )
Transmission and distribution 5,339   5,009   (330 ) (6.6 ) 16,436   14,428   (2,008 ) (13.9 )
Gross profit 16,676 15,680 996 6.4 53,451 46,204 7,247 15.7
Selling, general and administrative expenses 4,760 4,414 (346 ) (7.8 ) 14,575 12,672 (1,903 ) (15.0 )
Depreciation and amortization 1,965   1,843   (122 ) (6.6 ) 5,808   5,418   (390 ) (7.2 )
Operating income 9,951 9,423 528 5.6 33,068 28,114 4,954 17.6
Interest expense, net (1) (5,695 ) (2,415 ) (3,280 ) (135.8 ) (9,102 ) (7,912 ) (1,190 ) (15.0 )
Other (expense) income (153 ) 70 (223 ) NM (285 ) (209 ) (76 ) (36.4 )
Provision for income taxes (1,631 ) (2,689 ) 1,058   39.3 (9,343 ) (7,901 ) (1,442 ) (18.3 )
Net income (2) 2,472   4,389   (1,917 ) (43.7 ) 14,338   12,092   2,246   18.6
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income (2) 2,472 4,389 14,338 12,092
Interest expense, net (1) 5,695 2,415 9,102 7,912
Provision for income taxes 1,631 2,689 9,343 7,901
Depreciation and amortization 1,965 1,843 5,808 5,418
Other non-cash expenses 869   736     2,671   1,918    
EBITDA excluding non-cash items 12,632   12,072   560   4.6 41,262   35,241   6,021   17.1
 
EBITDA excluding non-cash items 12,632 12,072 41,262 35,241
Interest expense, net (1) (5,695 ) (2,415 ) (9,102 ) (7,912 )
Interest rate swap breakage fees (1) (8,701 ) - (8,701 ) -
Adjustments to derivative instruments recorded in interest expense (1) 4,386 35 3,089 932
Amortization of debt financing costs (1) 507 119 746 358
Provision for income taxes, net of changes in deferred taxes (1,513 ) (562 ) (5,888 ) (4,107 )
Changes in working capital 4,822   (1,030 ) 1,117   (7,479 )
Cash provided by operating activities 6,438 8,219 22,523 17,033
Changes in working capital (4,822 ) 1,030 (1,117 ) 7,479
Maintenance capital expenditures (2,056 ) (2,368 )   (5,241 ) (6,288 )  
Free cash flow (440 ) 6,881   (7,321 ) (106.4 ) 16,165   18,224   (2,059 ) (11.3 )
_____________________
NM - Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.
 
 

District Energy

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Cooling capacity revenue 5,613 5,523 90 1.6 16,675 16,282 393 2.4
Cooling consumption revenue 10,490 11,091 (601 ) (5.4 ) 20,853 19,445 1,408 7.2
Other revenue 702 688 14 2.0 2,023 2,281 (258 ) (11.3 )
Finance lease revenue 1,119   1,236   (117 ) (9.5 ) 3,448   3,784   (336 ) (8.9 )
Total revenue 17,924   18,538   (614 ) (3.3 ) 42,999   41,792   1,207   2.9
Direct expenses — electricity 5,901 6,697 796 11.9 12,587 12,318 (269 ) (2.2 )
Direct expenses — other (1) 5,237   5,056   (181 ) (3.6 ) 14,866   15,246   380   2.5
Direct expenses — total 11,138 11,753 615 5.2 27,453 27,564 111 0.4
Gross profit 6,786 6,785 1 0.0 15,546 14,228 1,318 9.3
Selling, general and administrative expenses 823 764 (59 ) (7.7 ) 2,675 2,449 (226 ) (9.2 )
Amortization of intangibles 345   345   -   - 1,027   1,023   (4 ) (0.4 )
Operating income 5,618 5,676 (58 ) (1.0 ) 11,844 10,756 1,088 10.1
Interest expense, net (2) (2,065 ) (4,566 ) 2,501 54.8 (6,521 ) (11,750 ) 5,229 44.5
Other income 436 1,201 (765 ) (63.7 ) 568 1,312 (744 ) (56.7 )
(Provision) benefit for income taxes (1,560 ) (865 ) (695 ) (80.3 ) (2,171 ) 132 (2,303 ) NM
Noncontrolling interest (203 ) (212 ) 9   4.2 (622 ) (638 ) 16   2.5
Net income (loss) 2,226   1,234   992   80.4 3,098   (188 ) 3,286   NM
 

Reconciliation of net income (loss) to EBITDA excluding non-cash items:

Net income (loss) 2,226 1,234 3,098 (188 )
Interest expense, net (2) 2,065 4,566 6,521 11,750
Provision (benefit) for income taxes 1,560 865 2,171 (132 )
Depreciation (1) 1,685 1,664 5,036 4,969
Amortization of intangibles 345 345 1,027 1,023
Other non-cash expenses 156   313     425   651    
EBITDA excluding non-cash items 8,037   8,987   (950 ) (10.6 ) 18,278   18,073   205   1.1
 
EBITDA excluding non-cash items 8,037 8,987 18,278 18,073
Interest expense, net (2) (2,065 ) (4,566 ) (6,521 ) (11,750 )
Adjustments to derivative instruments recorded in interest expense (2) (589 ) 1,865 (1,458 ) 3,808
Amortization of debt financing costs (2) 177 171 522 511
Equipment lease receivable, net 885 778 2,595 2,271
Provision/benefit for income taxes, net of changes in deferred taxes (619 ) (1,277 ) (892 ) (1,092 )
Changes in working capital 419   (789 ) (1,453 ) (608 )
Cash provided by operating activities 6,245 5,169 11,071 11,213
Changes in working capital (419 ) 789 1,453 608
Maintenance capital expenditures (478 ) (164 )   (642 ) (289 )  
Free cash flow 5,348   5,794   (446 ) (7.7 ) 11,882   11,532   350   3.0
_____________________

 

NM - Not meaningful

(1) Includes depreciation expense of $1.7 million and $5.0 million for the quarter and nine months ended September 30, 2012, respectively, and $1.7 million and $5.0 million for the quarter and nine months ended September 30, 2011, respectively.

(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.

 
 

Atlantic Aviation

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

    2012 2011

Favorable/(Unfavorable)

$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 139,491 131,778 7,713 5.9 420,197 392,138 28,059 7.2
Non-fuel revenue 39,409   38,118   1,291   3.4 120,502   116,582   3,920   3.4
Total revenue 178,900 169,896 9,004 5.3 540,699 508,720 31,979 6.3
Cost of revenue
Cost of revenue-fuel 96,925 89,217 (7,708 ) (8.6 ) 295,800 270,949 (24,851 ) (9.2 )
Cost of revenue-non-fuel 3,906   4,108   202   4.9 14,036   13,141   (895 ) (6.8 )
Total cost of revenue 100,831 93,325 (7,506 ) (8.0 ) 309,836 284,090 (25,746 ) (9.1 )
Fuel gross profit 42,566 42,561 5 0.0 124,397 121,189 3,208 2.6
Non-fuel gross profit 35,503   34,010   1,493   4.4 106,466   103,441   3,025   2.9
Gross profit 78,069   76,571   1,498   2.0 230,863   224,630   6,233   2.8
Selling, general and administrative expenses 43,983 43,430 (553 ) (1.3 ) 130,830 130,105 (725 ) (0.6 )
Depreciation and amortization 14,086 16,521 2,435 14.7 41,761 52,864 11,103 21.0
(Gain) loss on disposal of assets (1,706 ) 518   2,224   NM (1,379 ) 1,743   3,122   179.1
Operating income 21,706 16,102 5,604 34.8 59,651 39,918 19,733 49.4
Interest expense, net (1) (7,381 ) (7,655 ) 274 3.6 (23,448 ) (29,209 ) 5,761 19.7
Other (expense) income (10 ) (18 ) 8 44.4 38 (195 ) 233 119.5
Provision for income taxes (6,531 ) (3,396 ) (3,135 ) (92.3 ) (15,815 ) (4,236 ) (11,579 ) NM
Net income (2) 7,784   5,033   2,751   54.7 20,426   6,278   14,148   NM
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income (2) 7,784 5,033 20,426 6,278
Interest expense, net (1) 7,381 7,655 23,448 29,209
Provision for income taxes 6,531 3,396 15,815 4,236
Depreciation and amortization 14,086 16,521 41,761 52,864
(Gain) loss on disposal of assets (1,850 ) (204 ) (1,803 ) 949
Other non-cash (income) expenses (39 ) 207     (268 ) 310    
EBITDA excluding non-cash items 33,893   32,608   1,285   3.9 99,379   93,846   5,533   5.9
 
EBITDA excluding non-cash items 33,893 32,608 99,379 93,846
Interest expense, net (1) (7,381 ) (7,655 ) (23,448 ) (29,209 )
Interest rate swap breakage fees (1) (95 ) (515 ) (595 ) (2,247 )
Adjustments to derivative instruments recorded in interest expense (1) (5,567 ) (5,993 ) (16,015 ) (12,066 )
Amortization of debt financing costs (1) 663 724 2,022 2,205
Provision for income taxes, net of changes in deferred taxes (997 ) (326 ) (1,972 ) (942 )
Changes in working capital 1,904   (4,620 ) 2,549   (7,482 )
Cash provided by operating activities 22,420 14,223 61,920 44,105
Changes in working capital (1,904 ) 4,620 (2,549 ) 7,482
Maintenance capital expenditures (2,837 ) (2,665 )   (7,949 ) (5,694 )  
Free cash flow 17,679   16,178   1,501   9.3 51,422   45,893   5,529   12.0
_____________________
NM - Not meaningful

(1) Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation at the MIC Inc. level.
 

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 September 30, 2012

($ in Thousands) (Unaudited) IMTT 50%  

Hawaii Gas

  District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined (1)       IMTT 100%   District Energy 100%
           
Net income (loss) attributable to MIC LLC 8,192 2,472 1,113 7,784 (21,350 ) (1,789 ) 16,384 2,226
Interest expense (income), net (2) 5,267 5,695 1,033 7,381 (107 ) 19,268 10,533 2,065
Provision (benefit) for income taxes 5,816 1,631 780 6,531 (11,480 ) 3,278 11,631 1,560
Depreciation 8,181 1,759 843 5,837 - 16,619 16,361 1,685
Amortization of intangibles 316 206 173 8,249 - 8,943 631 345
Gain on disposal of assets - - - (1,850 ) - (1,850 ) - -
Base management fee paid in LLC interests - - - - 5,844 5,844 - -
Performance fee paid in LLC interests - - - - 23,509 23,509 - -
Other non-cash expense (income) 185     869     78     (39 )   1,709     2,802   369     156  
EBITDA excluding non-cash items 27,955     12,632     4,019     33,893     (1,875 )   76,624   55,909     8,037  
 
EBITDA excluding non-cash items 27,955 12,632 4,019 33,893 (1,875 ) 76,624 55,909 8,037
Interest (expense) income, net (2) (5,267 ) (5,695 ) (1,033 ) (7,381 ) 107 (19,268 ) (10,533 ) (2,065 )
Interest rate swap breakage fees - Hawaii Gas (2) - (8,701 ) - - - (8,701 ) - -
Interest rate swap breakage fees - Atlantic Aviation (2) - - - (95 ) - (95 ) - -
Adjustment to derivative instruments recorded in interest expense (2) 231 4,386 (295 ) (5,567 ) - (1,245 ) 461 (589 )
Amortization of deferred finance charges (2) 403 507 89 663 - 1,661 805 177
Equipment lease receivables, net - - 443 - - 443 - 885
Provision/benefit for income taxes, net of changes in deferred taxes (2,981 ) (1,513 ) (310 ) (997 ) 1,216 (4,585 ) (5,962 ) (619 )
Changes in working capital 2,691     4,822     210     1,904     (1,788 )   7,839   5,382     419  
Cash provided by (used in) operating activities 23,031 6,438 3,123 22,420 (2,340 ) 52,672 46,062 6,245
Changes in working capital (2,691 ) (4,822 ) (210 ) (1,904 ) 1,788 (7,839 ) (5,382 ) (419 )
Maintenance capital expenditures (7,652 )   (2,056 )   (239 )   (2,837 )   -     (12,784 ) (15,303 )   (478 )
 
Free cash flow 12,689     (440 )   2,675     17,679     (552 )   32,050   25,377     5,348  
 
 

For the Quarter Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%  

Hawaii

Gas

  District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined (1) IMTT 100%   District Energy 100%
 
Net income (loss) attributable to MIC LLC 3,639 4,389 617 5,033 (6,716 ) 6,962 7,277 1,234
Interest expense, net (2) 12,160 2,415 2,283 7,655 (1 ) 24,512 24,319 4,566
Provision (benefit) for income taxes 2,769 2,689 432 3,396 (1,813 ) 7,474 5,537 865
Depreciation 7,670 1,638 832 8,434 - 18,574 15,339 1,664
Amortization of intangibles 357 205 173 8,087 - 8,821 713 345
Gain on sale of assets - - - (204 ) - (204 ) - -
Base management fee paid in LLC interests - - - - 3,465 3,465 - -
Other non-cash (income) expense (51 )   736     157     207     3,030     4,079   (102 )   313  
EBITDA excluding non-cash items 26,542     12,072     4,494     32,608     (2,035 )   73,681   53,083     8,987  
 
EBITDA excluding non-cash items 26,542 12,072 4,494 32,608 (2,035 ) 73,681 53,083 8,987
Interest expense, net (2) (12,160 ) (2,415 ) (2,283 ) (7,655 ) 1 (24,512 ) (24,319 ) (4,566 )
Interest rate swap breakage fees - Atlantic Aviation (2) - - - (515 ) - (515 ) - -
Adjustment to derivative instruments recorded in interest expense (2) 7,673 35 933 (5,993 ) - 2,647 15,345 1,865
Amortization of deferred finance charges (2) 404 119 86 724 - 1,333 808 171
Equipment lease receivables, net - - 389 - - 389 - 778
Provision/benefit for income taxes, net of changes in deferred taxes (3,091 ) (562 ) (639 ) (326 ) 338 (4,279 ) (6,181 ) (1,277 )
Changes in working capital (8,811 )   (1,030 )   (395 )   (4,620 )   (37 )   (14,892 ) (17,621 )   (789 )
Cash provided by (used in) operating activities 10,558 8,219 2,585 14,223 (1,733 ) 33,851 21,115 5,169
Changes in working capital 8,811 1,030 395 4,620 37 14,892 17,621 789
Maintenance capital expenditures (7,270 )   (2,368 )   (82 )   (2,665 )   -     (12,385 ) (14,539 )   (164 )
 
Free cash flow 12,099     6,881     2,898     16,178     (1,696 )   36,359   24,197     5,794  
___________________________
(1) 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.
(2) Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees at Hawaii Gas and Atlantic Aviation.
 
 

For the Nine Months Ended September 30, 2012

($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas  

District Energy 50.01%

  Atlantic Aviation   MIC Corporate   Proportionately Combined (1)       IMTT 100%   District Energy 100%
           
Net income (loss) attributable to MIC LLC 26,905 14,338 1,549 20,426 (37,806 ) 25,412 53,809 3,098
Interest expense (income), net (2) 14,457 9,102 3,261 23,448 (111 ) 50,157 28,914 6,521
Provision (benefit) for income taxes 18,934 9,343 1,086 15,815 (12,631 ) 32,546 37,867 2,171
Depreciation 24,437 5,191 2,519 17,513 - 49,660 48,874 5,036
Amortization of intangibles 1,071 617 514 24,248 - 26,450 2,142 1,027

Gain on disposal of assets

- - - (1,803 ) (1,803 ) - -
Base management fee paid in LLC interests - - - - 15,599 15,599 - -
Performance fee paid in LLC interests - - - - 23,509 23,509 - -
Other non-cash expense (income) 324     2,671     213     (268 )   2,592     5,531   647     425  
EBITDA excluding non-cash items 86,127     41,262     9,141     99,379     (8,848 )   227,060   172,253     18,278  
 
EBITDA excluding non-cash items 86,127 41,262 9,141 99,379 (8,848 ) 227,060 172,253 18,278
Interest (expense) income, net (2) (14,457 ) (9,102 ) (3,261 ) (23,448 ) 111 (50,157 ) (28,914 ) (6,521 )
Interest rate swap breakage fees - Hawaii Gas (2) - (8,701 ) - - - (8,701 ) - -
Interest rate swap breakage fees - Atlantic Aviation (2) - - - (595 ) - (595 ) - -
Adjustment to derivative instruments recorded in interest expense (2) 49 3,089 (729 ) (16,015 ) (13,606 ) 98 (1,458 )
Amortization of deferred finance charges (2) 1,210 746 261 2,022 - 4,239 2,419 522
Equipment lease receivables, net - - 1,298 - - 1,298 - 2,595
Provision/benefit for income taxes, net of changes in deferred taxes (7,283 ) (5,888 ) (446 ) (1,972 ) 4,513 (11,076 ) (14,565 ) (892 )
Changes in working capital 8,840     1,117     (727 )   2,549     (4,627 )   7,152   17,680     (1,453 )
Cash provided by (used in) operating activities 74,486 22,523 5,537 61,920 (8,851 ) 155,614 148,971 11,071
Changes in working capital (8,840 ) (1,117 ) 727 (2,549 ) 4,627 (7,152 ) (17,680 ) 1,453
Maintenance capital expenditures (15,378 )   (5,241 )   (321 )   (7,949 )   -     (28,889 ) (30,756 )   (642 )
 
Free cash flow 50,268     16,165     5,942     51,422     (4,224 )   119,573   100,535     11,882  
 
 

For the Nine Months Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined (1) IMTT 100%   District Energy 100%
 
Net income (loss) attributable to MIC LLC 17,650 12,092 (94 ) 6,278 (17,199 ) 18,727 35,300 (188 )
Interest expense (income), net (2) 22,657 7,912 5,876 29,209 (2 ) 65,652 45,313 11,750
Provision (benefit) for income taxes 12,492 7,901 (66 ) 4,236 (370 ) 24,193 24,984 (132 )
Depreciation 23,157 4,801 2,485 21,104 - 51,547 46,314 4,969
Amortization of intangibles 887 617 512 31,760 - 33,775 1,773 1,023

Loss on disposal of assets

- - - 949 - 949 - -
Base management fee paid in LLC interests - - - - 11,253 11,253 - -
Other non-cash (income) expense (78 )   1,918     326     310     1,094     3,570   (156 )   651  
EBITDA excluding non-cash items 76,764     35,241     9,038     93,846     (5,224 )   209,665   153,528     18,073  
 
EBITDA excluding non-cash items 76,764 35,241 9,038 93,846 (5,224 ) 209,665 153,528 18,073
Interest (expense) income, net (2) (22,657 ) (7,912 ) (5,876 ) (29,209 ) 2 (65,652 ) (45,313 ) (11,750 )
Interest rate swap breakage fees - Atlantic Aviation (2) - - - (2,247 ) - (2,247 ) - -
Adjustment to derivative instruments recorded in interest expense (2) 9,327 932 1,904 (12,066 ) - 97 18,653 3,808
Amortization of deferred finance charges (2) 1,213 358 256 2,205 - 4,032 2,426 511
Equipment lease receivables, net - - 1,136 - - 1,136 - 2,271
Provision/benefit for income taxes, net of changes in deferred taxes (6,883 ) (4,107 ) (546 ) (942 ) 3,186 (9,292 ) (13,765 ) (1,092 )
Changes in working capital (15,234 )   (7,479 )   (304 )   (7,482 )   (3,150 )   (33,649 ) (30,468 )   (608 )
Cash provided by (used in) operating activities 42,531 17,033 5,608 44,105 (5,186 ) 104,090 85,061 11,213
Changes in working capital 15,234 7,479 304 7,482 3,150 33,649 30,468 608
Maintenance capital expenditures (18,029 )   (6,288 )   (145 )   (5,694 )   -     (30,156 ) (36,058 )   (289 )
 
Free cash flow 39,736     18,224     5,767     45,893     (2,036 )   107,584   79,471     11,532  
 
___________________________
(1) 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.
(2) Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees at Hawaii Gas and Atlantic Aviation.




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