Macquarie Infrastructure Company LLC Reports Second Quarter 2012 Financial Results, Increases Cash Dividend To $2.50 Per Year

Macquarie Infrastructure Company LLC (NYSE: MIC) reported financial results for the second quarter of 2012 including an announcement that the Company’s Board approved an increase in its quarterly cash dividend from $0.20 per share for the first quarter of 2012 to $0.625 per share for the second quarter of 2012 or $2.50 per share annualized.

MIC’s businesses generated proportionately combined free cash flow of $43.5 million or $0.93 per share during the period, compared with $34.2 million or $0.75 per share in the second quarter of 2011. For the six months ended June 30, 2012 proportionately combined free cash flow increased 21.3% to $1.88 per share compared with $1.55 per share for the six months ended June 30, 2011.

The increase in the Company’s dividend was anticipated. Management had indicated in May that with the receipt of $110.6 million in distributions from its investment in International-Matex Tank Terminals the dividend would be increased to “at least $2.00” per share annually. The second quarter dividend will be payable on August 16, 2012 to shareholders of record on August 13, 2012.

“I am extremely pleased with our Board’s decision to increase the quarterly cash dividend to an annualized $2.50 per share,” said James Hooke, Chief Executive Officer of Macquarie Infrastructure Company LLC, “and I am pleased to be able to back that decision by increasing our guidance on proportionately combined free cash flow to approximately $3.70 per share for 2012.” The Company had previously indicated that proportionately combined free cash flow would be between $3.50 and $3.60 per share in calendar 2012.

MIC regards free cash flow as an important tool in assessing the performance of its capital intensive, cash generative businesses. Proportionately combined free cash flow refers to the sum of the free cash flow generated by MIC’s businesses and investments in proportion to its equity interest in each and after holding company costs. See “Cash Generation” below for MIC’s definition of free cash flow and further information.

Consolidated Results for Second Quarter and Six Months

The Company reported net income, before tax, of $22.0 million for the second quarter of 2012 compared with a net loss of $4.4 million for the second quarter of 2011. For the six months ended June 30, 2012, MIC reported net income, before tax, of $42.7 million compared with net income of $13.4 million for the comparable period in 2011.

MIC’s consolidated revenue for the second quarter of 2012 increased 4.6% to $258.5 million compared with $247.2 million in the second quarter of 2011. Consolidated revenue increased 7.5% for the six-month period ended June 30, 2012 compared with the comparable period in 2011. The growth in revenue reflects the increased volume of products sold and higher energy costs, such as those for aviation fuel and gas products, which are passed through to customers of MIC’s businesses.

Reported gross profit – defined as revenue less cost of goods sold – removes the volatility in revenue associated with fluctuations in energy costs. MIC’s consolidated gross profit totaled $97.7 million in the second quarter of 2012, an increase of 7.9% over the same period in 2011. For the six months ended June 30, 2012 the Company’s gross profit increased 6.6% compared with the comparable period in 2011.

Dispute with Co-Investor in IMTT

To date MIC has been unable to resolve fully a previously-disclosed dispute with its co-investor in IMTT regarding quarterly distributions and governance in accordance with the Shareholders’ Agreement between the parties. Distributions calculated in accordance with the Shareholders’ Agreement for the first and second quarters of 2012 were $45.3 million ($22.6 million per shareholder) and $55.3 million ($27.7 million per shareholder), respectively.

Representatives of MIC’s co-investor on the IMTT Board voted against making distributions per the Shareholders’ Agreement saying that they would prefer IMTT retain greater cash, cash equivalents and available committed and undrawn credit balances. Had IMTT paid the full amount of the distribution due for the first and second quarters of 2012, it would have had cash, cash equivalents and available committed and undrawn credit balances of $219.6 million and $241.4 million at the end of the first and second quarters of 2012, respectively. MIC believes these amounts are more than sufficient for the business.

On July 20, 2012 the IMTT Board unanimously approved the payment of a distribution in the amount of $17.8 million ($8.9 million per shareholder) for the first quarter of 2012. Payment of the distribution for the first quarter was made on July 24, 2012 with both parties reserving their rights to dispute the amount payable.

On July 31, 2012 the IMTT Board unanimously approved the payment of a distribution in the amount of $18.7 million ($9.3 million per shareholder) for the second quarter of 2012. Payment of the distribution for the second quarter is expected to be in August. Again, both parties reserved their rights to dispute the amount payable.

MIC believes that the failure of its co-investor’s representatives to approve the distributions as calculated is a breach of the Shareholders’ Agreement and violates the terms of the March 30, 2012 Arbitration Award that resulted in the payment of $110.6 million to each of the IMTT shareholders. The parties appear to be at an impasse with respect to determining the reserves required under the Shareholders’ Agreement and Arbitration Award. Accordingly, MIC may initiate an arbitration to collect the total amounts due for the first and second quarters of 2012 and to recover costs and damages.

Contingent upon the resolution of matters limiting the distribution of cash from IMTT (described above), and following the successful refinancing of Atlantic Aviation’s debt facilities prior to their maturity in October of 2014, assuming the continued stable performance of MIC’s businesses, and subject to prevailing economic conditions, our Board will consider increasing the amount of the quarterly cash dividend.

Cash Generation

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 and investments. 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 items reflected in the statement of operations.

MIC 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, and 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 and changes in working capital.

MIC notes that free cash flow does not fully reflect its ability to freely deploy generated cash, as it does not reflect required principal payments on indebtedness, payments of dividends, potential growth capital expenditures and other fixed obligations or the other cash items excluded when calculating free cash flow. Free cash flow may be calculated differently by other companies which limits its usefulness as a comparative measure. Free cash flow, as defined by MIC, should be used as a supplemental measure and not in lieu of financial results reported under GAAP.
                     
/------------------------------------------------------For the Quarter Ended June 30, 2012---------------------------------------------------------------/
($ in Thousands) (Unaudited) IMTT 50%   The Gas Company  

District Energy 50.01%
  Atlantic Aviation   MIC Corporate  

Proportionately Combined(1)
IMTT 100%

District Energy 100%
 
 
Gross profit 31,706 18,076 2,535 74,542 N/A 126,859 63,412 5,069
EBITDA excluding non-cash items 28,441 14,450 2,947 31,335 (1,927 ) 75,246 56,882 5,892
Free cash flow 18,557     8,595     1,925     14,634     (203 )   43,507   37,113     3,849  
 
/------------------------------------------------------For the Quarter Ended June 30, 2011---------------------------------------------------------------/
IMTT 50%   The Gas Company  

District Energy 50.01%
  Atlantic Aviation   MIC Corporate  

Proportionately Combined(1)
IMTT 100%

District Energy 100%
 
Gross profit 27,409 15,036 2,305 70,852 N/A 115,602 54,817 4,610
EBITDA excluding non-cash items 23,731 11,380 2,825 29,163 (1,795 ) 65,303 47,461 5,648
Free cash flow 13,448     6,270     2,061     13,296     (840 )   34,235   26,896     4,121  
                           
Gross profit variance 15.7 %   20.2 %   10.0 %   5.2 %   N/A     9.7 % 15.7 %   10.0 %
EBITDA excluding non-cash items variance 19.8 %   27.0 %   4.3 %   7.4 %   (7.4 )%   15.2 % 19.8 %   4.3 %
Free cash flow variance 38.0 %   37.1 %   (6.6 )%   10.1 %   75.8 %   27.1 % 38.0 %   (6.6 )%

 
_____________________
(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.
                   
/-------------------------------------For the Six Months Ended June 30, 2012-------------------------------------/
($ in Thousands) (Unaudited) IMTT 50%   The Gas Company  

District Energy 50.01%
  Atlantic Aviation   MIC Corporate  

Proportionately Combined(1)
IMTT 100%  

District Energy 100%
 
Gross profit 64,894 36,775 4,381 152,794 N/A 258,844 129,788 8,760
EBITDA excluding non-cash items 58,172 28,630 5,122 65,486 (6,973 ) 150,437 116,344 10,241
Free cash flow 37,579     16,605     3,268     33,743     (3,672 )   87,523   75,158     6,534  
 
 
/-------------------------------------For the Six Months Ended June 30, 2011-------------------------------------/
IMTT 50%   The Gas Company  

District Energy 50.01%
  Atlantic Aviation   MIC Corporate  

Proportionately Combined(1)
IMTT 100%  

District Energy 100%
 
Gross profit 57,434 30,524 3,722 148,059 N/A 239,739 114,868 7,443
EBITDA excluding non-cash items 50,223 23,169 4,544 61,238 (3,189 ) 135,984 100,445 9,086
Free cash flow 27,637     11,343     2,870     29,715     (340 )   71,225   55,274     5,738  
                           
Gross profit variance 13.0 %   20.5 %   17.7 %   3.2 %   N/A     8.0 % 13.0 %   17.7 %
EBITDA excluding non-cash items variance 15.8 %   23.6 %   12.7 %   6.9 %   (118.7 )%   10.6 % 15.8 %   12.7 %
Free cash flow variance 36.0 %   46.4 %   13.9 %   13.6 %   NM     22.9 % 36.0 %   13.9 %

 

_____________________
NM - Not meaningful
(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.

IMTT

MIC has a 50% equity interest in International-Matex Tank Terminals (IMTT), the operator of one of the largest independent bulk liquid storage terminal businesses in the U.S. IMTT owns and operates 10 marine storage terminals in the U.S. and is the part owner and operator of two terminals in Canada. The terminals store and handle a wide variety of petroleum grades, chemicals and vegetable and animal oils. To aid in meaningful analysis of the performance of IMTT across periods, the table and discussion below refers to results for 100% of the business, not MIC’s 50% interest.

For the second quarter of 2012 compared with the second quarter of 2011:

  • Terminal revenue increased 7.6%
  • Average storage rental rates increased 5.8%; average storage rental rates are expected to increase by between 5.5% and 7.5% for the full year
  • Capacity utilization was stable at 94.3%; utilization decreased from 95.9% in the first quarter of 2012 as an increased number of tanks were out of service for cleaning and inspection in the second quarter
  • Terminal operating costs decreased 4.6%; fuel costs were lower reflecting the lower cost of natural gas and certain health care and repair and maintenance costs incurred in 2011 did not recur in 2012

Free cash flow generated by IMTT increased 38.0% to $37.1 million and 36.0% to $75.2 million for the second quarter and six months ended June 30, 2012, respectively. The growth in free cash flow reflects the improved operating results, primarily the higher gross profit from increased storage rates and lower operating expenses as well as lower maintenance capital expenditures, partially offset in the half year by an adjustment to IMTT’s provision for income taxes.

MIC has recalculated the income tax provision provided by IMTT for the first quarter of 2012 in accordance with Generally Accepted Accounting Principles. IMTT’s income tax provision for the first quarter has been recalculated as $4.8 million, down from the $11.4 million previously reported. The income tax provision for the six months ended June 30, 2012 assumes that IMTT will pay federal income taxes of $12.0 million and state income taxes of $5.2 million for the full year 2012. IMTT’s actual federal income tax liability could be higher or lower depending on the value of capital assets placed in service during the year and the extent to which IMTT is able to realize the benefits of bonus depreciation of those assets.

The Gas Company

The Gas Company is the owner and operator of the only regulated (“utility”) gas manufacturing and pipeline distribution network on the islands of Hawaii. The business is also the owner and operator of the largest unregulated (“non-utility”) gas distribution operation on the islands.

For the second quarter of 2012 compared with the second quarter of 2011:
  • Non-utility contribution margin increased 28.3% to $16.2 million from $12.6 million
  • Utility contribution margin increased 4.8% to $9.7 million from $9.2 million
  • The combined volume of gas products sold increased 5.4%

Free cash flow generated by The Gas Company increased 37.1% to $8.6 million and 46.4% to $16.6 million for the second quarter and six months ended June 30, 2012, respectively. The increase in free cash flow reflects the improved operating results, particularly the increased non-utility contribution margin, partially offset by increased wage and benefits related expenses and an approximately $1.0 million increase in taxes. The Gas Company is a part of MIC’s consolidated tax group and the increased liability is expected to be offset in consolidation with the application of MIC’s federal net operating loss carryforward.

In July 2012, MIC received commitments for the refinancing of the debt facilities of The Gas Company as well as commitments for a new revolver. The business’ current debt structure comprises an $80.0 million term loan facility and $20.0 million capital expenditure facility at the operating company level and an $80.0 million term loan facility at the intermediate holding company level.

The operating company level debt is expected to be replaced with $100.0 million of 10-year private placement notes and a 5-year $60.0 million revolving credit facility. The intermediate holding company facility is expected to be replaced with another 5-year $80.0 million term loan facility. The weighted average cost of all facilities employed by The Gas Company, including interest rate hedges, is expected to be lower than the current all-in rate of 4.92%.

District Energy

MIC’s District Energy business produces chilled water that it distributes via underground pipelines in downtown Chicago to high-rise buildings for use in air conditioning and process cooling systems. The business also operates a site-specific operation that supplies both cooling and heating services to three customers in Las Vegas, Nevada. MIC has a 50.01% (controlling) interest in District Energy. The table and discussion below refer to results for 100% of the business, not MIC’s 50.01% interest.

For the second quarter of 2012 compared with the second quarter of 2011:
  • Cooling consumption revenue increased 16.3% to $6.9 million from $5.9 million; higher average temperatures in 2012 compared with 2011 resulted in increased demand for cooling
  • Capacity revenue increased 2.6% to $5.6 million from $5.4 million; increases in the number of customers being served and inflation adjustments to existing contracts drove the improved performance
  • Gross profit rose 10.0% to $5.1 million from $4.6 million

Free cash flow decreased 6.6% to $3.8 million for the second quarter and increased 13.9% to $6.5 million for the six months ended June 30, 2012. The decrease in the current quarter reflects primarily the timing of income tax payments in 2012 compared with 2011. The year to date increase reflects the higher average temperatures and resulting increased demand for cooling in Chicago in 2012 compared with 2011.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed-base operations (FBO) that primarily provide fuel, terminal services and aircraft hangar services to owners and operators of general aviation (GA) aircraft at 64 airports in the US. The network is the one of the largest in the US air transportation industry.

For the second quarter of 2012 compared with the second quarter of 2011 (same store basis):
  • Fuel gross profit increased 4.0% on GA volume increases of 1.5% and weighted average margin increases of 2.8%
  • GA fuel gross profit improvement was partially offset by modest declines in non-GA gross profit

Atlantic Aviation’s pro-forma leverage ratio decreased to 5.64x including a principal payment of $7.5 million to be made on August 10, 2012.

Following the quarter end, Atlantic Aviation completed the sale of one of its FBO for $5.3 million. The impact of the sale is not expected to have a material impact on the business’ results for the full year.

Free cash flow generated by Atlantic Aviation increased 10.1% to $14.6 million and 13.6% to $33.7 million for the quarter and six months ended June 30, 2012, respectively. The increase in cash generation reflects primarily improved operating results partially offset by higher maintenance capital expenditures in the second quarter of 2012 compared with the second quarter of 2011.

Business Outlook

MIC is increasing its full year 2012 guidance for proportionately combined free cash flow to approximately $3.70 per share. Through the six months ended June 30, 2012 MIC’s businesses generated $1.88 per share in proportionately combined free cash flow.

Contributing to the expected increase in proportionately combined free cash flow in 2012 are better than expected operating results at IMTT and The Gas Company, reductions in interest expense at Atlantic Aviation resulting from the maturity of existing interest rate swaps in October and lower than expected cash capital expenditures for the year at Atlantic Aviation.

The Company also reaffirmed or increased its segment level full-year EBITDA guidance.
  • MIC believes that IMTT will produce EBITDA of between $230.0 and $240.0 million, up from prior estimates of $220.0 to $235.0 million. Increases in average storage rates continue to be at the low end of estimates. Utilization is expected to remain at levels consistent with the prior year. Cash capital expenditures are expected to be approximately $50.0 million for the full year.
  • The Gas Company is now expected to generate EBITDA in excess of the Company’s original guidance or between $55.0 and $57.5 million, up from prior estimates of between $50.0 and $55.0 million. The business anticipates continued increases in consumption in both the utility and non-utility components of the business consistent with the economic recovery in Hawaii and to be able to maintain margins on non-utility sales.
  • District Energy is expected to generate EBITDA of between $21.0 and $22.0 million in 2012. Cooling demand is typically at its highest during the third quarter of the year.
  • Atlantic Aviation is expected to generate EBITDA in a range between $130.0 and $135.0 million in 2012. The expectation assumes continued growth in general aviation traffic levels at the airports on which the business operates, and resulting volume and margin improvement, consistent with the first half of 2012.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, August 2, 2012 to review the Company’s results.

How: To listen to the conference call please dial +1(650) 521-5252 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 August 2, 2012 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 August 2, 2012 through August 16, 2012, at +1(404) 537-3406, Passcode: 93685696. 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 three energy-related businesses including a gas processing and distribution business in Hawaii, The Gas Company, a controlling interest in a District Energy business in Chicago, and a 50% interest in a bulk liquid storage terminal business, International-Matex Tank Terminals. MIC also owns and operates an aviation-related airport services business, Atlantic Aviation. The Company 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.

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 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)
 
June 30,

2012
December 31,

2011
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 145,574 $ 22,786
Accounts receivable, less allowance for doubtful accounts
of $639 and $445, respectively 64,694 56,458
Inventories 22,117 23,106
Prepaid expenses 5,754 7,338
Deferred income taxes 19,291 19,102
Other   14,306   14,523
Total current assets 271,736 143,313
Property, equipment, land and leasehold improvements, net 559,425 561,022
Equipment lease receivables 30,263 32,189
Investment in unconsolidated business 136,463 230,401
Goodwill 516,175 516,175
Intangible assets, net 645,043 662,135
Other   21,162   23,398
Total assets $ 2,180,267 $ 2,168,633
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 4,871 $ 4,300
Accounts payable 27,421 29,199
Accrued expenses 24,974 23,827
Current portion of long-term debt 255,916 34,535
Fair value of derivative instruments 23,539 39,339
Other   18,342   17,702
Total current liabilities 355,063 148,902
Long-term debt, net of current portion 858,827 1,086,053
Deferred income taxes 195,073 177,262
Fair value of derivative instruments 9,819 15,576
Other   47,007   46,980
Total liabilities   1,465,789   1,474,773
Commitments and contingencies - -
Members’ equity:
LLC interests, no par value; 500,000,000 authorized; 46,645,028 LLC
interests issued and outstanding at June 30, 2012 and 46,338,225 LLC interests issued and outstanding at December 31, 2011 942,955 951,729
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (22,549) (27,412)
Accumulated deficit   (216,852)   (242,082)
Total members’ equity 725,001 703,682
Noncontrolling interests   (10,523)   (9,822)
Total equity   714,478   693,860
Total liabilities and equity $ 2,180,267 $ 2,168,633
 
         
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)
 
Quarter Ended   Six Months Ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
 
 
Revenue
Revenue from product sales $ 169,129 $ 161,582 $ 342,083 $ 314,646
Revenue from product sales - utility 36,807 36,421 75,121 70,694
Service revenue 51,430 47,923 103,839 99,170
Financing and equipment lease income   1,150   1,261   2,329   2,548
Total revenue   258,516   247,187   523,372   487,058
Costs and expenses
Cost of product sales 115,720 113,226 235,101 218,551
Cost of product sales - utility 31,324 30,772 63,496 57,637
Cost of services 13,784 12,690 26,445 24,844
Selling, general and administrative 50,467 48,309 105,730 99,979
Fees to manager - related party 4,760 4,156 9,755 7,788
Depreciation 7,557 8,623 15,108 15,833
Amortization of intangibles 8,546 16,044 17,092 24,763
Loss on disposal of assets   327   1,225   327   1,225
Total operating expenses   232,485   235,045   473,054   450,620
Operating income 26,031 12,142 50,318 36,438
Other income (expense)
Interest income 4 97 6 101
Interest expense(1) (10,925) (19,866) (23,932) (34,335)
Equity in earnings and amortization charges of investee 6,805 3,270 16,306 11,632
Other income (expense), net   48   (46)   (4)   (395)
Net income (loss) before incomes taxes 21,963 (4,403) 42,694 13,441
(Provision) benefit for income taxes   (9,935)   488   (16,456)   (6,498)
Net income (loss) $ 12,028 $ (3,915) $ 26,238 $ 6,943
Less: net income (loss) attributable to noncontrolling interests   890   (1,425)   1,008   (1,732)
Net income (loss) attributable to MIC LLC $ 11,138 $ (2,490) $ 25,230 $ 8,675
 
Basic income (loss) per share attributable to MIC LLC interest holders $ 0.24 $ (0.05) $ 0.54 $ 0.19
Weighted average number of shares outstanding: basic   46,532,402   45,901,486   46,444,280   45,816,499
 
Diluted income (loss) per share attributable to MIC LLC interest holders $ 0.24 $ (0.05) $ 0.54 $ 0.19
Weighted average number of shares outstanding: diluted   46,553,858   45,901,486   46,466,575   45,846,235
Cash dividends declared per share $ 0.625 $ 0.20 $ 0.825 $ 0.40
 

_____________________

(1) Interest expense includes non-cash gains on derivative instruments of $7.5 million and $13.1 million for the quarter and six months ended June 30, 2012, respectively. For the quarter and six months ended June 30, 2011, interest expense includes non-cash losses on derivative instruments of $545,000 and non-cash gains on derivative instruments of $5.0 million, respectively.

 
       
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
 
Six Months Ended
June 30, 2012 June 30, 2011
 
Operating activities
Net income $ 26,238 $ 6,943
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of property and equipment 18,459 19,138
Amortization of intangible assets 17,092 24,763
Loss on disposal of assets 47 1,153
Equity in earnings and amortization charges of investees (16,306 ) (11,632 )
Equity distributions from investees 70,931 -
Amortization of debt financing costs 1,943 2,060
Non-cash derivative gains (13,114 ) (4,965 )
Base management fees settled in LLC interests 9,755 7,788
Equipment lease receivable, net 1,710 1,493
Deferred rent 185 201
Deferred taxes 14,130 5,370
Other non-cash expenses, net 1,532 1,218
Changes in other assets and liabilities:
Accounts receivable (8,656 ) (10,634 )
Inventories 1,734 (45 )
Prepaid expenses and other current assets 1,486 1,112
Due to manager - related party 33 8
Accounts payable and accrued expenses (472 ) (1,436 )
Income taxes payable (66 ) (251 )
Other, net   (1,830 )   (997 )
Net cash provided by operating activities 124,831 41,287
 
Investing activities
Proceeds from sale of assets 375 16,916
Purchases of property and equipment (15,333 ) (15,587 )
Investment in capital leased assets - (24 )
Return of investment in unconsolidated business 39,648 -
Other   146     7  
Net cash provided by investing activities 24,836 1,312
 
Financing activities
Proceeds from long-term debt 10,000 2,489
Net proceeds on line of credit facilities - 4,400
Dividends paid to holders of LLC interests (18,562 ) (9,170 )
Distributions paid to noncontrolling interests (2,133 ) (3,951 )
Payment of long-term debt (15,845 ) (24,500 )
Debt financing costs paid (66 ) -
Payment of notes and capital lease obligations   (273 )   (76 )
Net cash used in financing activities   (26,879 )   (30,808 )
 
Net change in cash and cash equivalents 122,788 11,791
Cash and cash equivalents, beginning of period   22,786     24,563  
Cash and cash equivalents, end of period $ 145,574   $ 36,354  
 
Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued purchases of property and equipment $ 2,083   $ 2,163  
Acquisition of equipment through capital leases $ 2,624   $ -  
Issuance of LLC interests to manager for base management fees $ 9,217   $ 6,846  
Issuance of LLC interests to independent directors $ 571   $ 450  
Taxes paid $ 2,613   $ 1,349  
Interest paid $ 34,972   $ 37,296  
 

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS – MD&A
 
               
 
Quarter Ended June 30,

 

Change

Favorable/(Unfavorable)
Six Months Ended June 30, Change

Favorable/(Unfavorable)
  2012     2011   $   %     2012     2011   $   %  
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 169,129 $ 161,582 7,547 4.7 $ 342,083 $ 314,646 27,437 8.7
Revenue from product sales - utility 36,807 36,421 386 1.1 75,121 70,694 4,427 6.3
Service revenue 51,430 47,923 3,507 7.3 103,839 99,170 4,669 4.7
Financing and equipment lease income   1,150     1,261   (111 ) (8.8 )   2,329     2,548   (219 ) (8.6 )
Total revenue   258,516     247,187   11,329   4.6   523,372     487,058   36,314   7.5
Costs and expenses
Cost of product sales 115,720 113,226 (2,494 ) (2.2 ) 235,101 218,551 (16,550 ) (7.6 )
Cost of product sales - utility 31,324 30,772 (552 ) (1.8 ) 63,496 57,637 (5,859 ) (10.2 )
Cost of services   13,784     12,690   (1,094 ) (8.6 )   26,445     24,844   (1,601 ) (6.4 )
Gross profit 97,688 90,499 7,189 7.9 198,330 186,026 12,304 6.6
Selling, general and administrative 50,467 48,309 (2,158 ) (4.5 ) 105,730 99,979 (5,751 ) (5.8 )
Fees to manager - related party 4,760 4,156 (604 ) (14.5 ) 9,755 7,788 (1,967 ) (25.3 )
Depreciation 7,557 8,623 1,066 12.4 15,108 15,833 725 4.6
Amortization of intangibles 8,546 16,044 7,498 46.7 17,092 24,763 7,671 31.0
Loss on disposal of assets   327     1,225   898   73.3   327     1,225   898   73.3
Total operating expenses   71,657     78,357   6,700   8.6   148,012     149,588   1,576   1.1
Operating income 26,031 12,142 13,889 114.4 50,318 36,438 13,880 38.1
Other income (expense)
Interest income 4 97 (93 ) (95.9 ) 6 101 (95 ) (94.1 )
Interest expense(1) (10,925 ) (19,866 ) 8,941 45.0 (23,932 ) (34,335 ) 10,403 30.3
Equity in earnings and amortization charges of investees 6,805 3,270 3,535 108.1 16,306 11,632 4,674 40.2
Other income (expense), net   48     (46 ) 94   NM   (4 )   (395 ) 391   99.0
Net income (loss) before income taxes 21,963 (4,403 ) 26,366 NM 42,694 13,441 29,253 NM
(Provision) benefit for income taxes   (9,935 )   488   (10,423 ) NM   (16,456 )   (6,498 ) (9,958 ) (153.2 )
Net income (loss) $ 12,028 $ (3,915 ) 15,943 NM $ 26,238 $ 6,943 19,295 NM
Less: net income (loss) attributable to noncontrolling interests   890     (1,425 ) (2,315 ) (162.5 )   1,008     (1,732 ) (2,740 ) (158.2 )
Net income (loss) attributable to MIC LLC $ 11,138   $ (2,490 ) 13,628   NM $ 25,230   $ 8,675   16,555   190.8

 

_____________________

NM - Not meaningful
 
(1) Interest expense includes non-cash gains on derivative instruments of $7.5 million and $13.1 million for the quarter and six months ended June 30, 2012, respectively. For the quarter and six months ended June 30, 2011, interest expense includes non-cash losses on derivative instruments of $545,000 and non-cash gains on derivative instruments of $5.0 million, respectively.
           

MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) ATTRIBUTABLE TO MIC LLC
TO EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING
ACTIVITIES TO FREE CASH FLOW
 
  Quarter Ended June 30, Change

Favorable/(Unfavorable)
  Six Months Ended June 30, Change

Favorable/(Unfavorable)
  2012       2011   $   %   2012       2011   $   %
($ In Thousands) (Unaudited)
 
Net income (loss) attributable to MIC LLC(1) $ 11,138 $ (2,490 ) $ 25,230 $ 8,675
Interest expense, net(2) 10,921 19,769 23,926 34,234
Provision (benefit) for income taxes 9,935 (488 ) 16,456 6,498
Depreciation(3) 7,557 8,623 15,108 15,833
Depreciation - cost of services(3) 1,677 1,658 3,351 3,305
Amortization of intangibles(4) 8,546 16,044 17,092 24,763
Loss on disposal of assets 47 1,153 47 1,153
Equity in earnings and amortization charges of investees(5) 9,501 (3,270 ) - (11,632 )
Base management fees settled/to be settled in LLC interests 4,760 4,156 9,755 7,788
Other non-cash expense (income), net   1,974     (759 )     2,725     (313 )  
EBITDA excluding non-cash items $ 66,056   $ 44,396   21,660 48.8 $ 113,690   $ 90,304   23,386 25.9
 
EBITDA excluding non-cash items $ 66,056 $ 44,396 $ 113,690 $ 90,304
Interest expense, net(2) (10,921 ) (19,769 ) (23,926 ) (34,234 )
Interest rate swap breakage fees(2) (252 ) (627 ) (500 ) (1,732 )
Non-cash derivative (gains) losses recorded in interest expense(2) (7,232 ) 1,172 (12,614 ) (3,233 )
Amortization of debt financing costs(2) 965 1,030 1,943 2,060
Cash distributions received in excess of equity in earnings and amortization
charges of investees(6) 54,625 - 54,625 -
Equipment lease receivables, net 872 753 1,710 1,493
Provision/benefit for income taxes, net of changes in deferred taxes (1,573 ) (196 ) (2,326 ) (1,128 )
Changes in working capital   (1,439 )   (7,014 )   (7,771 )   (12,243 )
Cash provided by operating activities 101,101 19,745 124,831 41,287
Changes in working capital 1,439 7,014 7,771 12,243
Maintenance capital expenditures   (4,734 )   (3,912 )     (8,461 )   (7,074 )  
Free cash flow from continuing operations $ 97,806   $ 22,847   74,959 NM $ 124,141   $ 46,456   77,685 167.2
 

_____________________

(1)
 

Net income (loss) attributable to MIC LLC excludes net income attributable to noncontrolling interests of $890,000 and $1.0 million for the quarter and six months ended June 30, 2012, respectively, and net loss attributable to noncontrolling interests of $1.4 million and $1.7 million for the quarter and six months ended June 30, 2011, respectively.

(2)

Interest expense, net, includes non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

(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 $3.9 million for the quarter and six months ended June 30, 2012, respectively, and $1.9 million and $3.6 million for the quarter and six months ended June 30, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

(4)

Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $171,000 for the quarter and six months ended June 30, 2012, respectively, and $151,000 and $435,000 for the quarter and six months ended June 30, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated condensed statements of operations.

(5)

Equity in earnings and amortization charges of investees 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 six months ended June 30, 2012, we recognized equity in earnings and amortization charges of investee income of $6.8 million and $16.3 million, respectively, in the consolidated condensed statement of operations, which was fully offset by the cash distributions received in June of 2012. The $9.5 million for the quarter ended June 30, 2012 represents the excess cash distributions received from IMTT over $16.3 million that was applied on the equity in earnings and amortization charges of investee income recognized during the quarter. See "Arbitration Proceeding Between MIC and Co-investor in IMTT" for further discussions.

(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 investees, since our investment in IMTT, adjusted for the current periods equity in earnings and amortization charges of investees in the calculation from net income (loss) attributable to MIC LLC to EBITDA excluding non-cash items above. The cumulative allocation of the $110.6 million distributions received in June of 2012 was $70.9 million recorded in net cash provided by operating activities and $39.6 million recorded in net cash provided by investing activities, as a return on investment, on the consolidated condensed statements of cash flows. See "Arbitration Proceeding Between MIC and Co-investor in IMTT" for further discussions.
                     

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 June 30,
 

Six Months Ended

June 30,

Change

Change
2012 2011

Favorable/(Unfavorable)
2012 2011

Favorable/(Unfavorable)
$ $ $ % $ $ $ %

 

($ In Thousands) (Unaudited)
Revenue
Terminal revenue 109,167 101,436 7,731 7.6 220,784 207,451 13,333 6.4
Environmental response revenue 4,596 5,514 (918) (16.6) 10,983 10,330 653 6.3
Total revenue 113,763 106,950 6,813 6.4 231,767 217,781 13,986 6.4
Costs and expenses
Terminal operating costs 45,905 48,121 2,216 4.6 92,377 94,170 1,793 1.9
Environmental response operating costs 4,446 4,012 (434) (10.8) 9,602 8,743 (859) (9.8)
Total operating costs 50,351 52,133 1,782 3.4 101,979 102,913 934 0.9
Terminal gross profit 63,262 53,315 9,947 18.7 128,407 113,281 15,126 13.4
Environmental response gross profit 150 1,502 (1,352) (90.0) 1,381 1,587 (206) (13.0)
Gross profit 63,412 54,817 8,595 15.7 129,788 114,868 14,920 13.0
General and administrative expenses 7,341 7,717 376 4.9 14,800 15,580 780 5.0
Depreciation and amortization 17,117 16,360 (757) (4.6) 34,024 32,035 (1,989) (6.2)
Operating income 38,954 30,740 8,214 26.7 80,964 67,253 13,711 20.4
Interest expense, net(1) (11,790) (16,311) 4,521 27.7 (18,381) (20,994) 2,613 12.4
Other income 807 341 466 136.7 1,263 1,120 143 12.8
Provision for income taxes (11,869) (5,903) (5,966) (101.1) (26,236) (19,447) (6,789) (34.9)
Noncontrolling interest (86) 66 (152) NM (185) 91 (276) NM
Net income 16,016 8,933 7,083 79.3 37,425 28,023 9,402 33.6
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 16,016 8,933 37,425 28,023
Interest expense, net(1) 11,790 16,311 18,381 20,994
Provision for income taxes 11,869 5,903 26,236 19,447
Depreciation and amortization 17,117 16,360 34,024 32,035
Other non-cash expense (income) 90 (46)   278 (54)  
EBITDA excluding non-cash items 56,882 47,461 9,421 19.8 116,344 100,445 15,899 15.8
 
EBITDA excluding non-cash items 56,882 47,461 116,344 100,445
Interest expense, net(1) (11,790) (16,311) (18,381) (20,994)
Non-cash derivative losses (gains) recorded in interest expense(1) 2,316 7,640 (363) 3,308
Amortization of debt financing costs(1) 809 807 1,614 1,618
Provision for income taxes, net of changes in deferred taxes (3,769) 304 (8,603) (7,584)
Changes in working capital 4,683 (14,479) 12,298 (12,847)
Cash provided by operating activities 49,131 25,422 102,909 63,946
Changes in working capital (4,683) 14,479 (12,298) 12,847
Maintenance capital expenditures (7,335) (13,005)   (15,453) (21,519)  
Free cash flow 37,113 26,896 10,217 38.0 75,158 55,274 19,884 36.0
 

_____________________
NM - Not meaningful
(1) Interest expense, net, includes non-cash (losses) gains on derivative instruments and non-cash amortization of deferred financing fees.
                     

The Gas Company
 

Quarter Ended

June 30,
Six Months Ended

June 30,

Change

Change
2012   2011  

Favorable/(Unfavorable)
2012   2011  

Favorable/(Unfavorable)
$   $   $   %   $   $   $   %  

 

($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 29,748 26,935 2,813 10.4 61,377 54,286 7,091 13.1
Cost of revenue - non-utility 13,554   14,315   761   5.3 29,127   30,372   1,245   4.1
Contribution margin - non-utility 16,194 12,620 3,574 28.3 32,250 23,914 8,336 34.9
Revenue - utility 36,807 36,421 386 1.1 75,121 70,694 4,427 6.3
Cost of revenue - utility 27,149   27,206   57   0.2 55,366   51,211   (4,155 ) (8.1 )
Contribution margin - utility 9,658 9,215 443 4.8 19,755 19,483 272 1.4
Total contribution margin 25,852 21,835 4,017 18.4 52,005 43,397 8,608 19.8
Production 2,127 1,778 (349 ) (19.6 ) 4,133 3,454 (679 ) (19.7 )
Transmission and distribution 5,649   5,021   (628 ) (12.5 ) 11,097   9,419   (1,678 ) (17.8 )
Gross profit 18,076 15,036 3,040 20.2 36,775 30,524 6,251 20.5
Selling, general and administrative expenses 4,558 4,041 (517 ) (12.8 ) 9,815 8,258 (1,557 ) (18.9 )
Depreciation and amortization 1,902   1,802   (100 ) (5.5 ) 3,843   3,575   (268 ) (7.5 )
Operating income 11,616 9,193 2,423 26.4 23,117 18,691 4,426 23.7
Interest expense, net(1) (1,516 ) (3,483 ) 1,967 56.5 (3,407 ) (5,497 ) 2,090 38.0
Other expense (63 ) (127 ) 64 50.4 (132 ) (279 ) 147 52.7
Provision for income taxes (3,913 ) (2,310 ) (1,603 ) (69.4 ) (7,712 ) (5,212 ) (2,500 ) (48.0 )
Net income(2) 6,124   3,273   2,851   87.1 11,866   7,703   4,163   54.0
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income(2) 6,124 3,273 11,866 7,703
Interest expense, net(1) 1,516 3,483 3,407 5,497
Provision for income taxes 3,913 2,310 7,712 5,212
Depreciation and amortization 1,902 1,802 3,843 3,575
Other non-cash expenses 995   512     1,802   1,182    
EBITDA excluding non-cash items 14,450   11,380   3,070   27.0 28,630   23,169   5,461   23.6
 
EBITDA excluding non-cash items 14,450 11,380 28,630 23,169
Interest expense, net(1) (1,516 ) (3,483 ) (3,407 ) (5,497 )
Non-cash derivative (gains) losses recorded in interest expense(1) (832 ) 1,173 (1,297 ) 897
Amortization of debt financing costs(1) 119 120 239 239
Provision for income taxes, net of changes in deferred taxes (2,205 ) (1,260 ) (4,375 ) (3,545 )
Changes in working capital (847 ) (2,034 ) (3,705 ) (6,449 )
Cash provided by operating activities 9,169 5,896 16,085 8,814
Changes in working capital 847 2,034 3,705 6,449
Maintenance capital expenditures (1,421 ) (1,660 )   (3,185 ) (3,920 )  
Free cash flow 8,595   6,270   2,325   37.1 16,605   11,343   5,262   46.4
 
_____________________

(1)
 

Interest expense, net, includes non-cash gains (losses) on 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 at the MIC Inc. level.
                   

District Energy
 

Quarter Ended

June 30,
Six Months Ended

June 30,

Change

Change
2012   2011  

Favorable/(Unfavorable)
2012   2011  

Favorable/(Unfavorable)
$   $   $   %   $   $   $   %  

 

($ In Thousands) (Unaudited)
 
Cooling capacity revenue 5,567 5,428 139 2.6 11,062 10,759 303 2.8
Cooling consumption revenue 6,890 5,924 966 16.3 10,363 8,354 2,009 24.0
Other revenue 682 903 (221 ) (24.5 ) 1,321 1,593 (272 ) (17.1 )
Finance lease revenue 1,150   1,261   (111 ) (8.8 ) 2,329   2,548   (219 ) (8.6 )
Total revenue 14,289   13,516   773   5.7 25,075   23,254   1,821   7.8
Direct expenses — electricity

4,148
3,675 (473 ) (12.9 )

 
6,686 5,621 (1,065 ) (18.9 )
Direct expenses — other(1) 5,072   5,231   159   3.0 9,629   10,190   561   5.5
Direct expenses — total 9,220 8,906 (314 )

(3.5

)
16,315 15,811 (504 ) (3.2 )
Gross profit 5,069 4,610 459 10.0 8,760 7,443 1,317 17.7
Selling, general and administrative expenses 961 762 (199 ) (26.1 ) 1,852 1,685 (167 ) (9.9 )
Amortization of intangibles 341   341   -   - 682   678   (4 ) (0.6 )
Operating income 3,767 3,507 260 7.4 6,226 5,080 1,146 22.6
Interest expense, net(2) (2,127 ) (4,925 ) 2,798 56.8 (4,456 ) (7,184 ) 2,728 38.0
Other income 75 55 20 36.4 132 111 21 18.9
(Provision) benefit for income taxes (621 ) 650 (1,271 ) (195.5 ) (611 ) 997 (1,608 ) (161.3 )
Noncontrolling interest (208 ) (213 ) 5   2.3 (419 ) (426 ) 7   1.6
Net income (loss) 886   (926 ) 1,812   195.7 872   (1,422 ) 2,294   161.3
 
Reconciliation of net income (loss) to EBITDA excluding non-
cash items:
Net income (loss) 886 (926 ) 872 (1,422 )
Interest expense, net(2) 2,127 4,925 4,456 7,184
Provision (benefit) for income taxes 621 (650 ) 611 (997 )
Depreciation(1) 1,677 1,658 3,351 3,305
Amortization of intangibles 341 341 682 678
Other non-cash expenses 240   300     269   338    
EBITDA excluding non-cash items 5,892   5,648   244   4.3 10,241   9,086   1,155   12.7
 
EBITDA excluding non-cash items 5,892 5,648 10,241 9,086
Interest expense, net(2) (2,127 ) (4,925 ) (4,456 ) (7,184 )
Non-cash derivative (gains) losses recorded in interest expense(2) (566 ) 2,304 (869 ) 1,943
Amortization of debt financing costs(2) 175 170 345 340
Equipment lease receivable, net 872 753 1,710 1,493
Provision/benefit for income taxes, net of changes in deferred taxes (320 ) 230 (273 ) 185
Changes in working capital (47 ) (1,142 ) (1,872 ) 181  
Cash provided by operating activities 3,879 3,038 4,826 6,044
Changes in working capital 47 1,142 1,872 (181 )
Maintenance capital expenditures (77 ) (59 )   (164 ) (125 )  
Free cash flow 3,849   4,121   (272 ) (6.6 ) 6,534   5,738   796   13.9
 
_____________________

(1)
 

Includes depreciation expense of $1.7 million and $3.4 million for the quarter and six months ended June 30, 2012, respectively, and $1.7 million and $3.3 million for the quarter and six months ended June 30, 2011, respectively.

(2)

Interest expense, net, includes non-cash gains (losses) on derivative instruments and non-cash amortization of deferred financing fees.
                   

Atlantic Aviation
 
 

Quarter Ended

June 30,

Six Months Ended

June 30,
2012   2011   Change

Favorable/(Unfavorable)
  2012   2011   Change

Favorable/(Unfavorable)
$   $   $   %   $   $   $   %  

 

($ In Thousands) (Unaudited)
Revenue
Fuel revenue 139,381 134,647 4,734 3.5 280,706 260,360 20,346 7.8
Non-fuel revenue 38,291   35,668   2,623   7.4 81,093   78,464   2,629   3.4
Total revenue 177,672 170,315 7,357 4.3 361,799 338,824 22,975 6.8
Cost of revenue
Cost of revenue-fuel 98,567 95,678 (2,889 ) (3.0 ) 198,875 181,732 (17,143 ) (9.4 )
Cost of revenue-non-fuel 4,563   3,785   (778 ) (20.6 ) 10,130   9,033   (1,097 ) (12.1 )
Total cost of revenue 103,130 99,463 (3,667 ) (3.7 ) 209,005 190,765 (18,240 ) (9.6 )
Fuel gross profit 40,814 38,969 1,845 4.7 81,831 78,628 3,203 4.1
Non-fuel gross profit 33,728   31,883   1,845   5.8 70,963   69,431   1,532   2.2
Gross profit 74,542   70,852   3,690   5.2 152,794   148,059   4,735   3.2
Selling, general and administrative expenses 42,903 41,624 (1,279 ) (3.1 ) 86,847 86,675 (172 ) (0.2 )
Depreciation and amortization 13,860 22,524 8,664 38.5 27,675 36,343 8,668 23.9
Loss on disposal of assets 327   1,225   898   73.3 327   1,225   898   73.3
Operating income 17,452 5,479 11,973 NM 37,945 23,816 14,129 59.3
Interest expense, net(1) (7,282 ) (11,361 ) 4,079 35.9 (16,067 ) (21,554 ) 5,487 25.5
Other income (expense) 64 50 14 28.0 48 (177 ) 225 127.1
(Provision) benefit for income taxes (4,574 ) 2,335   (6,909 ) NM (9,284 ) (840 ) (8,444 ) NM
Net income (loss)(2) 5,660   (3,497 ) 9,157   NM 12,642   1,245   11,397   NM
 
Reconciliation of net income (loss) to EBITDA excluding non-cash items:
Net income (loss)(2) 5,660 (3,497 ) 12,642 1,245
Interest expense, net(1) 7,282 11,361 16,067 21,554
Provision (benefit) for income taxes 4,574 (2,335 ) 9,284 840
Depreciation and amortization 13,860 22,524 27,675 36,343
Loss on disposal of assets 47 1,153 47 1,153
Other non-cash (income) expenses (88 ) (43 )   (229 ) 103    
EBITDA excluding non-cash items 31,335   29,163   2,172   7.4 65,486   61,238   4,248   6.9
 
EBITDA excluding non-cash items 31,335 29,163 65,486 61,238
Interest expense, net(1) (7,282 ) (11,361 ) (16,067 ) (21,554 )
Interest rate swap breakage fees(1) (252 ) (627 ) (500 ) (1,732 )
Non-cash derivative gains recorded in interest expense(1) (5,834 ) (2,305 ) (10,448 ) (6,073 )
Amortization of debt financing costs(1) 671 740 1,359 1,481
Provision/benefit for income taxes, net of changes in deferred

taxes
(768 ) (121 ) (975 ) (616 )
Changes in working capital 305   (3,085 ) 645   (2,862 )
Cash provided by operating activities 18,175 12,404 39,500 29,882
Changes in working capital (305 ) 3,085 (645 ) 2,862
Maintenance capital expenditures (3,236 ) (2,193 )   (5,112 ) (3,029 )  
Free cash flow 14,634   13,296   1,338   10.1 33,743   29,715   4,028   13.6
 
_____________________
NM - Not meaningful

(1)
 

Interest expense, net, includes non-cash gains on 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 June 30, 2012--------------------------/
($ in Thousands) (Unaudited) IMTT 50%  

The Gas Company
 

District Energy 50.01%
 

Atlantic Aviation
 

MIC Corporate
 

Proportionately Combined(1)

IMTT 100%
 

District Energy 100%
 
Net income (loss) attributable to MIC LLC 8,008 6,124 443 5,660 (8,337 ) 11,898 16,016 886
Interest expense (income), net(2) 5,895 1,516 1,064 7,282 (4 ) 15,753 11,790 2,127
Provision for income taxes 5,935 3,913 311 4,574 827 15,559 11,869 621
Depreciation 8,174 1,697 839 5,860 - 16,570 16,348 1,677
Amortization of intangibles 385 205 171 8,000 - 8,760 769 341
Loss on disposal of assets - - - 47 - 47 - -
Base management fee paid in LLC interests - - - - 4,760 4,760 - -
Other non-cash expense (income) 45     995     120     (88 )   827     1,899   90     240  
EBITDA excluding non-cash items 28,441     14,450     2,947     31,335     (1,927 )   75,246   56,882     5,892  
 
EBITDA excluding non-cash items 28,441 14,450 2,947 31,335 (1,927 ) 75,246 56,882 5,892
Interest (expense) income, net(2) (5,895 ) (1,516 ) (1,064 ) (7,282 ) 4 (15,753 ) (11,790 ) (2,127 )
Interest rate swap breakage fees(2) - - - (252 ) - (252 ) - -
Non-cash derivative losses (gains) recorded in interest expense, net(2) 1,158 (832 ) (283 ) (5,834 ) - (5,791 ) 2,316 (566 )
Amortization of deferred finance charges(2) 405 119 88 671 - 1,282 809 175
Equipment lease receivables, net - - 436 - - 436 - 872
Provision for income taxes, net of changes in deferred taxes (1,885 ) (2,205 ) (160 ) (768 ) 1,720 (3,298 ) (3,769 ) (320 )
Changes in working capital 2,342     (847 )   (24 )   305     (850 )   926   4,683     (47 )
Cash provided by (used in) operating activities 24,566 9,169 1,940 18,175 (1,053 ) 52,796 49,131 3,879
Changes in working capital (2,342 ) 847 24 (305 ) 850 (926 ) (4,683 ) 47
Maintenance capital expenditures (3,668 )   (1,421 )   (39 )   (3,236 )   -     (8,363 ) (7,335 )   (77 )
 
Free cash flow 18,557     8,595     1,925     14,634     (203 )   43,507   37,113     3,849  
 
 
/-----------------------------------For the Quarter Ended June 30, 2011--------------------------/
($ in Thousands) (Unaudited)

IMTT 50%
 

The Gas Company
 

District Energy 50.01%
 

Atlantic Aviation
 

MIC Corporate
 

Proportionately Combined(1)

IMTT 100%
 

District Energy 100%
 
Net income (loss) attributable to MIC LLC from continuing operations 4,467 3,273 (463 ) (3,497 ) (4,610 ) (831 ) 8,933 (926 )
Interest expense, net(2) 8,156 3,483 2,463 11,361 - 25,462 16,311 4,925
Provision (benefit) for income taxes 2,952 2,310 (325 ) (2,335 ) 187 2,789 5,903 (650 )
Depreciation 7,915 1,596 829 7,027 - 17,367 15,829 1,658
Amortization of intangibles 266 206 171 15,497 - 16,139 531 341
Loss on sale of assets - - - 1,153 - 1,153 - -
Base management fee paid in LLC interests - - - - 4,156 4,156 - -
Other non-cash (income) expense (23 )   512     150     (43 )   (1,528 )   (932 ) (46 )   300  
EBITDA excluding non-cash items 23,731     11,380     2,824     29,163     (1,795 )   65,303   47,461     5,648  
 
EBITDA excluding non-cash items 23,731 11,380 2,825 29,163 (1,795 ) 65,303 47,461 5,648
Interest expense, net(2) (8,156 ) (3,483 ) (2,463 ) (11,361 ) - (25,462 ) (16,311 ) (4,925 )
Interest rate swap breakage fees(2) - - - (627 ) - (627 ) - -
Non-cash derivative losses (gains) recorded in interest expense, net(2) 3,820 1,173 1,152 (2,305 ) - 3,840 7,640 2,304
Amortization of deferred finance charges(2) 404 120 85 740 - 1,349 807 170
Equipment lease receivables, net - - 377 - - 377 - 753
Provision/benefit for income taxes, net of changes in deferred taxes 152 (1,260 ) 115 (121 ) 955 (159 ) 304 230
Changes in working capital (7,240 )   (2,034 )   (571 )   (3,085 )   (753 )   (13,683 ) (14,479 )   (1,142 )
Cash provided by (used in) operating activities 12,711 5,896 1,519 12,404 (1,593 ) 30,937 25,422 3,038
Changes in working capital 7,240 2,034 571 3,085 753 13,683 14,479 1,142
Maintenance capital expenditures (6,503 )   (1,660 )   (30 )   (2,193 )   -     (10,385 ) (13,005 )   (59 )
 
Free cash flow 13,448     6,270     2,061     13,296     (840 )   34,235   26,896     4,121  

 

___________________________
(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) income, net, includes non-cash (losses) gains on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.
                   
/-------------------------------------For the Six Months Ended June 30, 2012-------------------------------------/
($ in Thousands) (Unaudited) IMTT 50%  

The Gas Company
 

District Energy 50.01%
 

Atlantic Aviation
 

MIC Corporate
 

Proportionately Combined(1)

IMTT 100%
 

District Energy 100%
 
Net income (loss) attributable to MIC LLC 18,713 11,866 436 12,642 (16,456 ) 27,201 37,425 872
Interest expense (income), net(2) 9,191 3,407 2,228 16,067 (4 ) 30,889 18,381 4,456
Provision (benefit) for income taxes 13,118 7,712 306 9,284 (1,151 ) 29,269 26,236 611
Depreciation 16,257 3,432 1,676 11,676 - 33,040 32,513 3,351
Amortization of intangibles 756 411 341 15,999 - 17,507 1,511 682

Loss on disposal of assets
- - - 47 47 - -
Base management fee paid in LLC interests - - - - 9,755 9,755 - -
Other non-cash expense (income) 139     1,802     135     (229 )   883     2,730   278     269  
EBITDA excluding non-cash items 58,172     28,630     5,122     65,486     (6,973 )   150,437   116,344     10,241  
 
EBITDA excluding non-cash items 58,172 28,630 5,122 65,486 (6,973 ) 150,437 116,344 10,241
Interest (expense) income, net(2) (9,191 ) (3,407 ) (2,228 ) (16,067 ) 4 (30,889 ) (18,381 ) (4,456 )
Interest rate swap breakage fees(2) - - - (500 ) - (500 ) - -
Non-cash derivative gains recorded in interest expense, net(2) (182 ) (1,297 ) (435 ) (10,448 ) - (12,361 ) (363 ) (869 )
Amortization of deferred finance charges(2) 807 239 173 1,359 - 2,578 1,614 345
Equipment lease receivables, net - - 855 - - 855 - 1,710
Provision/benefit for income taxes, net of changes in deferred taxes (4,302 ) (4,375 ) (137 ) (975 ) 3,297 (6,491 ) (8,603 ) (273 )
Changes in working capital 6,149     (3,705 )   (936 )   645     (2,839

)
  (686 ) 12,298     (1,872 )
Cash provided by (used in) operating activities 51,455 16,085 2,413 39,500 (6,511 ) 102,942 102,909 4,826
Changes in working capital (6,149 ) 3,705 936 (645 ) 2,839 686 (12,298 ) 1,872
Maintenance capital expenditures (7,727 )   (3,185 )   (82 )   (5,112 )   -     (16,106 ) (15,453 )   (164 )
 
Free cash flow 37,579     16,605     3,268     33,743     (3,672 )   87,523   75,158     6,534  
 
 
/-------------------------------------For the Six Months Ended June 30, 2011-------------------------------------/
($ in Thousands) (Unaudited) IMTT 50%  

The Gas Company
 

District Energy 50.01%
 

Atlantic Aviation
  MIC Corporate  

Proportionately Combined(1)

IMTT 100%
 

District Energy 100%
 
Net income (loss) attributable to MIC LLC 14,012 7,703 (711 ) 1,245 (10,483 ) 11,765 28,023 (1,422 )
Interest expense (income), net(2) 10,497 5,497 3,593 21,554 (1 ) 41,140 20,994 7,184
Provision (benefit) for income taxes 9,724 5,212 (499 ) 840 1,443 16,720 19,447 (997 )
Depreciation 15,488 3,163 1,653 12,670 - 32,973 30,975 3,305
Amortization of intangibles 530 412 339 23,673 - 24,954 1,060 678

Loss on disposal of assets
- - - 1,153 - 1,153 - -
Base management fee paid in LLC interests - - - - 7,788 7,788 - -
Other non-cash (income) expense (27 )   1,182     169     103     (1,936 )   (509 ) (54 )   338  
EBITDA excluding non-cash items 50,223     23,169     4,544     61,238     (3,189 )   135,984   100,445     9,086  
 
EBITDA excluding non-cash items 50,223 23,169 4,544 61,238 (3,189 ) 135,984 100,445 9,086
Interest (expense) income, net(2) (10,497 ) (5,497 ) (3,593 ) (21,554 ) 1 (41,140 ) (20,994 ) (7,184 )
Interest rate swap breakage fees(2) - - - (1,732 ) - (1,732 ) - -
Non-cash derivative losses (gains) recorded in interest expense, net (2) 1,654 897 972 (6,073 ) - (2,550 ) 3,308 1,943
Amortization of deferred finance charges(2) 809 239 170 1,481 - 2,699 1,618 340
Equipment lease receivables, net - - 747 - - 747 - 1,493
Provision/benefit for income taxes, net of changes in deferred taxes (3,792 ) (3,545 ) 93 (616 ) 2,848 (5,012 ) (7,584 ) 185
Changes in working capital (6,424 )   (6,449 )   91     (2,862 )   (3,113 )   (18,757 ) (12,847 )   181  
Cash provided by (used in) operating activities 31,973 8,814 3,023 29,882 (3,453 ) 70,239 63,946 6,044
Changes in working capital 6,424 6,449 (91 ) 2,862 3,113 18,757 12,847 (181 )
Maintenance capital expenditures (10,760 )   (3,920 )   (63 )   (3,029 )   -     (17,771 ) (21,519 )   (125 )
 
Free cash flow 27,637     11,343     2,870     29,715     (340 )   71,225   55,274     5,738  
 
___________________________
(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 non-cash gains (losses) on derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees.

Copyright Business Wire 2010

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