Macquarie Infrastructure Company Reports Fourth Quarter And Full-Year 2013 Financial Results, Increases Quarterly Cash Dividend

Macquarie Infrastructure Company LLC (NYSE:MIC) reported its financial results for 2013 including a 12.2% and 25.4% increase in proportionately combined Free Cash Flow for the fourth quarter and full year, respectively.

The increases reflect better than anticipated results at MIC’s Atlantic Aviation business, partially offset by higher operating expenses and maintenance capital expenditures at International-Matex Tank Terminals.

Proportionately combined Free Cash Flow per share for the full-year 2013 increased 11.7%, or $0.43, to $4.09 compared with the full-year 2012, excluding swap break fees incurred at Hawaii Gas in 2012. Per share figures for the full year include the impact of a 10.2% increase in the number of the Company’s weighted average shares outstanding at year-end. MIC issued 8.8 million additional shares during 2013 including shares sold in follow on offerings in May and December. The sales increased MIC’s weighted average number of shares outstanding at year end by 4.7 million versus year end 2012. The proceeds of the sales were used primarily to reduce the indebtedness of and facilitate acquisitions by the Company’s Atlantic Aviation business.

Proportionately combined Free Cash Flow per share decreased 2.3%, or $0.02 per share, to $0.83 in the fourth quarter of 2013 compared with the fourth quarter in 2012. The decrease in the per share amount was primarily attributable to shares issued and sold by the Company in a public offering on December 18, 2013. The proceeds of these sales are expected to be used to fund acquisitions by its Atlantic Aviation business. These acquisitions are expected to close at the end of the first quarter of 2014 and to be accretive to Free Cash Flow per share on an annualized basis. Excluding the dilutive effect of shares issued on December 18, 2013, Free Cash Flow per share would have been $4.10 for the full year.

“Overall, our businesses delivered an increase in proportionately combined Free Cash Flow that was at the lower end of our guidance for 2013,” said James Hooke, Chief Executive Officer of MIC. “Atlantic had a good year and a very strong quarter; however, cost control at IMTT was very disappointing in December, in our view, and provided further evidence in support of our belief that we need to change processes and upgrade management at IMTT. Nevertheless, the outcome reflects the stability and predictability of the asset class overall and the benefits of a diversified portfolio of quality infrastructure businesses.”

Dividend Increase

On February 18, 2014, the MIC board authorized the payment of cash dividend of $0.9125 per share for the fourth quarter of 2013. The authorization represents an increase in MIC’s cash dividend of 4.3% and implies an annualized $3.65 per share.

“When we issued shares in May 2013, we indicated that we expected Free Cash Flow per share and our dividend to increase at a high single digit percentage rate annually in the medium term. I am pleased that we have been able to increase the dividend per share by $0.15, or 4.3% on an annualized basis, just six months after our last increase,” Hooke added.

The fourth quarter dividend will be paid on March 6, 2014 to shareholders of record on March 3, 2014.

Cash Generation

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.

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, potential growth capital expenditures or 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. See “Cash Generation” below for MIC’s definition of Free Cash Flow and further information and see the attached reconciliation of cash from operating activities to Free Cash Flow.

Acquisition of Boca Raton Fixed Base Operation

On February 14, 2014, MIC’s Atlantic Aviation business signed an agreement to acquire certain of the assets of a Fixed Base Operation (“FBO”) at Boca Raton Airport in Boca Raton, Florida from Boca Aviation for $35.0 million. The acquisition is expected to generate annualized adjusted EBITDA of approximately $3.2 million.

The Company expects to fund the acquisition using a combination of cash on hand and drawings on the recently upsized term loan facility at Atlantic Aviation. The transaction is expected to close at the end of the first quarter of 2014, subject to the receipt of consent from the Boca Raton Airport Authority and satisfaction of other closing conditions typically associated with a transaction of this size and type.

“Following up on our proposed acquisition of the Galaxy FBOs in a transaction we announced in December, the anticipated addition of an FBO at Boca Raton further strengthens the position Atlantic Aviation expects to establish in the Florida market,” said Hooke. “Having five high quality facilities in the largest general aviation market (Florida) in the U.S. is a significant benefit to Atlantic Aviation and its customers.”

Fourth Quarter and Full-year Results

Consolidated Results

MIC consolidates the results of its Atlantic Aviation and Hawaii Gas businesses and its Contracted Power and Energy (“CP&E”) segment. The Company’s investment in IMTT is accounted for using the equity method.

Consolidated revenue for the fourth quarter of 2013 was 3.6% higher than the fourth quarter in 2012. The improvement was the result of increased product sales (fuel) at Atlantic Aviation and increased service revenue related to the full-year contribution from contracted power facilities acquired in 2012.

For the full-year 2013 MIC reported consolidated revenue of $1.04 billion compared with $1.03 billion in 2012. The relatively small increase in revenue reflects primarily lower energy prices, such as the cost of jet fuel, that typically are passed through to customers of MIC’s businesses and recovered in revenue, and volume growth.

Reported gross profit - defined as revenue less cost of goods sold - removes the volatility in revenue associated with fluctuations in energy prices. Gross profit for the fourth quarter increased 10.0%, primarily as a result of growth at Atlantic Aviation and contributions related to a full quarter of operations by the Company’s contracted power (solar) facilities. MIC’s consolidated gross profit for the full-year 2013 totaled $421.0 million, an increase of 6.0% over 2012. The year on year growth was the result of increases in both the volume of product sold, and the margins on those sales, generally, at each of MIC’s consolidated businesses was consistent with the annualized rate of growth in gross profit since 2007.

MIC reported consolidated net income, after tax and before non-controlling interests, for the fourth quarter of 2013 of $14.1 million compared with a net loss in the fourth quarter of 2012 of $11.9 million. The improvement reflected primarily the absence of performance fees paid in the fourth quarter of 2012 and improvement in operations at Atlantic Aviation.

MIC’s net income, after tax and before non-controlling interests, was $28.1 million and $14.3 million for the years ended December 31, 2013 and 2012, respectively. Net income increased as a result of lower performance fees in 2013 versus 2012, improvements in operations, and lower interest expense related to the successful refinancing of Atlantic Aviation in May of 2013.

MIC generated a modest net loss for tax purposes, primarily as a result of performance fees incurred during 2013. The net loss for tax purposes served to increase MIC’s federal Net Operating Loss, (NOL) carryforward balance at year-end 2013 to approximately $198.6 million. MIC expects utilization of its NOL balance will continue to offset any current federal income tax liability, other than Alternative Minimum Tax, into the 2016 tax year.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed base operations (FBOs) located at 63 airports in the U.S. The proposed acquisitions of a portfolio of five additional facilities announced in December and a sixth announced today are expected to close at the end of the first quarter of 2014 and would increase the total number of FBOs in the network to 69.

Following closing of the acquisitions, Atlantic Aviation will have transformed from having no presence in Florida – the largest general aviation market in the U.S. with approximately 11.8% of all flight movements based on data from the 250 busiest general aviation airports as compiled by the FAA – to being the second largest FBO operator in Florida. Atlantic Aviation anticipates having facilities at airports that collectively account for 28% of all flight movements in Florida.

In addition to exposure to the Florida market, the acquisitions serve to increase Atlantic Aviation’s weighted average lease life from 19.0 years at December 31, 2012 to 19.6 years at the closing of the transactions.

“Atlantic Aviation’s operating performance in the fourth quarter was the continuation of the very strong results posted by the business through the first nine months of the year – the rate of EBITDA growth versus the prior comparable period increased in each quarter of the year,” said Hooke. “Increases in the number of general aviation flight movements in the U.S. and growth in market share contributed to the excellent results for the quarter.”

Atlantic Aviation posted an increase in gross profit for the quarter of 11.4%. Full-year 2013 results included an increase in gross profit of 5.8% versus 2012. The improved performance reflected the continued growth in GA flight activity in the U.S., growth in non-fuel gross profit, increases in the same store volume of fuel sold of 3.3%, and an increase in same store average fuel margin of 2.1% for the year.

EBITDA grew by 13.7% during the fourth quarter, although the increase was constrained by higher selling, general and administrative (SG&A) expenses. However, effective management of expenses overall led to an increase in EBITDA of 10.8% for the full year. Expenses rose 2.4% primarily as a result of expenses incurred in connection with acquisitions completed and proposed acquisitions announced in the third and fourth quarters, other legal services and increased labor costs, primarily due to higher incentives.

Free Cash Flow at Atlantic Aviation declined 7.3% in the fourth quarter, primarily as a result of an expected level of increase in maintenance capital expenditures, increased interest expense and a larger provision for income taxes.

For the full year, Free Cash Flow generated by Atlantic Aviation increased 44.1% on lower interest expense and improved operating results. Cash interest expense (excluding swap breakage costs) declined from $42.7 million in 2012 to $18.8 million in 2013 following the successful refinancing of Atlantic Aviation’s long-term debt in May of 2013. The $5.0 million federal portion of Atlantic Aviation’s taxes in 2013 will be offset in consolidation with the application of MIC holding company level net operating loss carryforwards.

“Atlantic Aviation had a very good year in 2013,” said Hooke. “The business enjoyed an increase in flight activity at its bases that was well above the rate for the industry overall, 3.8% versus 1.8% based on data generated by the Federal Aviation Administration, and the management team continued to implement initiatives that kept expenses in check,” he added.

International-Matex Tank Terminals

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

Terminal revenue at IMTT rose by 4.4% in the fourth quarter of 2013 compared with the fourth quarter of 2012. The increase was driven by increases in storage rates of 2.8% and an increase in ancillary services revenue. However, as reported in MIC’s third quarter 2013 results, there was a change in the nature of a small number of customer contracts where take-or-pay long term infrastructure access payments were decoupled from storage contracts. Had these services been included in storage rates as they had been historically, average storage rates would have increased by 4.4% and 6.4% for the fourth quarter and full year, respectively. For the full year, terminal revenue increased by 7.6%.

Terminal revenue gains were offset by a 10.2% increase in terminal operating expenses for the quarter and 4.6% for the year versus the prior comparable periods. Terminal operating expenses rose as a result of higher underlying labor costs, repairs and maintenance costs, particularly in December, and other costs. The increase in labor costs in the fourth quarter was attributed to an increase in health care claims of $1.7 million.

“IMTT did not have a strong quarter from an expense management point of view, and this was especially disappointing given the soft comparable period,” said Hooke. “However, in spite of the 0.2% decline in gross profit posted by IMTT for the quarter, good performance through the first three quarters resulted in gross profit increasing by 10.1% for the full year.”

IMTT generated reported increases in EBITDA and Free Cash Flow for the quarter of 5.5% and 33.1%, respectively. The reported results for all of 2013 include the effect of a change in the treatment of certain pension items. IMTT’s EBITDA is now reported in a manner consistent with MIC’s other businesses. The non-cash pension expense is excluded and the actual cash pension contribution is disclosed separately as a reduction in Free Cash Flow. Had these changes not been made, growth in EBITDA and Free Cash Flow for the quarter would have been 0.7% and 17.8%, respectively, compared with the fourth quarter in 2012.

IMTT’s reported EBITDA and Free Cash Flow for 2013 increased 15.9% and 1.4%, respectively to $268.5 million and $120.8 million versus the prior comparable period. The increase reflects the improved operating results, the inclusion of casualty losses for which the business was reimbursed through insurance proceeds and the above mentioned change in methodology with respect to reporting certain pension items. Had the treatment of IMTT’s pension items not changed, IMTT would have generated an annualized change in EBITDA and Free Cash Flow of 10.9% and (4.5%), respectively. On the same basis, EBITDA for 2013 would have been slightly below the low end of MIC’s guidance.

IMTT’s results for the fourth quarter include an increase in the business’ provision for income taxes and lower, although above average, maintenance capital expenditures versus the prior comparable period. Maintenance capital expenditures were higher in the fourth quarter of 2012 as a result of damage inflicted on the business’ Bayonne, NJ facility by Hurricane Sandy.

Free Cash Flow generated by IMTT increased by 1.4% for the year as a result of improved performance during the first nine months of the year, partially offset by an increase in maintenance capital expenditures to $83.2 million in 2013 from $58.4 in 2012, higher interest expense and higher taxes. The increase in maintenance capital expenditures included costs incurred at IMTT’s Bayonne, NJ facility in the wake of Hurricane Sandy. MIC expects maintenance capital expenditures to return to historically normal levels in 2014.

Hawaii Gas

Hawaii Gas is the owner and operator of the only regulated (“utility”) gas processing and pipeline transmission and 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.

Contribution margin at MIC’s Hawaii Gas business rose 1.3% in fourth quarter versus the prior comparable period on increases in the volume of gas sold of 2.0%. Increases in production costs primarily related to higher labor expenses negated the contribution margin increases and contributed to a decline in gross profit for the quarter of 2.2%.

For the full year the volume of gas sold by Hawaii Gas increased by less than 1.0% compared with 2012. Effective margin management in the non-utility portion of the business pushed aggregate contribution margin higher by 2.1%. Higher production costs, predominantly labor related, were offset by lower transmission and distribution expense. Interest expense declined as a result of the full-year impact of the refinancing of the business’ long-term debt at lower rates in August of 2012 and the absence of interest rate swap break costs related to the refinancing.

EBITDA generated by Hawaii Gas was flat with the fourth quarter in 2012. EBITDA declined by 2.3% for the year primarily as a result of increased SG&A expenses and higher labor costs.

Free Cash Flow decreased by 52.6% and 7.2% in the quarter and full year periods, respectively, compared with the prior comparable periods. The declines were primarily the result of changes in Hawaii Gas’ provision for income taxes. The approximately $5.3 million federal portion of the tax cost for the full year will be offset in consolidation with the application of MIC holding company level net operating loss carryforwards.

“In spite of the relative strength of the Hawaiian economy in 2013, Hawaii Gas’ performance suffered from the supply disruptions related to the on-again, off-again sale and operation of the Tesoro refinery on Oahu,” said Hooke. “With the sale of the refinery to affiliates of Par Petroleum, we believe the situation has stabilized and expect that Hawaii Gas will again generate growth in EBITDA and Free Cash Flow in 2014.”

Contracted Power and Energy

MIC’s newly formed CP&E segment comprises its interests in five contracted power generating facilities (solar photovoltaic) in the Southwest U.S. and a district energy business headquartered in Chicago. MIC’s investment in the contracted power facilities became a reportable segment in the third quarter of 2013 while at the same time its district energy business no longer met the definition of a reportable segment. The Company assessed its businesses and operating segments and determined to combine these particular businesses into one reportable segment that it believes better reflects how these businesses are managed and allocated capital.

MIC’s five contracted power facilities were in operation at year-end 2013, although three of the five were commissioned late in the year and had minimal impact on full-year revenue. The district energy portion of the segment performed in line with MIC’s guidance for 2013.

Gross profit generated by CP&E for the quarter rose 45.1% primarily as a result of the contribution from solar facilities in operation during the quarter that were acquired late in the fourth quarter in 2012. For the full year, gross profit generated by the CP&E segment increased by $5.4 million, or 28.2%, primarily as a result of full year contributions from the contracted power projects brought on-line in 2012, partially offset by a decrease in gross profit generated by district energy.

Increases in EBITDA and Free Cash Flow at CP&E of $6.5 million and $5.5 million, respectively, during the quarter reflect primarily the contribution of the contracted power facilities acquired during 2012. For the full year, EBITDA for the segment rose 45.7%, on sales of electricity generated by the contract power facilities and a decrease in SG&A expenses. SG&A expenses were lower in 2013 compared with 2012 primarily as a result of reduced legal and professional fees.

MIC expanded the contracted power portion of the segment in 2013 with an investment of a net $4.8 million (estimated, assumes pending return of capital payments) in three additional facilities. In total, MIC anticipates having invested a net $10.0 to $14.0 million in the five contracted power facilities after expected return of capital payments are received in the first half of 2014.

Free Cash Flow generated by the segment increased to $13.7 million in 2013 from $8.4 million in 2012. The increase reflects the contribution from the contracted power facilities acquired in late 2012 partially offset by the acquisition-related expenses associated with those facilities acquired in 2013.

Corporate

MIC’s Corporate segment includes base and performance fees (expenses) to which the Company’s Manager may be entitled as well as holding company level SG&A expenses. The Corporate segment also includes the offset to federal income taxes incurred by its consolidated businesses (application of NOL carryforwards).

The improvement in Corporate segment EBITDA for the quarter and full year reflects primarily a reduction in SG&A. SG&A expenses declined in both the quarter and full-year periods as a result of lower legal fees incurred in 2013 compared with 2012, primarily in connection with the settlement of an arbitration in which the Company was involved in 2012.

2014 Financial Performance Guidance

MIC today introduced guidance concerning its expected financial performance in 2014. The Company expects to generate proportionately combined Free Cash Flow of between $4.35 and $4.50 per share for the full year. The Company’s guidance contemplates issuance of additional shares in satisfaction of base management fees payable to the Company’s Manager, Macquarie Infrastructure Management (USA) Inc. It also assumes a normalization of maintenance capital expenditures at IMTT in 2014. Maintenance capital expenditures at IMTT were inflated in 2013 as a result of damage inflicted on the business’ Bayonne, NJ facility by Hurricane Sandy.

“We anticipate generating growth in proportionately combined Free Cash Flow and our dividend during 2014 consistent with the trends in our businesses that we have witnessed during 2012 and 2013,” said Hooke. “We expect the ongoing recovery in general aviation flight activity and the successful closing of the proposed acquisitions to continue to drive performance improvement at Atlantic Aviation while top line growth at IMTT and Hawaii Gas remains tempered. The combination should deliver, subject to the continued stable performance of our businesses, high single-digit Free Cash Flow growth that we can augment with effective deployment of growth capital beyond that which is contemplated in our budget.”

“In addition to deploying our available capital effectively, we have an opportunity to increase Free Cash Flow if we are able to offset what is expected to be a substantially higher tax liability at IMTT in 2014,” said Hooke. “We believe that there are viable options for reducing IMTT’s taxes through, among other things, the deployment of tax equity.”

The guidance for proportionately combined Free Cash Flow in 2014 also encompasses an expected increase in interest expense at Atlantic Aviation compared with 2013. Interest expense was low during the first five months of 2013 as a result of the expiration of interest rate hedges in October of 2012. The increase in interest expense in 2014 is expected to be approximately $3.3 million, not including the impact of debt incurred by the business in connection with acquisition completed in November 2013 and the proposed acquisitions announced in December 2013 and today.

MIC is expecting its businesses to generate proportionately combined EBITDA of approximately $385.0 million for the year. Proportionately combined maintenance capital expenditures, including MIC’s 50% interest in IMTT’s maintenance capital expenditures are expected to total approximately $45.0 million in 2014.

Cash Generation, Proportionately Combined and Reconciled to GAAP

MIC reports EBITDA excluding non-cash items on a consolidated and operating segment basis and reconciles each to consolidated net income (loss). EBITDA excluding non-cash items is a measure relied upon by management in evaluating the performance of its businesses 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 non-cash items reflected in the statement of operations including base and performance fees settled in shares.

The Company believes that EBITDA excluding non-cash items provides additional insight into the performance of its operating businesses, relative to each other and to similar businesses, without regard to capital structure, their ability to service or reduce debt, fund capital expenditures and/or support distributions to the holding company.

MIC also reports free cash flow, as defined below, on both a consolidated and operating segment basis as a means of assessing the amount of cash generated by its businesses and as a supplement to other information provided in accordance with GAAP, and reconciles each to cash from operating activities. MIC believes that reporting free cash flow provides additional insight into its ability to deploy cash, as GAAP measures, such as net income (loss) and cash from operating activities, do not reflect all of the items that management considers in estimating the amount of cash generated by its operating businesses. MIC defines free cash flow as cash from operating activities, less maintenance capital expenditures and changes in working capital. See the attached reconciliation of EBITDA excluding non-cash items and Free Cash Flow to their most comparable GAAP measures.

 

For the Year Ended December 31, 2013
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   Atlantic Aviation   Contracted Power and Energy (2)   MIC Corporate  

Proportionately Combined (1)
  IMTT 100%   Contracted Power and Energy 100%
           
Gross profit 143,607 73,370 323,174 13,392 N/A 553,543 287,214 24,455
EBITDA excluding non-cash items 134,245 55,028 144,837 11,214 (5,433) 339,891 268,489 24,087
Free cash flow 60,411   32,048   106,755   5,560   5,277   210,051 120,822   13,662
 

For the Year Ended December 31, 2012
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   Atlantic Aviation   Contracted Power and Energy (2)   MIC Corporate  

Proportionately Combined (1)
IMTT 100%   Contracted Power and Energy 100%
 
Gross profit 130,415 72,439 305,434 9,720 N/A 518,008 260,830 19,081
EBITDA excluding non-cash items 115,843 56,305 130,755 5,455 (10,367) 297,991 231,686 16,537
Free cash flow 59,566   34,551   74,065   1,324   (12,507)   156,999 119,132   8,356
 
_____________________
N/A- Not applicable.

(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)

Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in both CP and DE.
 
 

For the Quarter Ended December 31, 2013
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   Atlantic Aviation   Contracted Power and Energy (2)   MIC Corporate   Proportionately Combined (1)   IMTT 100%   Contracted Power and Energy 100%
           
Gross profit 33,852 18,567 83,056

2,919
N/A

138,394
67,703 5,130
EBITDA excluding non-cash items 31,359 15,023 35,668 2,042 (970) 83,122 62,718 4,720
Free cash flow 12,377   8,715   20,994   508   1,927   44,521 24,754   1,991
 

For the Quarter Ended December 31, 2012
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   Atlantic Aviation   Contracted Power and Energy (2)   MIC Corporate   Proportionately Combined (1) IMTT 100%   Contracted Power and Energy 100%
 
Gross profit 33,932 18,988 74,571 1,945 N/A 129,436 67,863 3,535
EBITDA excluding non-cash items 29,717 15,043 31,376 (3,686) (1,519) 70,930 59,433 (1,741)
Free cash flow 9,299   18,386   22,643   (4,618)   (8,283)   37,427 18,597   (3,526)

_____________________
N/A- Not applicable.

(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)

Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in both CP and DE.
 

Conference Call and WEBCAST

When: Management of MIC have scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, February 20, 2014 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 February 20, 2014 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 February 20, 2014 through February 27, 2014, at +1(404) 537-3406, Passcode: 35397206. 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 portfolio of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of a an airport services business, Atlantic Aviation, a gas processing and distribution business, Hawaii Gas, and a 50% interest in a bulk liquid terminals business, International-Matex Tank Terminals. MIC also owns and operates businesses in a Contracted Power and Energy segment including five solar power generation facilities and a district energy business. 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 release contains forward-looking statements. MIC may, in some cases, use words such as "project”, "believe”, "anticipate”, "plan”, "expect”, "estimate”, "intend”, "should”, "would”, "could”, "potentially”, or "may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this release are subject to a number of risks and uncertainties, some of which are beyond MIC’s control and which are described in the Company’s filings with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K. These risks and uncertainties include, 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 BALANCE SHEETS
($ in Thousands, Except Share Data)
 
December 31,

2013
December 31,

2012
ASSETS
Current assets:
Cash and cash equivalents $ 233,373 $ 141,376
Restricted cash 48,853 3,133

Accounts receivable, less allowance for doubtful accounts of $953 and $875, respectively
60,823 56,553
Inventories 25,834 20,617
Prepaid expenses 10,132 8,908
Deferred income taxes 6,197 6,803
Equipment lease receivables current 8,515 4,448
Other   9,792     12,072  
Total current assets 403,519 253,910
Property, equipment, land and leasehold improvements, net 854,169 708,031
Restricted cash 3,516 7,326
Equipment lease receivables non-current 16,155 28,177
Investment in unconsolidated business 83,703 75,205
Goodwill 514,494 514,640
Intangible assets, net 592,850 626,902
Deferred financing costs, net of accumulated amortization 22,740 7,845
Fair value of derivative instruments 6,880 95
Other   2,839     1,563  
Total assets $ 2,500,865   $ 2,223,694  
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 3,032 $ 50,253
Accounts payable 28,850 26,499
Accrued expenses 42,713 35,499
Current portion of notes payable and capital leases 1,862 1,667
Current portion of long-term debt 163,083 106,580
Fair value of derivative instruments 13,027 7,450
Customer deposits 4,776 4,650
Other   14,109     12,732  
Total current liabilities 271,452 245,330
Notes payable and capital leases, net of current portion 1,218 2,303
Long-term debt, net of current portion 831,027 1,052,584
Deferred income taxes 189,719 169,392
Fair value of derivative instruments - 5,360
Other   54,181     51,160  
Total liabilities   1,347,597     1,526,129  
Commitments and contingencies - -
Members’ equity:

LLC interests, no par value; 500,000,000 authorized; 56,295,595 LLC interests issued and outstanding at December 31, 2013 and 47,453,943 LLC interests issued and outstanding at December 31, 2012
1,226,733 883,143
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (8,445 ) (20,801 )
Accumulated deficit   (197,507 )   (228,761 )
Total members’ equity 1,042,228 655,028
Noncontrolling interests   111,040     42,537  
Total equity   1,153,268     697,565  
 
Total liabilities and equity $ 2,500,865   $ 2,223,694  
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands, Except Share and Per Share Data)
     
 
Year Ended

December 31,

2013
Year Ended

December 31,

2012
Year Ended

December 31,

2011
Revenue
Revenue from product sales $ 685,997 $ 677,164 $ 639,521
Revenue from product sales - utility 137,486 144,439 140,746
Service revenue 213,973 207,907 203,532
Financing and equipment lease income   3,563     4,536     4,992  
Total revenue   1,041,019     1,034,046     988,791  
Costs and expenses
Cost of product sales 454,761 462,229 437,049
Cost of product sales - utility 117,499 122,254 116,413
Cost of services 47,760 52,609 52,744
Selling, general and administrative 210,060 213,372 202,486
Fees to manager - related party 85,367 89,227 15,475
Depreciation 39,150 31,587 33,815
Amortization of intangibles 34,651 34,601 42,107
Loss from customer contract termination 5,906 - -
Loss (gain) on disposal of assets   226     (1,358 )   1,522  
Total operating expenses   995,380     1,004,521     901,611  
Operating income 45,639 29,525 87,180
Other income (expense)
Interest income 204 222 112
Interest expense (1) (37,044 ) (46,623 ) (59,361 )
Loss on extinguishment of debt (2,472 ) - -
Equity in earnings and amortization charges of investee 39,115 32,327 22,763
Other income, net   681     1,085     912  
Net income before income taxes 46,123 16,536 51,606
Provision for income taxes (2)   (18,043 )   (2,285 )   (22,718 )
Net income $ 28,080 $ 14,251 $ 28,888
Less: net (loss) income attributable to noncontrolling interests   (3,174 )   930     1,545  
Net income attributable to MIC LLC $ 31,254   $ 13,321   $ 27,343  
Basic income per share attributable to MIC LLC interest holders $ 0.61   $ 0.29   $ 0.59  
Weighted average number of shares outstanding: basic   51,381,003     46,635,049     45,995,207  
Diluted income per share attributable to MIC LLC interest holders $ 0.61   $ 0.29   $ 0.59  
Weighted average number of shares outstanding: diluted   51,396,146     46,655,289     46,021,015  
Cash dividends declared per share $ 3.35   $ 2.20   $ 0.80  
 
(1) Interest expense includes losses on derivative instruments of $7.5 million, $21.6 million and $35.0 million for the years ended December 31, 2013, 2012 and 2011, respectively, of which net losses of $1.4 million, $15.4 million and $22.1 million, respectively, was reclassified from accumulated other comprehensive income.
(2) Includes $568,000, $6.8 million and $8.8 million of benefit for income taxes from accumulated other comprehensive income reclassifications for the years ended December 31, 2013, 2012 and 2011, respectively.
 

MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
     
Year Ended

December 31,

2013
Year Ended

December 31,

2012
Year Ended

December 31,

2011
 
Operating activities
Net income $ 28,080 $ 14,251 $ 28,888
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 45,876 38,314 40,454
Amortization of intangible assets 34,651 34,601 42,107
Loss (gain) on disposal of assets 106 (1,979 ) 617
Loss from customer contract termination 5,906 - -
Equity in earnings and amortization charges of investee (39,115 ) (32,327 ) (22,763 )
Equity distributions from investee 39,115 86,952 -
Amortization of debt financing costs 3,874 4,232 4,086
Loss on extinguishment of debt 2,434 - -
Adjustments to derivative instruments (5,138 ) (26,428 ) (18,244 )
Base management fees to be settled/settled in LLC interests 31,979 21,898 15,475
Performance fees settled in LLC interests 53,388 67,329 -
Equipment lease receivable, net 3,807 3,548 3,105
Deferred rent 260 421 385
Deferred taxes 13,295 (1,580 ) 19,209
Other non-cash expenses, net 71 2,036 2,748
Changes in other assets and liabilities, net of acquisitions:
Restricted cash (28,303 ) - -
Accounts receivable (4,239 ) (933 ) (4,633 )
Inventories (4,662 ) 3,087 (5,061 )
Prepaid expenses and other current assets 1,062 (3,461 ) (3,602 )
Due to manager - related party 29 57 10
Accounts payable and accrued expenses (23,796 ) 6,479 (9,696 )
Income taxes payable 1,037 (414 ) 668
Other, net   (4,600 )   1,828     (2,711 )
Net cash provided by operating activities   155,117     217,911     91,042  
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired (28,953 ) (64,817 ) (23,149 )
Proceeds from sale of assets - 5,625 17,006
Purchases of property and equipment (111,208 ) (39,288 ) (33,764 )
Investment in capital leased assets - - (24 )
Return of investment in unconsolidated business 371 101,110 -
Other, net   154     (153 )   249  
Net cash (used in) provided by investing activities   (139,636 )   2,477     (39,682 )
 
Financing activities
Proceeds from issuance of LLC interests 355,867 - -
Proceeds from long-term debt 579,296 192,570 13,406
Offering and equity raise costs paid (16,313 ) - -
Net proceeds on line of credit facilities - - 4,600
Proceeds from the issuance of LLC interests pursuant to MIC Direct 23 - -
Dividends paid to holders of LLC interests (128,970 ) (112,487 ) (27,618 )
Contributions received from noncontrolling interests 73,612 55,473 -
Distributions paid to noncontrolling interests (2,366 ) (4,781 ) (8,077 )
Payment of long-term debt (766,711 ) (237,240 ) (36,330 )
Debt financing costs paid (19,699 ) (2,942 ) (4 )
Change in restricted cash 3,810 8,663 1,010
Payment of notes and capital lease obligations   (2,033 )   (1,054 )   (124 )
Net cash provided by (used in) financing activities   76,516     (101,798 )   (53,137 )
 
Net change in cash and cash equivalents   91,997     118,590     (1,777 )
Cash and cash equivalents, beginning of year   141,376     22,786     24,563  
Cash and cash equivalents, end of year $ 233,373   $ 141,376   $ 22,786  
 
Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued purchases of property and equipment $ 13,950   $ 9,623   $ 3,201  
Accrued equity offering costs $ 298   $ -   $ -  
Accrued financing costs $ 479   $ -   $ -  
Acquisition of equipment through capital leases $ 1,320   $ 3,117   $ 2,663  
Issuance of LLC interests to manager for performance fees $ 97,208   $ 23,509   $ -  
Issuance of LLC interests to manager for base management fees $ 35,433   $ 19,821   $ 14,467  
Issuance of LLC interests to independent directors $ 640   $ 571   $ 450  
Taxes paid $ 3,710   $ 4,870   $ 2,913  
Interest paid $ 38,956   $ 58,916   $ 72,949  
 

CONSOLIDATED STATEMENT OF OPERATIONS - MD&A
               
 
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012 $ % 2013 2012 $ %
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 172,532 $ 168,696 3,836 2.3 $ 685,997 $ 677,164 8,833 1.3
Revenue from product sales - utility 33,391 33,783 (392 ) (1.2 ) 137,486 144,439 (6,953 ) (4.8 )
Service revenue 53,820 47,854 5,966 12.5 213,973 207,907 6,066 2.9
Financing and equipment lease income   784     1,088   (304 ) (27.9 )   3,563     4,536   (973 ) (21.5 )
Total revenue   260,527     251,421   9,106   3.6   1,041,019     1,034,046   6,973   0.7
Costs and expenses
Cost of product sales 114,639 115,451 812 0.7 454,761 462,229 7,468 1.6
Cost of product sales - utility 28,404 27,757 (647 ) (2.3 ) 117,499 122,254 4,755 3.9
Cost of services   10,730     11,120   390   3.5   47,760     52,609   4,849   9.2
Gross profit 106,754 97,093 9,661 10.0 420,999 396,954 24,045 6.1
Selling, general and administrative 55,062 56,071 1,009 1.8 210,060 213,372 3,312 1.6
Fees to manager - related party 8,455 50,119 41,664 83.1 85,367 89,227 3,860 4.3
Depreciation 10,420 8,883 (1,537 ) (17.3 ) 39,150 31,587 (7,563 ) (23.9 )
Amortization of intangibles 8,785 8,709 (76 ) (0.9 ) 34,651 34,601 (50 ) (0.1 )
Loss from customer contract termination 4,280 - (4,280 ) NM 5,906 - (5,906 ) NM
Loss (gain) on disposal of assets   -     21   21   100.0   226     (1,358 ) (1,584 ) (116.6 )
Total operating expenses   87,002     123,803   36,801   29.7   375,360     367,429   (7,931 ) (2.2 )
Operating income (loss) 19,752 (26,710 ) 46,462 173.9 45,639 29,525 16,114 54.6
 
Other income (expense)
Interest income 22 106 (84 ) (79.2 ) 204 222 (18 ) (8.1 )
Interest expense (1) (5,854 ) (7,547 ) 1,693 22.4 (37,044 ) (46,623 ) 9,579 20.5
Loss on extinguishment of debt - - - - (2,472 ) - (2,472 ) NM
Equity in earnings and amortization charges of investee 8,788 9,032 (244 ) (2.7 ) 39,115 32,327 6,788 21.0
Other income, net   167     840   (673 ) (80.1 )   681     1,085   (404 ) (37.2 )
Net income (loss) before income taxes 22,875 (24,279 ) 47,154 194.2 46,123 16,536 29,587 178.9
(Provision) benefit for income taxes   (8,802 )   12,413   (21,215 ) (170.9 )   (18,043 )   (2,285 ) (15,758 ) NM
Net income (loss) $ 14,073 $ (11,866 ) 25,939 NM $ 28,080 $ 14,251 13,829 97.0
Less: net (loss) income attributable to noncontrolling interests   (1,751 )   (1,836 ) (85 ) (4.6 )   (3,174 )   930   4,104   NM
Net income (loss) attributable to MIC LLC $ 15,824   $ (10,030 ) 25,854   NM $ 31,254   $ 13,321   17,933   134.6
 
NM - Not meaningful

(1) Interest expense includes gains on derivative instruments of $2.1 million and losses on derivative instruments of $7.5 million for the quarter and year ended December 31, 2013, respectively, and losses on derivative instruments of $1.3 million and $21.6 million for the quarter and year ended December 31, 2012, respectively.
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
       
  Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
    Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013   2012 $   % 2013   2012 $   %
($ In Thousands) (Unaudited)
Net income (loss) attributable to MIC LLC (1) $ 15,824 $ (10,030) $ 31,254 $ 13,321
Interest expense, net (2) 5,832 7,441 36,840 46,401
Provision (benefit) for income taxes 8,802 (12,413) 18,043 2,285
Depreciation (3) 10,420 8,883 39,150 31,587
Depreciation - cost of services (3) 1,705 1,691 6,726 6,727
Amortization of intangibles (4) 8,785 8,709 34,651 34,601
Loss from customer contract termination 4,280 - 5,906 -
Loss on extinguishment of debt - - 2,434 -
(Gain) loss on disposal of assets - (176) 106 (1,979)
Equity in earnings and amortization charges of investee (5) 11,302 - - -
Base management fees to be settled/settled in LLC interests 8,455 6,299 31,979 21,898

Performance fees settled in LLC interests
- 43,820 53,388 67,329
Other non-cash (income) expense, net   (874)   (2,033)     (2,843)   3,387  
EBITDA excluding non-cash items $ 74,531 $ 52,191 22,340 42.8 $ 257,634 $ 225,557 32,077 14.2
EBITDA excluding non-cash items $ 74,531 $ 52,191 $ 257,634 $ 225,557
Interest expense, net (2) (5,832) (7,441) (36,840) (46,401)
Interest rate swap breakage fee - Hawaii Gas (2) - - - (8,701)
Interest rate swap breakage fee - Atlantic Aviation (2) - - - (595)
Adjustments to derivative instruments recorded in interest expense (2) (6,298) (2,748) (5,138) (17,132)
Amortization of debt financing costs (2) 982 942 3,874 4,232

Cash distribution received in excess of equity in earning and amortization
charges of investee (6) - - - 54,625
Equipment lease receivables, net 993 953 3,807 3,548
Provision/benefit for income taxes, net of changes in deferred taxes (2,074) 374 (4,748) (3,865)
Pension contribution (7) (900) - (3,150) -
Changes in working capital   (34,045)   9,057   (60,322)   6,643
Cash provided by operating activities 27,357 53,328 155,117 217,911
Changes in working capital 34,045 (9,057) 60,322 (6,643)
Maintenance capital expenditures  

(7,685)
  (6,019)     (18,582)   (19,851)  
 
Free cash flow $ 53,717 $ 38,252 15,465 40.4 $ 196,857 $ 191,417 5,440 2.8

 

(1)
 

Net income (loss) attributable to MIC LLC excludes net loss of $1.8 million and $3.2 million attributable to noncontrolling interests for the quarter and year ended December 31, 2013, respectively, and net loss of $1.8 million and net income of $930,000 attributable to noncontrolling interests for the quarter and year ended December 31, 2012, 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, a component of Contracted Power and Energy segment, which is reported in cost of services in our consolidated statements of operations. Depreciation and Depreciation - cost of services does not include acquisition-related step-up depreciation expense of $2.0 million and $7.8 million for the quarters and years ended December 31, 2013 and 2012, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated statements of operations.

(4)

Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $342,000 for the quarters and years ended December 31, 2013 and 2012, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated 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 year ended December 31, 2013, we recognized equity in earnings and amortization charges of investee income of $8.8 million and $39.1 million, respectively, in the consolidated statement of operations, which was offset by the cash distributions of $39.1 million received during the year. The remaining distribution received of $371,000 was recorded in net cash provided by investing activities, as a return of investment, on the consolidated statements of cash flows. For the quarter and year ended December 31, 2012, we recognized equity in earnings and amortization charges of investee income of $9.0 million and $32.3 million, respectively, in the consolidated statement of operations, which was fully offset by the cash distributions received during the year ended December 31, 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 income (loss) attributable to MIC LLC to EBITDA excluding non-cash items above. The cumulative allocation of the $188.1 million distributions received during the year ended December 31, 2012 was $87.0 million recorded in net cash provided by operating activities and $101.1 million recorded in net cash provided by investing activities, as a return of investment, on the consolidated statements of cash flows.

(7)

Pension contribution of $1.6 million and $3.8 million for the quarter and year ended December 31, 2012, respectively, were reported in changes in working capital for those periods.
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

 

RECONCILIATION OF SEGMENT NET INCOME TO EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
               

Atlantic Aviation
 
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012       2013 2012      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 139,082 140,513 (1,431 ) (1.0 ) 556,387 560,710 (4,323 ) (0.8 )
Non-fuel revenue 44,558   38,643   5,915   15.3 169,093   159,145   9,948   6.3
Total revenue 183,640 179,156 4,484 2.5 725,480 719,855 5,625 0.8
Cost of revenue
Cost of revenue-fuel 96,544 100,584 4,040 4.0 386,417 396,384 9,967 2.5
Cost of revenue-non-fuel 4,040   4,001   (39 ) (1.0 ) 15,889   18,037   2,148   11.9
Total cost of revenue 100,584 104,585 4,001 3.8 402,306 414,421 12,115 2.9
Fuel gross profit 42,538 39,929 2,609 6.5 169,970 164,326 5,644 3.4
Non-fuel gross profit 40,518   34,642   5,876   17.0 153,204   141,108   12,096   8.6
Gross profit 83,056   74,571   8,485   11.4 323,174   305,434   17,740   5.8
Selling, general and administrative expenses 47,453 43,209 (4,244 ) (9.8 ) 178,182 174,039 (4,143 ) (2.4 )
Depreciation and amortization 14,461 14,920 459 3.1 56,378 56,681 303 0.5
Loss (gain) on disposal of assets -   21   21   100.0 226   (1,358 ) (1,584 ) (116.6 )
Operating income 21,142 16,421 4,721 28.7 88,388 76,072 12,316 16.2
Interest expense, net (1) (1,945 ) (4,515 ) 2,570 56.9 (22,151 ) (27,963 ) 5,812 20.8
Loss on extinguishment of debt - - - NM (2,472 ) - (2,472 ) NM
Other (expense) income (56 ) 931 (987 ) (106.0 ) (2 ) 969 (971 ) (100.2 )
Provision for income taxes (7,209 ) (5,525 ) (1,684 ) (30.5 ) (25,218 ) (21,340 ) (3,878 ) (18.2 )
Net income (2) 11,932   7,312   4,620   63.2 38,545   27,738   10,807   39.0
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
Net income (2) 11,932 7,312 38,545 27,738
Interest expense, net (1) 1,945 4,515 22,151 27,963
Provision for income taxes 7,209 5,525 25,218 21,340
Depreciation and amortization 14,461 14,920 56,378 56,681
Loss on extinguishment of debt - - 2,434 -
(Gain) loss on disposal of assets - (176 ) 106 (1,979 )
Other non-cash expense (income) 121   (720 )   5   (988 )  
EBITDA excluding non-cash items 35,668   31,376   4,292   13.7 144,837   130,755   14,082   10.8
 
EBITDA excluding non-cash items 35,668 31,376 144,837 130,755
Interest expense, net (1) (1,945 ) (4,515 ) (22,151 ) (27,963 )
Interest rate swap breakage fees (1) - - - (595 )
Adjustments to derivative instruments recorded in interest expense (1) (4,781 ) (1,249 ) 823 (17,264 )
Amortization of debt financing costs (1) 676 653 2,687 2,675
Provision for income taxes, net of changes in deferred taxes (2,254 ) (674 ) (7,823 ) (2,646 )
Changes in working capital 1,220   (2,503 ) 2,504   46  
Cash provided by operating activities 28,584 23,088 120,877 85,008
Changes in working capital (1,220 ) 2,503 (2,504 ) (46 )
Maintenance capital expenditures (6,370 ) (2,948 )   (11,618 ) (10,897 )  
Free cash flow 20,994   22,643   (1,649 ) (7.3 ) 106,755   74,065   32,690   44.1
_____________________
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.
 

IMTT
               
 
 
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012       2013 2012      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 122,826 117,611 5,215 4.4 484,238 449,927 34,311 7.6
Environmental response revenue 7,323   6,409   914   14.3 29,664   24,461   5,203   21.3
Total revenue 130,149 124,020 6,129 4.9 513,902 474,388 39,514 8.3
Costs and expenses
Terminal operating costs 55,019 49,905 (5,114 ) (10.2 ) 200,600 191,791 (8,809 ) (4.6 )
Environmental response operating costs 7,427   6,252   (1,175 ) (18.8 ) 26,088   21,767   (4,321 ) (19.9 )
Total operating costs 62,446 56,157 (6,289 ) (11.2 ) 226,688 213,558 (13,130 ) (6.1 )
Terminal gross profit 67,807 67,706 101 0.1 283,638 258,136 25,502 9.9
Environmental response gross profit (104 ) 157   (261 ) (166.2 ) 3,576   2,694   882   32.7
Gross profit 67,703 67,863 (160 ) (0.2 ) 287,214 260,830 26,384 10.1
General and administrative expenses 8,309 8,645 336 3.9 32,729 31,050 (1,679 ) (5.4 )
Depreciation and amortization 19,982 19,000 (982 ) (5.2 ) 76,091 70,016 (6,075 ) (8.7 )
Casualty losses, net (1) -   -   -   - 6,700   -   (6,700 ) NM
Operating income 39,412 40,218 (806 ) (2.0 ) 171,694 159,764 11,930 7.5
Interest expense, net (2) (7,473 ) (6,330 ) (1,143 ) (18.1 ) (24,572 ) (35,244 ) 10,672 30.3
Other income 329 210 119 56.7 2,133 1,890 243 12.9
Provision for income taxes (12,255 ) (13,426 ) 1,171 8.7 (61,149 ) (51,293 ) (9,856 ) (19.2 )
Noncontrolling interest (31 ) (203 ) 172   84.7 (251 ) (839 ) 588   70.1
Net income 19,982   20,469   (487 ) (2.4 ) 87,855   74,278   13,577   18.3
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
Net income 19,982 20,469 87,855 74,278
Interest expense, net (2) 7,473 6,330 24,572 35,244
Provision for income taxes 12,255 13,426 61,149 51,293
Depreciation and amortization 19,982 19,000 76,091 70,016
Casualty losses, net (1) - - 6,700 -
Other non-cash expenses (3) 3,026   208     12,122   855    
EBITDA excluding non-cash items 62,718   59,433   3,285   5.5 268,489   231,686   36,803   15.9
 
EBITDA excluding non-cash items 62,718 59,433 268,489 231,686
Interest expense, net (2) (7,473 ) (6,330 ) (24,572 ) (35,244 )
Adjustments to derivative instruments recorded in interest expense (2) (4,010 ) (4,369 ) (19,794 ) (4,271 )
Amortization of debt financing costs (2) 843 802 2,833 3,221
Provision for income taxes, net of changes in deferred taxes (4,609 ) (3,320 ) (18,456 ) (17,885 )
Pension contribution (4) - - (4,450 ) -
Changes in working capital (3,525 ) (4,044 ) (3,707 ) 13,636  
Cash provided by operating activities 43,944 42,172 200,343 191,143
Changes in working capital 3,525 4,044 3,707 (13,636 )
Maintenance capital expenditures (5) (22,715 ) (27,619 )   (83,228 ) (58,375 )  
Free cash flow 24,754   18,597   6,157   33.1 120,822   119,132   1,690   1.4
_____________________
NM - Not meaningful

(1)
 

Casualty losses, net, includes $2.5 million and $1.5 million related to the quarters ended December 31, 2012 and March 31, 2013, respectively, which were recorded in terminal operating costs in those periods. These amounts have been included in the year ended December 31, 2013.

(2)

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

(3)

IMTT management's calculation of IMTT's EBITDA includes various non-cash items, unlike MIC’s other businesses. In order to ensure IMTT’s EBITDA excluding non-cash items does in fact excludes non-cash items, and to promote consistency across its reporting segments, MIC has excluded known non-cash items when calculating IMTT’s EBITDA excluding non-cash items including primarily the non-cash pension expense of $2.7 million and $11.2 million for the quarter and year ended December 31, 2013. The non-cash pension expense of $2.8 million and $11.4 million for the quarter and year ended December 31, 2012, respectively, were reported in changes in working capital for those periods, net of pension contribution.

(4)

Pension contributions of $5.0 million for the year ended December 31, 2012 were reported in changes in working capital, net of the non-cash pension expenses.

(5)

Maintenance capital expenditures includes a reclassification from growth capital expenditures in the quarters ended December 31, 2012 and March 31, 2013 of $1.2 million and $509,000, respectively. These amounts have been included in the year ended December 31, 2013. The classification of capital expenditures as either growth or maintenance is the subject of ongoing review and discussions between MIC and its co-investor in IMTT.

 

Hawaii Gas
               
 
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012       2013 2012      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 31,246 27,828 3,418 12.3 120,239 116,099 4,140 3.6
Cost of revenue - non-utility 14,548   11,571   (2,977 ) (25.7 ) 54,073   52,091   (1,982 ) (3.8 )
Contribution margin - non-utility 16,698 16,257 441 2.7 66,166 64,008 2,158 3.4
Revenue - utility 33,391 33,783 (392 ) (1.2 ) 137,486 144,439 (6,953 ) (4.8 )
Cost of revenue - utility 23,866   24,155   289   1.2 98,780   105,723   6,943   6.6
Contribution margin - utility 9,525 9,628 (103 ) (1.1 ) 38,706 38,716 (10 ) (0.0 )
Total contribution margin 26,223 25,885 338 1.3 104,872 102,724 2,148 2.1
Production 2,752 1,617 (1,135 ) (70.2 ) 10,871 8,569 (2,302 ) (26.9 )
Transmission and distribution (1) 4,904   5,280   376   7.1 20,631   21,716   1,085   5.0
Gross profit 18,567 18,988 (421 ) (2.2 ) 73,370 72,439 931 1.3
Selling, general and administrative expenses 4,155 4,062 (93 ) (2.3 ) 20,294 18,637 (1,657 ) (8.9 )
Depreciation and amortization 2,259   2,173   (86 ) (4.0 ) 8,767   7,981   (786 ) (9.8 )
Operating income 12,153 12,753 (600 ) (4.7 ) 44,309 45,821 (1,512 ) (3.3 )
Interest expense, net (2) (1,794 ) (1,758 ) (36 ) (2.0 ) (6,834 ) (10,860 ) 4,026 37.1
Other income (expense) 87 (152 ) 239 157.2 (164 ) (437 ) 273 62.5
Provision for income taxes (4,326 ) (4,561 ) 235   5.2 (14,995 ) (13,904 ) (1,091 ) (7.8 )
Net income (3) 6,120   6,282   (162 ) (2.6 ) 22,316   20,620   1,696   8.2
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
Net income (3) 6,120 6,282 22,316 20,620
Interest expense, net (2) 1,794 1,758 6,834 10,860
Provision for income taxes 4,326 4,561 14,995 13,904
Depreciation and amortization 2,259 2,173 8,767 7,981
Other non-cash expenses (1) 524   269     2,116   2,940    
EBITDA excluding non-cash items 15,023   15,043   (20 ) (0.1 ) 55,028   56,305   (1,277 ) (2.3 )
 
EBITDA excluding non-cash items 15,023 15,043 55,028 56,305
Interest expense, net (2) (1,794 ) (1,758 ) (6,834 ) (10,860 )
Interest rate swap breakage fees (2) - - - (8,701 )
Adjustments to derivative instruments recorded in interest expense (2) (4 ) (51 ) (430 ) 3,038
Amortization of debt financing costs (2) 113 112 455 858
Provision for income taxes, net of changes in deferred taxes (2,744 ) 7,862 (6,705 ) 1,974
Pension contribution (4) (900 ) - (3,150 ) -
Changes in working capital 3,808   (7,829 ) 2,248   (6,712 )
Cash provided by operating activities 13,502 13,379 40,612 35,902
Changes in working capital (3,808 ) 7,829 (2,248 ) 6,712
Maintenance capital expenditures (979 ) (2,822 )   (6,316 ) (8,063 )  
Free cash flow 8,715   18,386   (9,671 ) (52.6 ) 32,048   34,551   (2,503 ) (7.2 )
_____________________

(1)
 

For the year ended December 31, 2013, transmission and distribution includes non-cash income of $286,000 for asset retirement obligation credit. This non-cash income is excluded when calculating EBITDA excluding non-cash items.

(2)

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

(3)

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.

(4)

Pension contribution of $1.6 million and $3.8 million for the quarter and year ended December 31, 2012, respectively, were reported in changes in working capital for those periods.
 

Contracted Power and Energy
               
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012       2013 2012      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Product sales 2,204 355 1,849 NM 9,371 355 9,016 NM
Service revenue 9,262 9,211 51 0.6 44,880 48,762 (3,882 ) (8.0 )
Finance lease revenue 784   1,088   (304 ) (27.9 ) 3,563   4,536   (973 ) (21.5 )
Total revenue 12,250   10,654   1,596   15.0 57,814   53,653   4,161   7.8
Direct expenses — electricity 1,903 1,907 4 0.2 12,263 14,494 2,231 15.4
Direct expenses — other (1) 5,217   5,212   (5 ) (0.1 ) 21,096   20,078   (1,018 ) (5.1 )
Direct expenses — total 7,120 7,119 (1 ) (0.0 ) 33,359 34,572 1,213 3.5
Gross profit 5,130 3,535 1,595 45.1 24,455 19,081 5,374 28.2
Selling, general and administrative expenses 2,292 7,154 4,862 68.0 7,865 9,829 1,964 20.0
Depreciation 2,156 154 (2,002 ) NM 7,330 154 (7,176 ) NM
Amortization of intangibles 329 345 16 4.6 1,326 1,372 46 3.4
Loss from customer contract termination 4,280   -   (4,280 ) NM 5,906   -   (5,906 ) NM
Operating (loss) income (3,927 ) (4,118 ) 191 4.6 2,028 7,726 (5,698 ) (73.8 )
Interest expense, net (2) (2,016 ) (1,269 ) (747 ) (58.9 ) (7,930 ) (7,790 ) (140 ) (1.8 )
Other income 133 83 50 60.2 3,289 651 2,638 NM
Benefit (provision) for income taxes 2,145 1,241 904 72.8 (827 ) (930 ) 103 11.1
Noncontrolling interests 471   2,043   (1,572 ) (76.9 ) 4,051   1,421   2,630   185.1
Net (loss) income (3,194 ) (2,020 ) (1,174 ) (58.1 ) 611   1,078   (467 ) (43.3 )
 
Reconciliation of net (loss) income to EBITDA excluding non-cash items and cash (used in) provided by operating activities to Free Cash Flow:
Net (loss) income (3,194 ) (2,020 ) 611 1,078
Interest expense, net (2) 2,016 1,269 7,930 7,790
(Benefit) provision for income taxes (2,145 ) (1,241 ) 827 930
Depreciation (1) 3,861 1,845 14,056 6,881
Amortization of intangibles 329 345 1,326 1,372
Loss from customer contract termination 4,280 - 5,906 -
Other non-cash expense (427 ) (1,939 )   (6,569 ) (1,514 )  
EBITDA excluding non-cash items 4,720   (1,741 ) 6,461   NM 24,087   16,537   7,550   45.7
 
EBITDA excluding non-cash items 4,720 (1,741 ) 24,087 16,537
Interest expense, net (2) (2,016 ) (1,269 ) (7,930 ) (7,790 )
Adjustments to derivative instruments recorded in interest expense (2) (1,513 ) (1,448 ) (5,531 ) (2,906 )
Amortization of debt financing costs (2) 193 177 732 699
Equipment lease receivable, net 993 953 3,807 3,548
Benefit/provision for income taxes, net of changes in deferred taxes (50 ) 51 (855 ) (841 )
Changes in working capital (36,158 ) 13,415   (54,491 ) 11,962  
Cash (used in) provided by operating activities (33,831 ) 10,138 (40,181 ) 21,209
Changes in working capital 36,158 (13,415 ) 54,491 (11,962 )
Maintenance capital expenditures (336 ) (249 )   (648 ) (891 )  
Free cash flow 1,991   (3,526 ) 5,517   156.5 13,662   8,356   5,306   63.5
____________
NM - Not meaningful

(1)
 

Includes depreciation expense related to District Energy of $1.7 million and $6.7 million for the quarters and years ended December 31, 2013 and 2012, respectively.

(2)

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

Corporate
               
 
Quarter Ended

December 31,
Change

Favorable/(Unfavorable)
Year Ended

December 31,
Change

Favorable/(Unfavorable)
2013 2012       2013 2012      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Base management fees 8,455 6,299 (2,156 ) (34.2 ) 31,979 21,898 (10,081 ) (46.0 )
Performance fees - 43,820 43,820 100.0 53,388 67,329 13,941 20.7
Selling, general and administrative expenses 1,162   1,646   484   29.4 6,149   10,867   4,718   43.4
Operating loss (9,617 ) (51,765 ) 42,148 81.4 (91,516 ) (100,094 ) 8,578 8.6
Interest (expense) income, net (77 ) 101 (178 ) (176.2 ) 75 212 (137 ) (64.6 )
Other income (expense), net 4 (23 ) 27 117.4 (12 ) (98 ) 86 87.8
Benefit for income taxes 588 21,258 (20,670 ) (97.2 ) 22,997 33,889 (10,892 ) (32.1 )
Noncontrolling interest 1,280   (207 ) 1,487   NM (877 ) (2,351 ) 1,474   62.7
Net loss (1) (7,822 ) (30,636 ) 22,814   74.5 (69,333 ) (68,442 ) (891 ) (1.3 )
 
Reconciliation of net loss to EBITDA excluding non-cash items and cash used in operating activities to Free Cash Flow:
Net loss (1) (7,822 ) (30,636 ) (69,333 ) (68,442 )
Interest expense (income), net 77 (101 ) (75 ) (212 )
Benefit for income taxes (588 ) (21,258 ) (22,997 ) (33,889 )
Base management to be settled/settled in LLC interests 8,455 6,299 31,979 21,898
Performance fees settled in LLC interests - 43,820 53,388 67,329
Other non-cash (income) expense (1,092 ) 357     1,605   2,949    
EBITDA excluding non-cash items (970 ) (1,519 ) 549   36.1 (5,433 ) (10,367 ) 4,934   47.6
 
EBITDA excluding non-cash items (970 ) (1,519 ) (5,433 ) (10,367 )
Interest (expense) income, net (77 ) 101 75 212
Benefit for income taxes, net of changes in deferred taxes 2,974 (6,865 ) 10,635 (2,352 )
Changes in working capital (2,915 ) 5,974   (10,583 ) 1,347  
Cash used in operating activities (988 ) (2,309 ) (5,306 ) (11,160 )
Changes in working capital 2,915   (5,974 )   10,583   (1,347 )  
Free cash flow 1,927   (8,283 ) 10,210   123.3 5,277   (12,507 ) 17,784   142.2
_____________________
NM - Not meaningful

(1)
 

Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

 

RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM

OPERATING ACTIVITIES TO FREE CASH FLOW
     

For the Year Ended December 31, 2013
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas 100%   Atlantic Aviation

100%
  Contracted Power and Energy (2)   MIC Corporate 100%   Proportionately Combined (1) IMTT 100%   Contracted Power and Energy 100%
         
Net income (loss) attributable to MIC LLC 43,928 22,316 38,545 1,095 (69,333) 36,551 87,855 611
Interest expense (income), net (3) 12,286 6,834 22,151 4,417 (75) 45,613 24,572 7,930
Provision (benefit) for income taxes 30,575 14,995 25,218 602 (22,997) 48,393 61,149 827
Depreciation 37,077 7,519 24,301 7,987 - 76,884 74,154 14,056
Amortization of intangibles 969 1,248 32,077 663 - 34,957 1,937 1,326
Loss from customer contract termination - - - 2,954 - 2,954 - 5,906
Casualty losses, net (4) 3,350 - - - - 3,350 6,700 -

Loss on disposal of assets
- - 106 - - 106 - -
Loss on extinguishment of debt - - 2,434 - - 2,434 - -
Base management fee settled/to be settled in LLC interests - - - - 31,979 31,979 - -
Performance fee settled in LLC interests - - - - 53,388 53,388 - -
Other non-cash expense (income) (5) 6,061   2,116   5   (6,504)   1,605   3,283 12,122   (6,569)
EBITDA excluding non-cash items 134,245   55,028   144,837   11,214   (5,433)   339,891 268,489   24,087
 
EBITDA excluding non-cash items 134,245 55,028 144,837 11,214 (5,433) 339,891 268,489 24,087
Interest (expense) income, net (3) (12,286) (6,834) (22,151) (4,417) 75 (45,613) (24,572) (7,930)
Adjustments to derivative instruments recorded in interest expense, net (3) (9,897) (430) 823 (2,766) - (12,270) (19,794) (5,531)
Amortization of deferred finance charges (3) 1,417 455 2,687 377 - 4,936 2,833 732
Equipment lease receivables, net - - - 1,904 - 1,904 - 3,807
Provision/benefit for income taxes, net of changes in deferred taxes (9,228) (6,705) (7,823) (428) 10,635 (13,549) (18,456) (855)
Pension contribution (2,225) (3,150) - - - (5,375) (4,450) -
Changes in working capital (1,854)   2,248   2,504   (53,436)   (10,583)   (61,121) (3,707)   (54,491)
Cash provided by (used in) operating activities 100,172 40,612 120,877 (47,552) (5,306) 208,802 200,343 (40,181)
Changes in working capital 1,854 (2,248) (2,504) 53,436 10,583 61,121 3,707 54,491
Maintenance capital expenditures (6) (41,614)   (6,316)   (11,618)   (324)   -   (59,872) (83,228) (648)
Free cash flow 60,411   32,048   106,755   5,560   5,277   210,051 120,822   13,662
 

For the Year Ended December 31, 2012
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas 100%   Atlantic Aviation

100%
  Contracted Power and Energy (2)   MIC Corporate 100%   Proportionately Combined (1) IMTT

100%
  Contracted Power and Energy 100%
 
Net income (loss) attributable to MIC LLC 37,139 20,620 27,738 (578) (68,442) 16,477 74,278 1,078
Interest expense (income), net (3) 17,622 10,860 27,963 3,935 (212) 60,168 35,244 7,790
Provision (benefit) for income taxes 25,647 13,904 21,340 (231) (33,889) 26,771 51,293 930
Depreciation 32,819 6,982 24,451 3,518 - 67,770 65,637 6,881
Amortization of intangibles 2,190 999 32,230 686 - 36,105 4,379 1,372

Gain on disposal of assets
- - (1,979) - - (1,979) - -
Base management fee settled in LLC interests - - - - 21,898 21,898 - -
Performance fee settled in LLC interests - - - - 67,329 67,329 - -
Other non-cash expense (income) (5) 428   2,940   (988)   (1,875)   2,949   3,453 855   (1,514)
EBITDA excluding non-cash items 115,843   56,305   130,755   5,455   (10,367)   297,991 231,686   16,537
 
EBITDA excluding non-cash items 115,843 56,305 130,755 5,455 (10,367) 297,991 231,686 16,537
Interest (expense) income, net (3) (17,622) (10,860) (27,963) (3,935) 212 (60,168) (35,244) (7,790)
Interest rate swap breakage fees - Hawaii Gas (3) - (8,701) - - - (8,701) - -
Interest rate swap breakage fees - Atlantic Aviation (3) - - (595) - - (595) - -
Adjustments to derivative instruments recorded in interest expense, net (3) (2,136) 3,038 (17,264) (1,453) - (17,815) (4,271) (2,906)
Amortization of deferred finance charges (3) 1,611 858 2,675 350 - 5,493 3,221 699
Equipment lease receivables, net - - - 1,774 - 1,774 - 3,548
Provision/benefit for income taxes, net of changes in deferred taxes (8,943) 1,974 (2,646) (421) (2,352) (12,387) (17,885) (841)
Changes in working capital (7) 6,818   (6,712)   46   11,516   1,347   13,015 13,636   11,962
Cash provided by (used in) operating activities 95,572 35,902 85,008 13,286 (11,160) 218,607 191,143 21,209
Changes in working capital (7) (6,818) 6,712 (46) (11,516) (1,347) (13,015) (13,636) (11,962)
Maintenance capital expenditures (29,188)   (8,063)   (10,897)   (446)   -   (48,593) (58,375)   (891)
Free cash flow 59,566   34,551   74,065   1,324   (12,507)   156,999 119,132   8,356
___________________________

(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)

Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in both CP and DE.

(3)

Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees for 2012.

(4)

Casualty losses, net, includes $2.5 million and $1.5 million related to the quarters ended December 31, 2012 and March 31, 2013, respectively, which were recorded in terminal operating costs in those periods. These amounts have been included in the year ended December 31, 2013.

(5)

IMTT management's calculation of IMTT's EBITDA includes various non-cash items, unlike MIC’s other businesses. In order to ensure IMTT’s EBITDA excluding non-cash items does in fact excludes non-cash items, and to promote consistency across its reporting segments, MIC has excluded known non-cash items when calculating IMTT’s EBITDA excluding non-cash items including primarily the non-cash pension expense of $11.2 million for 2013. The non-cash pension expense of $11.4 million for 2012 were reported in changes in working capital for that period, net of pension contribution.

(6)

Maintenance capital expenditures at IMTT includes a reclassification from growth capital expenditures in the quarters ended December 31, 2012 and March 31, 2013 of $1.2 million and $509,000, respectively. These amounts have been included in the year ended December 31, 2013.

(7)

Pension contributions of $5.0 million and $3.8 million for IMTT and Hawaii Gas, respectively, for 2012 were reported in changes in working capital, net of the non-cash pension expenses.
 
 

For the Quarter Ended December 31, 2013
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas 100%   Atlantic Aviation

100%
  Contracted Power and Energy (2)   MIC Corporate 100%   Proportionately Combined (1)   IMTT 100%   Contracted Power and Energy 100%
           
Net income (loss) attributable to MIC LLC 9,991 6,120 11,932 (2,323 ) (7,822 ) 17,898 19,982 (3,194 )
Interest expense, net (3) 3,737 1,794 1,945 1,185 77 8,737 7,473 2,016
Provision (benefit) for income taxes 6,128 4,326 7,209 (1,472 ) (588 ) 15,603 12,255 (2,145 )
Depreciation 9,749 1,946 6,318 2,283 - 20,296 19,498 3,861
Amortization of intangibles 242 313 8,143 165 - 8,863 484 329
Loss from customer contract termination - - - 2,140 - 2,140 - 4,280
Base management fee to be settled in LLC interests - - - - 8,455 8,455 - -
Other non-cash expense (income) 1,513     524     121     65     (1,092 )   1,131   3,026     (427 )
EBITDA excluding non-cash items 31,359     15,023     35,668     2,042     (970 )   83,122   62,718     4,720  
 
EBITDA excluding non-cash items 31,359 15,023 35,668 2,042 (970 ) 83,122 62,718 4,720
Interest expense, net (3) (3,737 ) (1,794 ) (1,945 ) (1,185 ) (77 ) (8,737 ) (7,473 ) (2,016 )
Adjustments to derivative instruments recorded in interest expense, net (3) (2,005 ) (4 ) (4,781 ) (757 ) - (7,547 ) (4,010 ) (1,513 )
Amortization of deferred finance charges (3) 422 113 676 104 - 1,314 843 193
Equipment lease receivables, net - - - 497 - 497 - 993
Provision/benefit for income taxes, net of changes in deferred taxes (2,305 ) (2,744 ) (2,254 ) (25 ) 2,974 (4,354 ) (4,609 ) (50 )
Pension contribution - (900 ) - - - (900 ) - -
Changes in working capital (1,763 )   3,808     1,220     (38,033 )   (2,915 )   (37,683 ) (3,525 )   (36,158 )
Cash provided by (used in) operating activities 21,972 13,502 28,584 (37,357 ) (988 ) 25,713 43,944 (33,831 )
Changes in working capital 1,763 (3,808 ) (1,220 ) 38,033 2,915 37,683 3,525 36,158
Maintenance capital expenditures (11,358 )   (979 )   (6,370 )   (168 )   -     (18,875 ) (22,715 )   (336 )
Free cash flow 12,377     8,715     20,994     508     1,927     44,521   24,754     1,991  
 
 

For the Quarter Ended December 31, 2012
($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas 100%   Atlantic Aviation

100%
  Contracted Power and Energy (2)   MIC Corporate 100%   Proportionately Combined (1) IMTT

100%
  Contracted Power and Energy 100%
 
Net income (loss) attributable to MIC LLC 10,235 6,282 7,312 (2,127 ) (30,636 ) (8,935 ) 20,469 (2,020 )
Interest expense (income), net (3) 3,165 1,758 4,515 674 (101 ) 10,011 6,330 1,269
Provision (benefit) for income taxes 6,713 4,561 5,525 (1,316 ) (21,258 ) (5,775 ) 13,426 (1,241 )
Depreciation 8,382 1,791 6,938 1,000 - 18,110 16,763 1,845
Amortization of intangibles 1,119 382 7,982 173 - 9,655 2,237 345

Gain on disposal of assets
- - (176 ) - - (176 ) - -
Base management fee settled in LLC interests - - - - 6,299 6,299 - -
Performance fee settled in LLC interests - - - - 43,820 43,820 - -
Other non-cash expense (income) 104     269     (720 )   (2,088 )   357     (2,078 ) 208     (1,939 )
EBITDA excluding non-cash items 29,717     15,043     31,376     (3,686 )   (1,519 )   70,930   59,433     (1,741 )
 
EBITDA excluding non-cash items 29,717 15,043 31,376 (3,686 ) (1,519 ) 70,930 59,433 (1,741 )
Interest (expense) income, net (3) (3,165 ) (1,758 ) (4,515 ) (674 ) 101 (10,011 ) (6,330 ) (1,269 )
Adjustments to derivative instruments recorded in interest expense, net (3) (2,185 ) (51 ) (1,249 ) (724 ) - (4,209 ) (4,369 ) (1,448 )
Amortization of deferred finance charges (3) 401 112 653 89 - 1,255 802 177
Equipment lease receivables, net - - - 477 - 477 - 953
Provision/benefit for income taxes, net of changes in deferred taxes (1,660 ) 7,862 (674 ) 26 (6,865 ) (1,311 ) (3,320 ) 51
Changes in working capital (4) (2,022 )   (7,829 )   (2,503 )   12,242     5,974     5,862   (4,044 )   13,415  
Cash provided by (used in) operating activities 21,086 13,379 23,088 7,749 (2,309 ) 62,993 42,172 10,138
Changes in working capital (4) 2,022 7,829 2,503 (12,242 ) (5,974 ) (5,862 ) 4,044 (13,415 )
Maintenance capital expenditures (13,810 )   (2,822 )   (2,948 )   (125 )   -     (19,704 ) (27,619 )   (249 )
Free cash flow 9,299     18,386     22,643     (4,618 )   (8,283 )   37,427   18,597     (3,526 )
___________________________

(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)

Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in both CP and DE.

(3)

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

(4)

Pension contributions of $1.6 million for Hawaii Gas for the quarter ended December 31, 2012 was reported in changes in working capital, net of the non-cash pension expenses.

Copyright Business Wire 2010

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