Macquarie Infrastructure Company LLC Reports First Quarter 2014 Financial Results, Continued Growth In Cash Generation

Macquarie Infrastructure Company LLC (NYSE:MIC) reported 7.9% growth in proportionately combined Free Cash Flow to $64.9 million in the first quarter of 2014 from $60.2 million in the first quarter of 2013. Proportionately combined Free Cash Flow per share declined to $1.15 versus $1.26 in the prior comparable period.

Growth in aggregate Free Cash Flow was offset on a per share basis by an 18.5% increase in the weighted number of shares outstanding following equity capital raises by the Company in the second and fourth quarters of 2013 and the reinvestment in shares of base management and performance fees incurred in 2013. MIC noted that the $0.11 decrease in Free Cash Flow per share for the quarter was a function of principally three matters:

1. The absence of approximately $0.07 per share in incremental Free Cash Flow that MIC expects as a result of the acquisitions involving five fixed base operations (FBO) from Galaxy Aviation and one FBO from Boca Aviation (collectively the “Galaxy transactions”) that did not close in the first quarter of 2014 but for which the company raised equity capital to fund in December of 2013. The Galaxy transactions closed on April 30;

2. The unusually low (and temporary) rate of interest on the debt facilities of Atlantic Aviation in the first quarter in 2013 due to the expiration of interest rate swaps. Had Atlantic Aviation’s debt borne interest at the current rate, proportionately combined Free Cash Flow per share would have been $0.10 lower in the first quarter of 2013; and

3. Approximately $0.03 per share from the timing of 2013 federal income tax provisioning by IMTT management that was subsequently corrected during 2013.

“The performance of our businesses and investments in the first quarter was marginally ahead of our expectations as both Atlantic Aviation and IMTT posted improved results. Our guidance for the full year 2014 is unchanged,” said James Hooke, Chief Executive Officer of MIC.

“Adjusted for the three matters identified – the timing of the Galaxy transactions, the expiration of Atlantic’s interest rate hedges, and the timing of IMTT’s 2013 tax provision - the reported $0.11 decrease in Free Cash Flow per share would have been an increase of $0.09 or 8.0%. With the performance of the business to date, we are on track to meet or beat our guidance and the proposed extension of bonus depreciation could provide additional benefit,” Hooke added.

MIC’s bulk liquid terminals business, IMTT, generated a 16.0% increase in gross profit and a 21.2% increase in EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) excluding non-cash items during the first quarter of 2014 versus the prior comparable period. The financial result reflects a 10.2% increase in terminal revenue driven in part by colder winter weather in the U.S.

The cold weather drove an increase in heating oil throughput and demand for storage tank heating, the cost of which is typically passed through to IMTT’s customers. IMTT also reported an increased contribution from its environmental response services business, OMI Environmental Solutions, primarily as a result of its involvement in the cleanup of the fuel oil spill in the Houston Ship Channel in March.

MIC’s Atlantic Aviation business generated a 9.5% increase in gross profit and an 11.2% increase in EBITDA excluding non-cash items in the first quarter of 2014 compared with the first quarter in 2013. Continued increases in the volume of general aviation flight activity throughout the U.S. drove growth in the volume of fuel sold and active management of margins on fuel sales contributed to the favorable result.

The gains from MIC’s largest businesses were partially offset by a small decrease in the gross profit and EBITDA excluding non-cash items generated by the Company’s Hawaii Gas business, legal and professional expenses incurred by businesses in the Company’s CP&E segment and the seasonal reduction in the production of electricity by the Company’s solar power generation facilities. Continuing supply disruptions and a year on year decline in tourist visits in Hawaii contributed to the softer results for Hawaii Gas. Operating results for the solar facilities in the CP&E segment were consistent with the Company’s expectations.

“We’re pleased with our overall results for the first quarter,” said Hooke. “Assuming the continued good performance of Atlantic Aviation, there is potential upside in our full-year guidance for proportionately combined Free Cash Flow of between $4.35 and $4.50 per share associated with the implementation of certain cost and tax reduction strategies at IMTT in particular.”

MIC has reported a potential 2014 federal income tax liability for its bulk liquid terminals business of $37.5 million. To the extent that IMTT is able to defease that liability, approximately 50% of the benefit will flow through to MIC’s proportionately combined Free Cash Flow. Proposed legislation extending bonus depreciation on capital expenditures made in 2014 could help ease the potential tax burden at IMTT by as much as $22.0 million and increase Free Cash Flow at MIC by approximately $0.19 per share.

The Galaxy Transactions

MIC raised $123.2 million (net) of new equity in December of 2013 to fund, in part, the Galaxy transactions. The Galaxy transactions had been expected to close late in the first quarter but were delayed pending approval by certain of the airport authorities involved. The additional shares issued, combined with the delay in receipt of the expected cash distributions, contributed to MIC’s reported decline in proportionately combined Free Cash Flow per share versus the first quarter in 2013.

On April 30, 2014, Atlantic Aviation completed the acquisitions of the assets and liabilities of Galaxy Aviation and Boca Aviation. The Galaxy transactions included six FBOs and one new hangar that is currently under construction at one of the six airports at which the FBOs operate for a combined purchase price of $230.0 million. The purchase price was funded using cash that had previously been raised or generated and debt facilities that had previously been arranged.

Dividend

MIC also reported that its Board of Directors authorized a cash dividend of $0.9375, or $3.75 annualized, per share for the first quarter of 2014. The cash dividend will be payable on May 15, 2014 to shareholders of record on May 12, 2014. The 2.7% increase in the dividend reflects the improved first quarter performance of the Company’s businesses and investments and its stated policy of targeting a distribution of between 80% and 85% of its proportionately combined Free Cash Flow.

Use of Non-GAAP Measures

MIC owns and has invested in a portfolio of infrastructure businesses based in the U.S. The businesses include: a 50% (unconsolidated) interest in a bulk liquid terminals business, International-Matex Tank Terminals (“IMTT”); a gas processing and distribution business, Hawaii Gas; an airport services business, Atlantic Aviation; and several businesses in which MIC has varying interests that comprise its Contracted Power and Energy (CP&E) segment.

Proportionately combined Free Cash Flow – the cash generated by each of MIC’s businesses in proportion to the Company’s equity interest in the businesses, after holding company costs - increased to $64.9 million in the first quarter of 2014 from $60.2 million in the first quarter of 2013.

MIC regards Free Cash Flow as an important tool in assessing the performance of its capital intensive, cash generative businesses. The Company defines Free Cash Flow as cash from operating activities, including cash paid for interest and taxes, less maintenance capital expenditures and excluding changes in working capital. Working capital movements are excluded on the basis that these are largely timing differences in payables and receivables, and are therefore not reflective of MIC’s ability to generate cash. See “Cash Generation” below for further information.

Consolidated Results for First Quarter

MIC’s consolidated revenue for the first quarter of 2014 increased by 4.5% compared with the first quarter in 2013. Increased product sales at Atlantic Aviation and incremental product revenue generated by businesses in the Company’s Contracted Power and Energy segment were partially offset by a decrease in the utility portion of the revenues generated by its Hawaii Gas business. MIC notes that fluctuations in revenue also reflect the pass-through of primarily energy-related costs that are recovered in revenue.

Viewing gross profit – defined as revenue less cost of goods sold – as MIC’s top line removes the volatility in revenue associated with fluctuations in energy cost inputs and highlights underlying trends in aggregate volume and margins at MIC’s businesses. The Company’s consolidated gross profit grew to $113.0 million in the first quarter of 2014, up 7.8% compared with the first quarter in 2013.

MIC reported $28.6 million of consolidated net income, before taxes, in the first quarter of 2014 compared with net income of $11.2 million in the first quarter of 2013. Consolidated net income rose on improvement in operating results, the absence of a performance fee payable to the Company’s Manager and a larger contribution from its investment in IMTT (accounted for using the equity method), partially offset by an increase in interest expense.

The increase in consolidated interest expense reflects the relatively higher cost of debt at Atlantic Aviation in 2014 following the successful refinancing of that business’ debt facilities in May of 2013 and higher debt levels in MIC’s CP&E segment resulting from the increase in the size of the operations in the segment. Atlantic’s Aviation’s performance in the first quarter of 2013 reflected an unusually low cost of debt of approximately 2.0% on $706.9 million of total debt outstanding. In the first quarter of 2014, following the refinancing of the business, Atlantic Aviation’s all-in cost of borrowing is approximately 4.7% on $516.4 million of debt. Consolidated debt associated with the CP&E segment increased to $291.6 million from $245.4 million in the first quarter in 2013.

MIC’s financial performance during the first quarter also reflects lower consolidated expenses, particularly those incurred by the MIC holding company. MIC generated a performance fee of more than $22.0 million in the first quarter of 2013 but did not generate a performance fee for the first quarter in 2014.

Base management fees are calculated as a percentage of the Company’s market capitalization and were approximately $1.9 million higher in the first quarter of 2014 versus the prior comparable period as a result of MIC’s higher share price and the increase in its shares outstanding. MIC’s Manager has elected to reinvest any base and performance fees payable in new primary shares rendering these effectively a non-cash item.

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 non-cash items reflected in the statement of operations including base management and performance fees settled in shares.

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, 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, including cash paid for interest and taxes, less maintenance capital expenditures and excluding changes in working capital.

Free Cash Flow does not fully reflect MIC’s ability to freely deploy generated cash, as it does not reflect required payments to be made on MIC’s indebtedness and other fixed obligations or the other cash items excluded when calculating Free Cash Flow. Free Cash Flow may be calculated in a different manner by other companies, which limits its usefulness as a comparative measure. Therefore, Free Cash Flow should be used as a supplemental measure and not in lieu of MIC’s financial results as reported under GAAP.

MIC reports certain financial metrics on a proportionately combined basis including, proportionately combined gross profit, proportionately combined EBITDA excluding non-cash items, proportionately combined cash interest, proportionately combined cash taxes, proportionately combined maintenance capital expenditures, proportionately combined Free Cash Flow, proportionately combined Free Cash Flow per share, proportionately combined growth capital expenditures and proportionately combined net debt. The Company believes that such measures provide investors and management with additional insight into the financial results and cash generated by the combined ownership interest in its businesses and investments for the reporting period.

Proportionately combined metrics used by MIC may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Therefore, proportionately combined metrics should be used as a supplement to and not in lieu of, financial results reported in accordance with GAAP.

The following table summarizes MIC’s financial performance on a proportionately combined basis during the quarter ended March 31, 2014 and the prior comparable quarter.
       

For the Quarter Ended March 31, 2014
($ 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 42,496 19,972 87,209 3,567 N/A 153,243 84,991 5,821
EBITDA excluding non-cash items 39,737 14,991 40,036 3,878 (858) 97,783 79,473 6,496
Free cash flow 21,416 8,636 31,767 1,612 1,489 64,920 42,832 2,775
 
 

For the Quarter Ended March 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 36,647 20,417 79,634 2,489 N/A 139,187 73,294 4,739
EBITDA excluding non-cash items 32,777 15,715 36,018 2,542 (1,465) 85,587 65,554 5,093
Free cash flow 17,200 9,940 27,092 1,315 4,535

60,082
34,399 2,728

__________________________
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 its solar power generation and district energy businesses.

IMTT

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 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 discussion below refers to results for 100% of the business, not MIC’s 50% interest.

Terminal revenue increased 10.2% at IMTT in the first quarter of 2014 compared with the first quarter of 2013. The increase reflects higher heating revenue (cold weather drove an increase in demand for and the cost of natural gas, the cost of which is passed through to customers), firm commitments (fixed monthly charges for access to infrastructure and storage) and growth in ancillary services (primarily due to weather related increases in volume).

As anticipated, capacity utilization in the first quarter of 2014 was flat with the first quarter of 2013 at 92.7%. Utilization rates are expected to remain slightly below historically normal levels of approximately 94.0% while a number of large tanks are out of service for cleaning and inspection.

The higher cost of heating storage tanks in 2014 drove terminal operating costs up in the first quarter of 2014 relative to the prior comparable period although these costs are typically recovered in revenue as a component of IMTT’s storage contracts. Higher terminal operating costs were partially offset by a reduction in repair and maintenance expenses compared with the first quarter in 2013. Repair and maintenance expenses were elevated in the first quarter of 2013 as a result of the impact of Hurricane Sandy on IMTT’s facility at Bayonne, New Jersey.

Environmental response gross profit generated in the first quarter of 2014 increased to $3.1 million from $2.3 million in the first quarter of 2013 primarily as a result of spill response activity this year related to the cleanup of a fuel oil spill in the Houston Ship Channel. The cleanup activity was ongoing at quarter end and as a result environmental gross profit is expected to be higher than normal in the second quarter of 2014 as well.

Free Cash Flow generated by IMTT rose 24.5% to $42.8 million in the first quarter of 2014 from $34.4 million in the first quarter of 2013 primarily as a result of improved operating results and lower repairs and maintenance expenses. The improvement was partially offset by an increased provision for income taxes of $15.1 million compared with $1.7 million in the first quarter of 2013. MIC believes that a substantial portion of IMTT’s full year federal income tax liability could be offset with the implementation of certain tax strategies by year end.

On April 22, 2014, the Board of IMTT declared a distribution for the first quarter of 2014 in the amount $58.5 million, or $29.25 million per shareholder. Included in the amount was a normal distribution of $43.0 million based on IMTT’s operating results and an additional distribution of $15.5 million based on maintenance of leverage levels as required by the Shareholders’ Agreement. The distribution to shareholders of IMTT was made on April 28, 2014.

Hawaii Gas

Hawaii Gas is the owner and operator of the only regulated (“utility”) gas processing and pipeline distribution network in the Hawaiian Islands. The business is also the owner and operator of the largest unregulated (“non-utility”) propane gas distribution business on the islands.

The volume of gas sold by both the utility and non-utility portions of the business decreased in the first quarter of 2014 compared with the first quarter in 2013. Utility volumes decreased by 2.4% on reduced demand from certain commercial customers and non-utility volumes decreased by 1.3%. A portion of the decrease in demand was attributed to a reduction in tourist visits to Hawaii in 2014 compared with 2013. According to data provided by the Hawaii Department of Business, Economic Development and Tourism through March the total number of visitors to Hawaii declined by 3.2% compared with the same period in 2013.

The decrease in non-utility volume also reflects continuing unreliability in local supplies of LPG and the resulting need to bring a greater portion of supply into the market from off-island sources. The unusually cold weather in the U.S. mainland during the winter of 2014 aggravated the situation as LPG prices rose substantially at the same time. The reduction in volume was partially offset by a reduction in direct expenses.

Hawaii Gas generated $8.6 million of Free Cash Flow in the first quarter of 2014 compared with $9.9 million in the first quarter of 2013. The decrease reflects the softer operating results and higher maintenance capital expenditures partially offset by a lower provision for income taxes.

Atlantic Aviation

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

Gross profit for the first quarter of 2014 increased 9.5% compared with the first quarter of 2013 primarily as a result of an increase in the volume of fuel sold and an increase in average margins on fuel sales generally. Hangar rental revenue and de-icing gross profit were higher as well.

Continued increases in the number of general aviation flight movements in the U.S. during the first quarter of 2014 drove an increase in the volume of jet fuel sold. On a same store basis, the volume of GA jet fuel sold by Atlantic Aviation increased 3.8%. Atlantic Aviation continued to actively manage margins on fuel sales across the network. Average margins on all same store sales rose by 2.7%.

The cold winter weather had both a positive and a negative impact on the performance of Atlantic Aviation. The weather drove an increase in demand for hangar rental and de-icing services. De-icing revenue in the first quarter of 2014 rose by more than 48% compared with the first quarter in 2013. The cold weather also drove increased snow removal and utility costs, both of which are recorded in selling, general and administrative expenses.

Selling, general and administrative expenses were 8.7% higher in the first quarter of 2014 compared with the first quarter of 2013 primarily as a result of costs incurred in connection with the acquisition of an FBO in Kansas City in the fourth quarter of 2013 and the Galaxy transactions which closed on April 30. Same store costs were higher as well, driven by weather-related expenses (snow removal and utilities) and higher labor and incentive costs.

Free Cash Flow generated by Atlantic Aviation during the first quarter of 2014 increased 17.3% to $31.8 million from $27.1 million in the first quarter of 2013. The increase was primarily the result of the improved operating performance, a reduced provision for income taxes and lower maintenance capital expenditures, partially offset by higher interest expense. Cash interest paid rose to $6.2 million from $3.3 million in the prior comparable period due to Atlantic Aviation’s debt bearing interest at a lower rate in the prior period, partially offset by a reduction in overall debt levels in the current period.

At quarter end Atlantic Aviation operated at 63 airports. On April 15, the business sold its operations at Sacramento Mather Airport in California and on April 30 the business commenced operations at the six airports associated with the Galaxy transactions. Atlantic Aviation now operates at 68 airports in the U.S.

Contracted Power and Energy

MIC’s 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 CP&E segment produced a 22.8% increase in gross profit in the first quarter of 2014 compared with the first quarter in 2013. The increase relates primarily to the commencement of operations at four solar power generation facilities during 2013, offset by legal and professional expenses and a decrease in finance lease revenue arising out of a previously disclosed termination of a cooling contract by one customer of the district energy business.

Free Cash Flow generated by CP&E increased 1.7% to $2.8 million in the first quarter of 2014 compared with the first quarter of 2013 primarily due to improved operating results, partially offset by an increase in maintenance capital expenditures.

Conference Call and Webcast

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, May 1, 2014 during which it will review and comment on the Company’s results for the first quarter.

How: To listen to the conference call please dial +1(650) 521-5252 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company’s website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company’s website the morning of May 1, 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 May 1, 2014 through midnight on May 8, 2014, at +1(404) 537-3406, Passcode: 29646525. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of a gas processing and distribution business, Hawaii Gas, several entities comprising a Contracted Power and Energy segment, and a 50% interest in a bulk liquid terminals business, International-Matex Tank Terminals. MIC also owns and operates an 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 filing contains forward-looking statements. MIC may, in some cases, use words such as "project”, "believe”, "anticipate”, "plan”, "expect”, "estimate”, "intend”, "should”, "would”, "could”, "potentially”, or "may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond MIC’s control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; its shared decision-making with co-investors over investments including the distribution of dividends; its regulatory environment establishing rate structures and monitoring quality of service, demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks, fuel and gas costs; its ability to recover increases in costs from customers, reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

MIC’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which MIC is not currently aware could also cause its actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. MIC undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
           
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)
 
March 31,

2014
December 31,

2013
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 208,569 $ 233,373
Restricted cash 38,562 51,884
Accounts receivable, less allowance for doubtful accounts
of $1,121 and $953, respectively 66,990 60,823
Inventories 24,779 25,834
Prepaid expenses 8,654 10,132
Deferred income taxes 5,320 6,197
Equipment lease receivables current 8,690 8,515
Other   11,140   9,792
Total current assets 372,704 406,550
Property, equipment, land and leasehold improvements, net 854,687 854,169
Equipment lease receivables non-current 15,019 16,155
Investment in unconsolidated business 89,434 83,703
Goodwill 514,343 514,494
Intangible assets, net 584,085 592,850
Deferred financing costs, net of accumulated amortization 22,356 22,740
Other   8,010   10,204
Total assets $ 2,460,638 $ 2,500,865
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 3,134 $ 3,032
Accounts payable 29,567 28,850
Accrued expenses 29,021 42,713
Current portion of long-term debt 160,181 163,083
Fair value of derivative instruments 11,283 13,027
Other   18,689   20,747
Total current liabilities 251,875 271,452
Long-term debt, net of current portion 827,729 831,027
Deferred income taxes 195,226 189,719
Other   55,648   55,399
Total liabilities   1,330,478   1,347,597
Commitments and contingencies - -
Members’ equity:
LLC interests, no par value; 500,000,000 authorized; 56,459,047 LLC
interests issued and outstanding at March 31, 2014 and 56,295,595 LLC

interests issued and outstanding at December 31, 2013
1,184,108 1,226,733
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (8,652) (8,445)
Accumulated deficit   (177,141)   (197,507)
Total members’ equity 1,019,762 1,042,228
Noncontrolling interests   110,398   111,040
Total equity   1,130,160   1,153,268
Total liabilities and equity $ 2,460,638 $ 2,500,865
 
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
         
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)
 
Quarter Ended

March 31, 2014
Quarter Ended

March 31, 2013
Revenue
Revenue from product sales $ 183,801 $ 174,115
Revenue from product sales - utility 35,145 36,921
Service revenue 56,502 52,115
Financing and equipment lease income   747   1,055
Total revenue   276,195   264,206
Costs and expenses
Cost of product sales 122,917 116,993
Cost of product sales - utility 29,380 31,489
Cost of services 10,896 10,934
Selling, general and administrative 55,464 49,209
Fees to manager - related party 8,994 29,177
Depreciation 12,154 9,255
Amortization of intangibles 8,765 8,628
Loss on disposal of assets   -   173
Total operating expenses   248,570   255,858
Operating income 27,625 8,348
Other income (expense)
Interest income 64 94
Interest expense(1) (14,011) (7,686)
Equity in earnings and amortization charges of investee 14,287 10,462
Other income (expense), net   681   (2)
Net income before income taxes 28,646 11,216
Provision for income taxes(2)   (8,486)   (4,502)
Net income $ 20,160 $ 6,714
Less: net (loss) income attributable to noncontrolling interests   (206)   843
Net income attributable to MIC LLC $ 20,366 $ 5,871
 
Basic income per share attributable to MIC LLC interest holders $ 0.36 $ 0.12
Weighted average number of shares outstanding: basic   56,369,295   47,584,661
 
Diluted income per share attributable to MIC LLC interest holders $ 0.36 $ 0.12
Weighted average number of shares outstanding: diluted   56,382,205   47,603,257
Cash dividends declared per share $ 0.9375 $ 0.6875

_________________________
(1) Interest expense includes losses on derivative instruments of $5.3 million and $1.1 million for the quarters ended March 31, 2014 and 2013, respectively, of which net losses of $239,000 and $398,000, respectively, was reclassified from accumulated other comprehensive loss.
(2) Includes $95,000 and $158,000 of benefit for income taxes from accumulated other comprehensive loss reclassifications for the quarters ended March 31, 2014 and 2013, respectively.
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
         
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)

Quarter

Ended

March 31,

2014

Quarter

Ended

March 31,

2013
 
Operating activities
Net income $ 20,160 $ 6,714
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization of property and equipment 13,858 10,953
Amortization of intangible assets 8,765 8,628
Loss on disposal of assets - 106
Equity in earnings and amortization charges of investee (14,287) (10,462)
Equity distributions from investee 8,127 -
Amortization of debt financing costs 1,041 947
Adjustments to derivative instruments 1,094 (1,339)
Base management fees to be settled/settled in LLC interests 8,994 7,135
Performance fees settled in LLC interests - 22,042
Equipment lease receivable, net 996 967
Deferred rent 50 64
Deferred taxes 6,439 3,070
Other non-cash expenses (income), net 692 (1,913)
Changes in other assets and liabilities:
Restricted cash 14,643 1,271
Accounts receivable (6,431) (6,238)
Inventories 1,973 (2,394)
Prepaid expenses and other current assets (492) (2,462)
Due to manager - related party (116) (11)
Accounts payable and accrued expenses (4,166) (2,001)
Income taxes payable (69) 94
Other, net   (2,194)   (1,502)
Net cash provided by operating activities   59,077   33,669
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired (1,052) -
Purchases of property and equipment (21,613) (14,834)
Other, net   52   (41)
Net cash used in investing activities   (22,613)   (14,875)
 
Financing activities
Proceeds from long-term debt 4,884 21,192
Dividends paid to holders of LLC interests (51,469) -
Proceeds from the issuance of LLC interests pursuant to MIC Direct 72 -
Contributions received from noncontrolling interests - 2,000
Distributions paid to noncontrolling interests (656) (247)
Payment of long-term debt (11,084) (28,050)
Debt financing costs paid (1,050) -
Change in restricted cash (1,506) -
Payment of notes and capital lease obligations (454) (485)
Other, net   (5)   (133)
Net cash used in financing activities   (61,268)   (5,723)
 
Net change in cash and cash equivalents (24,804) 13,071
Cash and cash equivalents, beginning of period   233,373   141,376
Cash and cash equivalents, end of period $ 208,569 $ 154,447
 
Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued equity offering costs $ 1 $ 195
Accrued financing costs $ - $ 665
Accrued purchases of property and equipment $ 1,797 $ 5,755
Acquisition of equipment through capital leases $ - $ 1,135
Issuance of LLC interests to manager for performance fees $ - $ 43,820
Issuance of LLC interests to manager for base management fees $ 8,777 $ 6,299
Conversion of construction loan to term loan $ 60,360 $ -
Distributions payable to noncontrolling interests $ 128 $ 214
Taxes paid $ 2,116 $ 1,338
Interest paid $ 11,351 $ 8,471
 
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – MD&A
         
  Quarter Ended March 31,     Change

Favorable/(Unfavorable)
  2014     2013   $   %
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 183,801 $ 174,115 9,686 5.6
Revenue from product sales - utility 35,145 36,921 (1,776) (4.8)
Service revenue 56,502 52,115 4,387 8.4
Financing and equipment lease income   747   1,055   (308) (29.2)
Total revenue   276,195   264,206   11,989 4.5
Costs and expenses
Cost of product sales 122,917 116,993 (5,924) (5.1)
Cost of product sales - utility 29,380 31,489 2,109 6.7
Cost of services   10,896   10,934   38 0.3
Gross profit 113,002 104,790 8,212 7.8
Selling, general and administrative 55,464 49,209 (6,255) (12.7)
Fees to manager - related party 8,994 29,177 20,183 69.2
Depreciation 12,154 9,255 (2,899) (31.3)
Amortization of intangibles 8,765 8,628 (137) (1.6)
Loss on disposal of assets   -   173   173 100.0
Total operating expenses   85,377   96,442   11,065 11.5
Operating income 27,625 8,348 19,277 NM
Other income (expense)
Interest income 64 94 (30) (31.9)
Interest expense(1) (14,011) (7,686) (6,325) (82.3)
Equity in earnings and amortization charges of investee 14,287 10,462 3,825 36.6
Other income (expense), net   681   (2)   683 NM
Net income before income taxes 28,646 11,216 17,430 155.4
Provision for income taxes   (8,486)   (4,502)   (3,984) (88.5)
Net income $ 20,160 $ 6,714 13,446 NM
Less: net (loss) income attributable to noncontrolling interests   (206)   843   1,049 124.4
Net income attributable to MIC LLC $ 20,366 $ 5,871   14,495 NM

___________________
NM - Not meaningful
(1) Interest expense includes losses on derivative instruments of $5.3 million and $1.1 million for the quarters ended March 31, 2014 and 2013, respectively.
 
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF CONSOLIDATED NET INCOME ATTRIBUTABLE TO MIC LLC TO EBITDA EXCLUDING NON-CASH ITEMS AND

CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
       
  Quarter Ended March 31,     Change

Favorable/(Unfavorable)
  2014     2013   $   %
($ In Thousands) (Unaudited)
 
Net income attributable to MIC LLC(1) $ 20,366 $ 5,871
Interest expense, net(2) 13,947 7,592
Provision for income taxes 8,486 4,502
Depreciation(3) 12,154 9,255
Depreciation - cost of services(3) 1,704 1,698
Amortization of intangibles(4) 8,765 8,628
Loss on disposal of assets - 106
Equity in earnings and amortization charges of investee (14,287) (10,462)
Equity distributions from investee(5) 8,127 -
Base management fees to be settled/settled in LLC interests 8,994 7,135
Performance fees settled in LLC interests - 22,042
Other non-cash expense (income), net   536   (1,006)    
EBITDA excluding non-cash items $ 68,792 $ 55,361   13,431 24.3
 
EBITDA excluding non-cash items $ 68,792 $ 55,361
Interest expense, net(2) (13,947) (7,592)
Adjustments to derivative instruments recorded in interest expense(2) 1,094 (1,339)
Amortization of debt financing costs(2) 1,041 947
Equipment lease receivables, net 996 967
Provision for income taxes, net of changes in deferred taxes (2,047) (1,432)
Pension contribution(6) (310) -
Changes in working capital   3,458   (13,243)
Cash provided by operating activities 59,077 33,669
Changes in working capital (3,458) 13,243
Maintenance capital expenditures   (2,825)   (2,617)    
Free cash flow $ 52,794 $ 44,295   8,499 19.2

______________________
(1) Net income attributable to MIC LLC excludes net loss attributable to noncontrolling interests of $206,000 for the quarter ended March 31, 2014 and net income attributable to noncontrolling interests of $843,000 for the quarter ended March 31, 2013.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(3) Depreciation - cost of services includes depreciation expense for our district energy business, a component of Contracted Power and Energy segment, 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 for each of the quarters ended March 31, 2014 and 2013 in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.
(4) Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 for each of the quarters ended March 31, 2014 and 2013 in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.
(5) Equity distributions from investee in the above table includes distributions we received only up to our share of the earnings recorded in the calculation for EBITDA excluding non-cash items.
(6) Pension contribution of $450,000 for the quarter ended March 31, 2013 was reported in changes in working capital for this period.
 
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO PROPORTIONATELY COMBINED

FREE CASH FLOW
           
Quarter Ended March 31,     Change

Favorable/(Unfavorable)
2014 2013 $ %
($ In Thousands) (Unaudited)
 
Free Cash Flow- Consolidated basis $ 52,794 $ 44,295 8,499 19.2
Equity distributions from investee(1) (8,127) -
100% of CP&E Free Cash Flow included in consolidated Free Cash Flow (2,775) (2,728)
MIC's share of IMTT Free Cash Flow 21,416 17,200
MIC's share of CP&E Free Cash Flow   1,612   1,315  
Free Cash Flow- Proportionately Combined basis $ 64,920 $ 60,082 4,838 8.1
_________________
(1) The distribution for the fourth quarter of 2013 from IMTT was received in the first quarter of 2014, as customary. Conversely, the distribution for the fourth quarter of 2012 from IMTT was received in the same period.
 
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND

CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
     
IMTT Quarter Ended March 31,
2014   2013

Change

Favorable/(Unfavorable)
$ $ $ %
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 133,690 121,332 12,358 10.2
Environmental response revenue 14,388 10,153 4,235 41.7
Total revenue 148,078 131,485 16,593 12.6
Costs and expenses
Terminal operating costs 51,847 50,304 (1,543) (3.1)
Environmental response operating costs 11,240 7,887 (3,353) (42.5)
Total operating costs 63,087 58,191 (4,896) (8.4)
Terminal gross profit 81,843 71,028 10,815 15.2
Environmental response gross profit 3,148 2,266 882 38.9
Gross profit 84,991 73,294 11,697 16.0
General and administrative expenses 7,866 8,482 616 7.3
Depreciation and amortization 18,274 18,422 148 0.8
Operating income 58,851 46,390 12,461 26.9
Interest expense, net(1) (7,133) (6,606) (527) (8.0)
Other income 494 742 (248) (33.4)
Provision for income taxes (21,102) (17,121) (3,981) (23.3)
Noncontrolling interest (129) (75) (54) (72.0)
Net income 30,981 23,330 7,651 32.8
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income 30,981 23,330
Interest expense, net(1) 7,133 6,606
Provision for income taxes 21,102 17,121
Depreciation and amortization 18,274 18,422
Other non-cash expenses(2) 1,983 75  
EBITDA excluding non-cash items 79,473 65,554 13,919 21.2
 
EBITDA excluding non-cash items 79,473 65,554
Interest expense, net(1) (7,133) (6,606)
Adjustments to derivative instruments recorded in interest expense(1) (4,136) (4,409)
Amortization of debt financing costs(1) 844 666
Provision for income taxes, net of changes in deferred taxes (15,109) (1,685)
Changes in working capital 5,248 (17,387)
Cash provided by operating activities 59,187 36,133
Changes in working capital (5,248) 17,387
Maintenance capital expenditures(3) (11,107) (19,121)  
Free cash flow 42,832 34,399 8,433 24.5
_____________________
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) 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 $1.8 million for the quarter ended March 31, 2014. The non-cash pension expense of $2.8 million was reported in changes in working capital for the quarter ended March 31, 2013.
(3) Maintenance capital expenditures includes a reclassification from growth capital expenditures during the quarter ended March 31, 2013 of $509,000.
 
 
Hawaii Gas   Quarter Ended March 31,
2014   2013  

Change

Favorable/(Unfavorable)
$ $ $   %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 34,206 32,085 2,121 6.6
Cost of revenue - non-utility 16,963 13,354 (3,609) (27.0)
Contribution margin - non-utility 17,243 18,731 (1,488) (7.9)
Revenue - utility 35,145 36,921 (1,776) (4.8)
Cost of revenue - utility 25,229 26,654 1,425 5.3
Contribution margin - utility 9,916 10,267 (351) (3.4)
Total contribution margin 27,159 28,998 (1,839) (6.3)
Production 2,384 2,715 331 12.2
Transmission and distribution 4,803 5,866 1,063 18.1
Gross profit 19,972 20,417 (445) (2.2)
Selling, general and administrative expenses 5,623 5,332 (291) (5.5)
Depreciation and amortization 2,258 2,158 (100) (4.6)
Operating income 12,091 12,927 (836) (6.5)
Interest expense, net(1) (1,787) (1,705) (82) (4.8)
Other expense (82) (32) (50) (156.3)
Provision for income taxes (4,027) (4,483) 456 10.2
Net income(2) 6,195 6,707 (512) (7.6)
 
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income(2) 6,195 6,707
Interest expense, net(1) 1,787 1,705
Provision for income taxes 4,027 4,483
Depreciation and amortization 2,258 2,158
Other non-cash expenses 724 662  
EBITDA excluding non-cash items 14,991 15,715 (724) (4.6)
 
EBITDA excluding non-cash items 14,991 15,715
Interest expense, net(1) (1,787) (1,705)
Adjustments to derivative instruments recorded in interest expense(1) (7) (78)
Amortization of debt financing costs(1) 118 106
Provision for income taxes, net of changes in deferred taxes (2,711) (3,092)
Pension contribution(3) (310) -
Changes in working capital (5,488) (10,567)
Cash provided by operating activities 4,806 379
Changes in working capital 5,488 10,567
Maintenance capital expenditures (1,658) (1,006)  
Free cash flow 8,636 9,940 (1,304) (13.1)
_____________________
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated in consolidation.
(3) Pension contribution of $450,000 for the quarter ended March 31, 2013 was reported in changes in working capital for this period.
 
 
Atlantic Aviation Quarter Ended March 31,
    2014   2013   Change

Favorable/(Unfavorable)
$ $ $   %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 145,937 140,344 5,593 4.0
Non-fuel revenue 48,024 43,796 4,228 9.7
Total revenue 193,961 184,140 9,821 5.3
Cost of revenue
Cost of revenue-fuel 102,058 99,785 (2,273) (2.3)
Cost of revenue-non-fuel 4,694 4,721 27 0.6
Total cost of revenue 106,752 104,506 (2,246) (2.1)
Fuel gross profit 43,879 40,559 3,320 8.2
Non-fuel gross profit 43,330 39,075 4,255 10.9
Gross profit 87,209 79,634 7,575 9.5
Selling, general and administrative expenses 47,243 43,477 (3,766) (8.7)
Depreciation and amortization 14,933 13,871 (1,062) (7.7)
Loss on disposal of assets - 173 173 100.0
Operating income 25,033 22,113 2,920 13.2
Interest expense, net(1) (9,565) (4,099) (5,466) (133.3)
Other income (expense) 2 (4) 6 150.0
Provision for income taxes (4,915) (7,398) 2,483 33.6
Net income(2) 10,555 10,612 (57) (0.5)
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income(2) 10,555 10,612
Interest expense, net(1) 9,565 4,099
Provision for income taxes 4,915 7,398
Depreciation and amortization 14,933 13,871
Loss on disposal of assets - 106
Other non-cash expense (income) 68 (68)  
EBITDA excluding non-cash items 40,036 36,018 4,018 11.2
 
EBITDA excluding non-cash items 40,036 36,018
Interest expense, net(1) (9,565) (4,099)
Adjustments to derivative instruments recorded in interest expense(1) 2,626 25
Amortization of debt financing costs(1) 731 661
Provision for income taxes, net of changes in deferred taxes (1,244) (4,048)
Changes in working capital (971) 3,158
Cash provided by operating activities 31,613 31,715
Changes in working capital 971 (3,158)
Maintenance capital expenditures (817) (1,465)  
Free cash flow 31,767 27,092 4,675 17.3
_____________________
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated in consolidation.
 
 
Contracted Power and Energy Quarter Ended March 31,
    2014   2013   Change

Favorable/(Unfavorable)
$ $ $   %
($ In Thousands) (Unaudited)
 
Product sales 3,658 1,686 1,972 117.0
Service revenue 8,478 8,319 159 1.9
Finance lease revenue 747 1,055 (308) (29.2)
Total revenue 12,883 11,060 1,823 16.5
Cost of revenue — product 860 108 (752) NM
Cost of revenue — service(1) 6,202 6,213 11 0.2
Cost of revenue — total 7,062 6,321 (741) (11.7)
Gross profit 5,821 4,739 1,082 22.8
Selling, general and administrative expenses 1,552 1,225 (327) (26.7)
Depreciation 3,406 1,517 (1,889) (124.5)
Amortization of intangibles 322 337 15 4.5
Operating income 541 1,660 (1,119) (67.4)
Interest expense, net(2) (2,645) (1,877) (768) (40.9)
Other income, net 761 2,490 (1,729) (69.4)
Provision for income taxes (599) (1,963) 1,364 69.5
Noncontrolling interest 527 (428) 955 NM
Net loss (1,415) (118) (1,297) NM
 
Reconciliation of net loss to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net loss (1,415) (118)
Interest expense, net(2) 2,645 1,877
Provision for income taxes 599 1,963
Depreciation(1) 5,110 3,215
Amortization of intangibles 322 337
Other non-cash income (765) (2,181)  
EBITDA excluding non-cash items 6,496 5,093 1,403 27.5
 
EBITDA excluding non-cash items 6,496 5,093
Interest expense, net(2) (2,645) (1,877)
Adjustments to derivative instruments recorded in interest expense(2) (1,525) (1,286)
Amortization of debt financing costs(2) 192 180
Equipment lease receivable, net 996 967
Provision for income taxes, net of changes in deferred taxes (389) (203)
Changes in working capital 12,423 874
Cash provided by operating activities 15,548 3,748
Changes in working capital (12,423) (874)
Maintenance capital expenditures (350) (146)  
Free cash flow 2,775 2,728 47 1.7
_____________________
NM - Not meaningful
(1) Includes depreciation expense related to our district energy business of $1.7 million for the quarters ended March 31, 2014 and 2013.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
 
 
Corporate and Other Quarter Ended March 31,
2014   2013   Change

Favorable/(Unfavorable)
$ $ $   %
($ In Thousands) (Unaudited)
 
Base management fees 8,994 7,135 (1,859) (26.1)
Performance fees - 22,042 22,042 100.0
Selling, general and administrative expenses 1,046 1,606 560 34.9
Operating loss (10,040) (30,783) 20,743 67.4
Interest income 50 89 (39) (43.8)
Other expense, net - (25) 25 100.0
Benefit for income taxes 1,055 9,342 (8,287) (88.7)
Noncontrolling interest (321) (415) 94 22.7
Net loss(1) (9,256) (21,792) 12,536 57.5
 
Reconciliation of net loss to EBITDA excluding non-cash items and cash used in operating activities to Free Cash Flow:
 
Net loss(1) (9,256) (21,792)
Interest income (50) (89)
Benefit for income taxes (1,055) (9,342)
Base management fees to be settled/settled in LLC interests 8,994 7,135
Performance fees settled in LLC interests - 22,042
Other non-cash expense 509 581  
EBITDA excluding non-cash items (858) (1,465) 607 41.4
 
EBITDA excluding non-cash items (858) (1,465)
Interest income 50 89
Benefit for income taxes, net of changes in deferred taxes 2,297 5,911
Changes in working capital (2,506) (6,708)
Cash used in operating activities (1,017) (2,173)
Changes in working capital 2,506 6,708  
Free cash flow 1,489 4,535 (3,046) (67.2)
_____________________
(1) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated in consolidation.
 
 

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA EXCLUDING

NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
   

For the Quarter Ended March 31, 2014
($ 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 15,491 6,195 10,555 525 (9,256) 23,510 30,981 (1,415)
Interest expense (income), net(3) 3,567 1,787 9,565 1,731 (50) 16,600 7,133 2,645
Provision (benefit) for income taxes 10,551 4,027 4,915 429 (1,055) 18,867 21,102 599
Depreciation 8,905 1,946 6,802 3,354 - 21,007 17,809 5,110
Amortization of intangibles 233 312 8,131 161 - 8,837 465 322
Base management fee settled/to be settled in LLC interests - - - - 8,994 8,994 - -
Other non-cash expense (income)(4) 992 724 68 (2,323) 509 (30) 1,983 (765)
EBITDA excluding non-cash items 39,737 14,991 40,036 3,878 (858) 97,783 79,473 6,496
 
EBITDA excluding non-cash items 39,737 14,991 40,036 3,878 (858) 97,783 79,473 6,496
Interest (expense) income, net(3) (3,567) (1,787) (9,565) (1,731) 50 (16,600) (7,133) (2,645)
Adjustments to derivative instruments recorded in interest expense, net(3) (2,068) (7) 2,626 (763) - (212) (4,136) (1,525)
Amortization of deferred finance charges(3) 422 118 731 101 - 1,372 844 192
Equipment lease receivables, net - - - 498 - 498 - 996
Provision/benefit for income taxes, net of changes in deferred taxes (7,555) (2,711) (1,244) (196) 2,297 (9,408) (15,109) (389)
Pension contribution - (310) - - - (310) - -
Changes in working capital 2,624 (5,488) (971) 10,530 (2,506) 4,189 5,248 12,423
Cash provided by (used in) operating activities 29,594 4,806 31,613 12,318 (1,017) 77,313 59,187 15,548
Changes in working capital (2,624) 5,488 971 (10,530) 2,506 (4,189) (5,248) (12,423)
Maintenance capital expenditures (5,554) (1,658) (817) (175) - (8,204) (11,107) (350)
Free cash flow 21,416 8,636 31,767 1,612 1,489 64,920 42,832 2,775
 
 
 

For the Quarter Ended March 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 11,665 6,707 10,612 281 (21,792) 7,473 23,330 (118)
Interest expense (income), net(3) 3,303 1,705 4,099 985 (89) 10,003 6,606 1,877
Provision (benefit) for income taxes 8,561 4,483 7,398 1,855 (9,342) 12,955 17,121 1,963
Depreciation 9,118 1,846 5,892 1,721 - 18,577 18,235 3,215
Amortization of intangibles 94 312 7,979 169 - 8,553 187 337
Loss on disoposal of assets - - 106 - - 106 - -
Base management fee settled in LLC interests - - - - 7,135 7,135 - -
Performance fee settled in LLC interests - - - - 22,042 22,042 - -
Other non-cash expense (income)(4) 38 662 (68) (2,468) 581 (1,256) 75 (2,181)
EBITDA excluding non-cash items 32,777 15,715 36,018 2,542 (1,465) 85,587 65,554 5,093
 
EBITDA excluding non-cash items 32,777 15,715 36,018 2,542 (1,465) 85,587 65,554 5,093
Interest (expense) income, net(3) (3,303) (1,705) (4,099) (985) 89 (10,003) (6,606) (1,877)
Adjustments to derivative instruments recorded in interest expense, net (3) (2,205) (78) 25 (643) - (2,901) (4,409) (1,286)
Amortization of deferred finance charges(3) 333 106 661 92 - 1,192 666 180
Equipment lease receivables, net - - - 484 - 484 - 967
Provision/benefit for income taxes, net of changes in deferred taxes (843) (3,092) (4,048) (102) 5,911 (2,173) (1,685) (203)
Changes in working capital(5) (8,694) (10,567) 3,158 1,459 (6,708) (21,352) (17,387) 874
Cash provided by (used in) operating activities 18,067 379 31,715 2,847 (2,173) 50,834 36,133 3,748
Changes in working capital(5) 8,694 10,567 (3,158) (1,459) 6,708 21,352 17,387 (874)
Maintenance capital expenditures(6) (9,561) (1,006) (1,465) (73) - (12,105) (19,121) (146)
Free cash flow 17,200 9,940 27,092 1,315 4,535 60,082 34,399 2,728
___________________________
(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 its solar power generation and district energy businesses.
(3) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(4) 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 $1.8 million for the quarter ended March 31, 2014. The non-cash pension expense of $2.8 million was reported in changes in working capital for the quarter ended March 31, 2013.
(5) Pension contribution of $450,000 for Hawaii Gas for the quarter ended March 31, 2013 was reported in changes in working capital.
(6) Maintenance capital expenditures at IMTT includes a reclassification from growth capital expenditures during the quarter ended March 31, 2013 of $509,000.

Copyright Business Wire 2010

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