Macquarie Infrastructure Company LLC Reports Second Quarter 2014 Financial Results, Increased Cash Dividend

Macquarie Infrastructure Company LLC (NYSE: MIC) reported financial results for the second quarter of 2014 including confirmation of the Company’s previously announced increase in its quarterly cash dividend to $0.95 per share. MIC paid a cash dividend of $0.9375 per share in the first quarter of 2014.

The increase in the dividend was first made public on July 7, 2014 in connection with MIC’s announcement that it had reached an agreement to acquire the remaining 50% interest in International-Matex Tank Terminals (“IMTT”) that it did not already own. The increase in its quarterly cash dividend is the third by MIC in as many quarters.

“We’re confident in the expected increased contribution from IMTT over the remainder of the year and pleased that our Board has increased our quarterly cash dividend,” said James Hooke, Chief Executive Officer of MIC.

MIC generated proportionately combined Free Cash Flow of $56.7 million in the second quarter, up 21.5% from the $46.7 million in the comparable quarter in 2013. For the six months ended June 30, 2014, MIC’s proportionately combined Free Cash Flow increased by 13.8% to $121.6 million, from $106.8 million in 2013.

On a per share basis, the absolute increase in proportionately combined Free Cash Flow was partially offset by an increase in the Company’s weighted average number of shares outstanding of 11.1% and 14.7% for the quarter and year to date periods, respectively, and transaction-related costs pertaining primarily to acquisitions concluded by MIC’s Atlantic Aviation business. Consequently, MIC generated proportionately combined Free Cash Flow per share of $1.00 per share during the second quarter of 2014, and $2.15 per share in the year to date period. The Company generated $0.92 per share and $2.17 per share, in the comparable quarter and year to date periods in 2013.

The decline in proportionately combined Free Cash Flow per share to $2.15 for the six months ended June 30, 2014 compared with $2.17 for the six months ended June 30, 2013 was attributed primarily to, (1) a $0.16 per share increase in cash taxes at IMTT, and (2) a delay in the closing of an acquisition by MIC’s Atlantic Aviation business (while the Galaxy Acquisitions closed on April 30, the incremental shares to fund the transaction were issued in late 2013).

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 in proportion to its equity interest in each entity after holding company costs. See “Cash Generation” below for MIC’s definition of Free Cash Flow and further information.

“Each of our businesses contributed to our results for the quarter at levels consistent with or better than our expectations,” said Hooke. “We saw continued growth at Atlantic Aviation, IMTT and Hawaii Gas. In addition, our results reflect the contribution from our growing Contracted Power and Energy (CP&E) segment.”

Following the quarter end, on July 7, 2014, MIC announced its execution of an agreement to acquire the remaining interest in IMTT it did not already own. At the same time the Company launched a public offering of LLC interests, or shares, and a concurrent offering of convertible senior notes to raise the funds necessary to fund the acquisition.

On July 15, 2014, MIC concluded a public offering of 11.5 million shares raising a gross $764.8 million and issued $350.0 million of convertible senior notes. A portion of the proceeds of the offerings, along with $115.0 million of shares issued to the seller, was used to fund the $1,025.0 million acquisition. The remaining proceeds from the offerings are available to fund growth capital projects, acquisitions by MIC’s existing businesses and for general corporate purposes. The acquisition of the remainder of IMTT closed on July 16, 2014.

MIC has stated that it expects the transaction to be accretive to Free Cash Flow in 2014 and thereafter, excluding transaction related expenses. The Company revised its guidance for Free Cash Flow per share for the full year 2014 to $4.55 per share and established initial guidance for Free Cash Flow per share for 2015 of $5.10 per share. If achieved, the Free Cash Flow per share figures would represent year on year growth in 2014 of approximately 11.2% and approximately 12.1% in 2015.

“We’re pleased to have been able to acquire the remainder of IMTT and believe that we are well placed to derive additional value from consolidating the ownership of the business,” said Hooke.

Commencing with the third quarter in 2014, MIC will consolidate IMTT for financial reporting and tax purposes and IMTT will become a reportable segment. MIC had accounted for IMTT using the equity method prior to the acquisition. The Company noted that consolidation will eliminate payment of federal income taxes by IMTT as a standalone entity and eliminate taxes on the portion of any distributions from IMTT to MIC that were not eligible for the Dividends Received Deduction or were not returns of capital. To the extent that IMTT generates federal taxable income in the future, the tax could be offset in consolidation with the application of MIC level net operating loss carryforwards.

MIC also closed on an additional investment in its Contracted Power & Energy (CP&E) segment during July. The Company completed an acquisition of a controlling interest in a 19.8 MW wind power generating facility in New Mexico for $10.6 million including transaction costs (press release issued on July 3). Similar to MIC’s previous investments in the CP&E segment, the wind project in New Mexico will sell the electricity it generates pursuant to a 20-year power purchase agreement. MIC has expressed confidence in the cash generating capacity of its CP&E investments and has indicated that it would pursue additional investments of a similar size and type over the upcoming 12 to 18 months.

“We’re pleased with the investments we’ve been making in the CP&E segment,” said Hooke, “particularly given the lower risk nature of the cash flows and the visibility we have into the cash generating capacity of the projects over time.” MIC has invested as the sponsor equity in contracted power projects to date, but has indicated that it could also make tax equity investments in contracted power projects if it was able to utilize the tax credits.

At the end of the second quarter MIC had proportionately combined cash and long term debt of $84.6 million and $1471.4 million, respectively. At the same point, its operating companies had access to undrawn credit facilities totaling approximately $677.5 million. Subsequent to the quarter end, pro forma for the capital raise associated with the acquisition of the remainder of IMTT and the effect of the IMTT acquisition, MIC had cash and long term debt of approximately $240.0 million and $2,330.0 million, respectively, and undrawn credit facilities totaling $927.5 million including a new revolving credit facility of $250.0 million at the MIC level. The cash and undrawn credit facilities are available to fund future growth capital projects, acquisitions by MIC’s existing businesses and/or for general corporate purposes.

Consolidated Results for Second Quarter and Six Months

MIC reported net income, before tax, of $15.2 million for the second quarter of 2014 compared with a net loss of $2.0 million for the second quarter of 2013. For the six months ended June 30, 2014, MIC reported net income, before tax, of $43.9 million compared with net income of $9.2 million for the comparable period in 2013. The improvement was primarily attributable to an increase in gross profit and a decrease in combined base management and performance fees incurred in 2014. Combined fees were $14.5 million and $23.5 million in the quarter and year to date periods, respectively, down from $32.5 million and $61.7 million in comparable periods in 2013.

MIC’s consolidated revenue for the second quarter of 2014 rose 11.2% to $280.9 million compared with $252.6 million in the second quarter of 2013. Consolidated revenue increased 7.8% for the six-month period ended June 30, 2014 versus the comparable period in 2013. The increases reflect a growth in the volume of products sold and higher energy costs, such as those for aviation fuel, which are passed through to customers of MIC’s businesses, as well as increased contributions from the Company’s CP&E segment.

Reported gross profit – defined as revenue less cost of goods sold – removes the volatility in revenue associated with fluctuations in energy costs. MIC’s consolidated gross profit rose 13.2% to $114.8 million in the second quarter of 2014 from $101.4 million in the same period in 2013. For the six months ended June 30, 2014, the Company’s gross profit increased 10.5% versus the comparable period in 2013.

The increase in MIC’s consolidated operating income for the quarter and six months ended June 30, 2014 reflects, lower base and performance fees incurred, improved results at Atlantic Aviation and increased contributions from the CP&E segment and the non-utility portion of Hawaii Gas, partially offset by higher selling, general and administrative expenses. The increased expenses were principally legal and transaction-related items incurred in connection with acquisitions on behalf of Atlantic Aviation and CP&E and costs incurred in connection with the IMTT acquisition.

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 may include impairments, gains and losses on derivatives and adjustments for certain other items reflected in the statement of operations.

MIC believes that EBITDA excluding non-cash items provides additional insight into the performance of its operating businesses, relative to each other and to similar businesses without regard to capital structure, and into 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 an 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, which includes cash paid for interest, taxes and pension contributions, less maintenance capital expenditures and 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 on 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. Free Cash Flow should be used as a supplemental measure and not in lieu of MIC’s financial results as reported under GAAP.

MIC may report 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. When we refer to proportionately combined net debt and resultant leverage ratios, we exclude net debt associated with CP&E as the capital structure of that business is more project finance related and the size of that reporting segment, on a proportionately combined basis, is minimal. The Company believes that such measures provide investors and management with additional insight into the financial results and cash generated on the basis of its varied ownership interests in its businesses and investments for the reporting periods.

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. Proportionately combined metrics should be used as a supplement to and not in lieu of financial results reported in accordance with GAAP.

The following tables summarize MIC’s financial performance on a proportionately combined basis for the quarter and six-month periods ended June 30, 2014, and for the prior comparable periods.
                 

For the Quarter Ended June 30, 2014
Contracted Contracted
Atlantic Power and Proportionately Power and

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

Energy (2)
  MIC Corporate  

Combined (1)
IMTT 100%   Energy 100%
Gross profit 38,523 19,400 86,460 5,681 N/A

150,064
77,046 8,989
EBITDA excluding non-cash items 34,718 14,980 39,416 4,544 (2,046)

91,611
69,435 8,024
Free cash flow 16,111   7,780   30,464   2,128   216  

56,699
32,221   4,048
 
 

For the Quarter Ended June 30, 2013 (3)
Contracted Contracted
Atlantic Power and Proportionately Power and

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

Energy (2)
  MIC Corporate  

Combined (1)
IMTT 100%   Energy 100%
Gross profit 37,671 17,147 77,839 3,554 N/A

136,211
75,342 6,450
EBITDA excluding non-cash items 33,965 11,411 34,845 3,463 (1,904)

81,780
67,930 6,798
Free cash flow 12,145   6,489   26,332   2,343   (331)  

46,978
24,290   4,682
 
 

For the Six Months Ended June 30, 2014
Contracted Contracted
Atlantic Power and Proportionately Power and

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

Energy (2)
  MIC Corporate  

Combined (1)
IMTT 100%   Energy 100%
Gross profit 81,019 39,372 173,669 9,248 N/A 303,308 162,037 14,810
EBITDA excluding non-cash items 74,454 29,971 79,452 8,422 (2,904) 189,395 148,908 14,520
Free cash flow 37,527   16,416   62,231   3,740   1,705   121,619 75,053   6,823
 
 

For the Six Months Ended June 30, 2013 (3)
Contracted Contracted
Atlantic Power and Proportionately Power and

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

Energy (2)
  MIC Corporate  

Combined (1)
IMTT 100%   Energy 100%
Gross profit 74,318 37,564 157,473 6,043 N/A 275,398 148,636 11,189
EBITDA excluding non-cash items 66,742 27,126 70,863 6,004 (3,369) 167,366 133,484 11,891
Free cash flow 29,345   16,429   53,424   3,658   4,204   107,060 58,689   7,410

 

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.(3) Reclassified to conform to current period presentation.

IMTT

At the end of the second quarter, MIC had a 50% equity interest in IMTT, the operator of one of the largest independent bulk liquid storage terminal businesses in the U.S. On July 16, 2014, MIC completed the acquisition of the remaining 50% interest in IMTT that it did not already own. IMTT is the owner and operator of 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, discussion below refers to results for 100% of the business, not MIC’s 50% interest at June 30, 2014.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:
  • terminal revenue increased 1.2% and 5.7%
  • capacity utilization was 91.6% and 92.1%
  • maintenance capital expenditures decreased 43.7% and 43.0%
  • Free Cash Flow increased 32.7% and 27.9%

Terminal revenue growth in the second quarter reflected an anticipated level of capacity utilization, a slightly lower than average number of contract renewals and a continuation of the stable pricing growth environment. The pricing environment at IMTT has been unchanged for the past four quarters. Terminal heating and throughput revenue in the second quarter were down on the prior comparable period. Year to date growth in terminal revenue reflects similar factors and the impact of above-average heating and throughput revenue in the first quarter.

As previously disclosed, capacity utilization continued to be lower than the historical average for the business as a number of tanks were off line for cleaning and inspection in the second quarter. MIC reported more than 700,000 barrels of storage capacity out of service for cleaning and inspection during the quarter ended June 30, 2014. Utilization and terminal revenue are expected to increase as and when these tanks are returned to service.

Reported terminal operating expenses were higher in the second quarter of 2014 compared with the second quarter of 2013 as a result of the absence of insurance recoveries related to Hurricane Sandy. The lack of the expense offset had a corresponding impact on EBITDA excluding non-cash items and limited the quarter over quarter increase to 2.2%. Excluding the impact of these recoveries from the 2013 results, the increase in EBITDA excluding non-cash items in the second quarter of 2014 over the prior comparable period would have been 8.6%.

Maintenance capital expenditures were lower in the 2014 periods primarily as a result of the absence of expenditures incurred in 2013 in connection with the restoration of the Bayonne facility following Hurricane Sandy partially offset by the higher level of tank cleaning and inspections.

Taxes at IMTT increased in the quarter and year to date periods as a result of the business’ improved performance, particularly in the first quarter. Prior to acquiring the remainder of IMTT, MIC believed that IMTT’s standalone federal income tax liability could have been offset with certain tax minimization strategies. However, the acquisition of the remainder of IMTT in early July crystallized IMTT’s tax liability for the first half of the year and rendered tax mitigation strategies at IMTT in 2014 unnecessary as any federal tax liability generated by IMTT in the remainder of the year is expected to be offset in consolidation with the application of MIC level NOLs.

Free Cash Flow generated by IMTT increased 32.7% and 27.9% to $32.2 million and $75.1 million for the quarter and six months ended June 30, 2014, respectively. The increase reflects lower maintenance capital expenditures and improved operating results, partially offset by the increased tax provision.

IMTT did not make a distribution to either of its shareholders for the second quarter as a result of the sale of the interest owned by the Coleman family trust to MIC being pending at quarter end.

Hawaii Gas

Hawaii Gas is the owner and operator of the only regulated (“utility”) gas processing and pipeline distribution network on the islands of Hawaii. The business is also the owner and operator of the largest unregulated (“non-utility”) gas distribution operation on the islands. MIC owns 100% of Hawaii Gas.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:
  • non-utility contribution margin increased 15.5% and 2.5%
  • utility contribution margin increased 1.9% and decreased 0.9%
  • maintenance capital expenditures decreased 11.7% and increased 10.8%
  • Free Cash Flow increased 19.9% and was flat

The volume of gas sold by the non-utility portion of the business increased by 5.6% and 1.9% for the quarter and six months ended June 30, 2014, respectively. Adjusted for increases in tank capacity utilization, the volume increases were 3.1% and 2.6%. The volume of gas sold by the utility portion of the business decreased by 1.1% and 1.8% in the quarter and six months ended June 30, 2014, respectively, reflecting reduced demand from certain industrial customers and overall lower residential consumption.

The availability of local supplies of LPG improved in the second quarter compared with the prior comparable period. As a result, Hawaii Gas purchased approximately 63% of its LPG from off-island sources in the second quarter of 2014 compared with 95% in the second quarter of 2013. Longer term supply reliability remains uncertain and Hawaii Gas is pursuing several initiatives including expanding storage capacity and diversifying the supply base to mitigate this risk.

Following approval from the Hawaii Public Utilities Commission in March, Hawaii Gas began moving containerized Liquefied Natural Gas (LNG) from the U.S. mainland to Hawaii in the second quarter. The LNG will be used initially as a supplement to its naphtha-based synthetic natural gas distribution operations on the island of Oahu. Hawaii Gas continues to work on initiatives to expand its use of containerized LNG and develop large-scale bulk LNG storage and distribution operations in Hawaii.

The increase in Free Cash Flow generated by Hawaii Gas during the second quarter reflects improved operating results including the absence of severance costs incurred in 2013 and lower maintenance capital expenditures, partially offset by an increased provision for taxes. On a year to date basis, improved performance was offset by higher taxes and maintenance capital expenditures and the fact that cash pension contributions were not excluded from the calculation of Free Cash Flow in the prior period.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed-base operations (FBO) that primarily provide fuel, terminal and aircraft hangar services to owners and operators of general aviation (GA) aircraft at 68 airports throughout the U.S. The network is the largest of its kind in the U.S. air transportation industry.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:
  • total gross profit growth of 11.1% and 10.3%
  • same store gross profit growth of 5.1% and 6.9%
  • maintenance capital expenditures decreased 65.6% and 59.2%
  • Free Cash Flow increased 15.7% and 16.5%

The recovery in general aviation flight activity in the U.S. following the global financial crisis in 2008/2009 continued in the second quarter of 2014. Atlantic Aviation’s results benefitted from the increased activity, acquisitions of a total of seven FBOs, and same store increases in both the volume of fuel sold and the average margin on fuel sales. Atlantic Aviation’s results included the contribution from an FBO acquired in December of 2013 and a network of six FBOs acquired in a transaction that closed on April 30, 2014 (the “Galaxy Acquisitions”).

Selling, general and administrative expenses, as well as depreciation and amortization, increased in the second quarter of 2014 compared with the second quarter in 2013 primarily as a result of the acquisitions concluded during the prior twelve months.

The acquisitions, including related borrowings of $100.0 million, together with the refinancing of the long-term debt of Atlantic Aviation late in the second quarter of 2013, also contributed to an increase in cash interest expense of approximately $2.9 million in the second quarter of 2014 versus the prior comparable period.

Maintenance capital expenditures at Atlantic Aviation were lower in the quarter and year to date periods ended June 30, 2014 as a result of differences in timing of spending on maintenance projects and lower anticipated spending overall in 2014 versus 2013.

The increase in Free Cash Flow generated by Atlantic Aviation reflects primarily the improved operating results, including the contribution from acquisitions, and the lower maintenance capital expenditures and tax provision, partially offset by the increased cash interest payments.

Contracted Power and Energy Segment

At the end of the second quarter MIC’s CP&E segment comprised controlling interests in five contracted power generating facilities (solar photovoltaic) in the Southwest U.S. and in a district energy business headquartered in Chicago. In July, MIC acquired a controlling interest in an additional contracted power generating facility (wind) in New Mexico. The previously announced sale of the district energy business is currently pending and is expected to close as anticipated in the third quarter, subject to satisfaction of customary closing conditions. To aid in meaningful analysis of the performance of the CP&E segment across periods, the discussion below refers to results for 100% of the businesses in the segment, not MIC’s controlling interests at June 30.

MIC’s CP&E segment produced an increase in total revenue of 20.4% and 18.7% in the quarter and year to date periods ended June 30, 2014, respectively, primarily as a result of the commencement of operations of additional contracted power facilities during the preceding year. The revenue growth was partially offset by increased selling, general and administrative expenses related to the additional facilities and to transaction-related expenses. Together these produced an increase in EBITDA of 18.0% or $1.2 million compared with the second quarter in 2013 and an increase of 22.1% or $2.6 million for the year to date period.

Free Cash Flow generated by CP&E decreased 13.5% to $4.0 million in the second quarter of 2014 compared with the second quarter of 2013. Free Cash Flow generated in the first half of 2014 decreased 7.9% to $6.8 million versus the prior comparable period. The decreases were primarily due to higher transaction-related expenses, higher cash interest expense, an increase in the provision for taxes and higher maintenance capital expenditures partially offset by improved operating results.

Business Outlook

As a result of the acquisition in early July of the remaining interest in IMTT that it did not already own and the acquisition of an interest in an additional contracted power and energy facility, MIC has revised its outlook regarding financial performance for full year 2014 with respect to certain expenses, taxes and Free Cash Flow per share.
  • Expenses related to the various transactions to which the Company has been a party, along with an agreed upon pension contribution at IMTT, are expected to be approximately $30.0 million and to be recorded in the third quarter.
  • Cash taxes payable in relation to the performance of IMTT during the period January 1, 2014 through the IMTT transaction closing date of July 16, 2014 are expected to be in a range of approximately $16.6 million.
  • Interest expense is expected to increase as a result of the issuance of $350.0 million of senior convertible notes in connection with the IMTT acquisition and commitment fees associated with a $250.0 million (undrawn) revolving credit facility at the MIC level.
  • The sale of the district energy business within MIC’s CP&E segment is expected to conclude in the third quarter of 2014. For purposes of Free Cash Flow projections, the proceeds of the sale are not assumed to be reinvested.
  • Taking into consideration the expected contribution from IMTT from the date of closing of the acquisition on July 16 through year end, along with the dilution associated with the shares issued in connection with the financing of the transaction, the Company has provided guidance for Free Cash Flow per share in 2014 of $4.55 per share.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, July 31, 2014 during which it will review the Company’s results and answer questions from analysts and investors.

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 July 31, 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 July 31, 2014 through August 7, 2014, at +1(404) 537-3406, Passcode: 93685696. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G

About Macquarie Infrastructure Company

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

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

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.
   
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)
 
June 30, December 31,
2014 2013
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 84,583 $ 233,373
Restricted cash 29,036 51,884

Accounts receivable, less allowance for doubtful accounts of $961 and $953, respectively
71,487 60,823
Inventories 26,942 25,834
Prepaid expenses 6,251 10,132
Deferred income taxes 4,567 6,197
Equipment lease receivables current 8,831 8,515
Other   13,179     9,792  
Total current assets 244,876 406,550
Property, equipment, land and leasehold improvements, net 894,665 854,169
Equipment lease receivables non-current 13,840 16,155
Investment in unconsolidated business 71,434 83,703
Goodwill 596,627 514,494
Intangible assets, net 693,366 592,850
Deferred financing costs, net of accumulated amortization 22,843 22,740
Other   4,854     10,204  
Total assets $ 2,542,505   $ 2,500,865  
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 8,370 $ 3,032
Accounts payable 31,029 28,850
Accrued expenses 32,100 42,713
Current portion of long-term debt 158,687 163,083
Fair value of derivative instruments 10,542 13,027
Other   25,715     20,747  
Total current liabilities 266,443 271,452
Long-term debt, net of current portion 923,581 831,027
Deferred income taxes 198,331 189,719
Other   58,014     55,399  
Total liabilities   1,446,369     1,347,597  
Commitments and contingencies - -
Members’ equity:

LLC interests, or shares, no par value; 500,000,000 authorized; 56,636,240 shares issued and outstanding at June 30, 2014 and 56,295,595 shares issued and outstanding at December 31, 2013
1,140,909 1,226,733
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (8,273 ) (8,445 )
Accumulated deficit   (167,441 )   (197,507 )
Total members’ equity 986,642 1,042,228
Noncontrolling interests   109,494     111,040  
Total equity   1,096,136     1,153,268  
Total liabilities and equity $ 2,542,505   $ 2,500,865  
 
       
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)
 
Quarter Ended Six Months Ended
June 30, June 30, June 30, June 30,
2014 2013 2014 2013
 
Revenue
Revenue from product sales $ 188,087 $ 167,181 $ 371,888 $ 341,296
Revenue from product sales - utility 37,117 34,193 72,262 71,114
Service revenue 55,029 50,286 111,531 102,401
Financing and equipment lease income   710     907     1,457     1,962  
Total revenue   280,943     252,567     557,138     516,773  
Costs and expenses
Cost of product sales 121,332 109,594 244,249 226,587
Cost of product sales - utility 31,926 29,464 61,306 60,953
Cost of services 12,836 12,073 23,732 23,007
Selling, general and administrative 56,836 52,120 112,300 101,329
Fees to manager - related party 14,495 32,493 23,489 61,670
Depreciation 12,428 9,436 24,582 18,691
Amortization of intangibles 9,456 8,620 18,221 17,248
Loss from customer contract termination - 1,626 - 1,626
Loss on disposal of assets   866     3     866     176  
Total operating expenses   260,175     255,429     508,745     511,287  
Operating income (loss) 20,768 (2,862 ) 48,393 5,486
Other income (expense)
Interest income 31 49 95 143
Interest expense (1) (17,945 ) (7,737 ) (31,956 ) (15,423 )
Loss on extinguishment of debt - (2,472 ) - (2,472 )
Equity in earnings and amortization charges of investee 10,799 11,289 25,086 21,751
Other income (expense), net   1,576     (313 )   2,257     (315 )
Net income (loss) before income taxes 15,229 (2,046 ) 43,875 9,170
(Provision) benefit for income taxes (2)   (5,485 )   1,090     (13,971 )   (3,412 )
Net income (loss) $ 9,744 $ (956 ) $ 29,904 $ 5,758
Less: net income (loss) attributable to noncontrolling interests   44     (108 )   (162 )   735  
Net income (loss) attributable to MIC LLC $ 9,700   $ (848 ) $ 30,066   $ 5,023  
 
Basic income (loss) per share attributable to MIC LLC $ 0.17   $ (0.02 ) $ 0.53   $ 0.10  
Weighted average number of shares outstanding: basic   56,559,924     50,889,021     56,465,136     49,245,969  
 
Diluted income (loss) per share attributable to MIC LLC $ 0.17   $ (0.02 ) $ 0.53   $ 0.10  
Weighted average number of shares outstanding: diluted   56,572,519     50,889,021     56,477,888     49,263,383  
Cash dividends declared per share $ 0.95   $ 0.875   $ 1.8875   $ 1.5625  
 

(1) Interest expense includes losses on derivative instruments of $8.6 million and $13.9 million for the quarter and six months ended June 30, 2014, respectively, of which net losses of $269,000 and $508,000, respectively, were reclassified from accumulated other comprehensive loss. For the quarter and six months ended June 30, 2013, interest expense includes losses on derivative instruments of $487,000 and $1.5 million, respectively, of which net losses of $423,000 and $821,000, respectively, were reclassified from accumulated other comprehensive loss.(2) Includes $107,000 and $202,000 of benefit for income taxes from accumulated other comprehensive loss reclassifications for the quarter and six months ended June 30, 2014, respectively. For the quarter and six months ended June 30, 2013, benefit for income taxes includes $168,000 and $326,000 from accumulated other comprehensive loss reclassifications, respectively.
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
 
  Six Months Ended
 
June 30, 2014 June 30, 2013
 
Operating activities
Net income $ 29,904 $ 5,758

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment 27,993 22,092
Amortization of intangible assets 18,221 17,248
Loss on disposal of assets 816 106
Loss from customer contract termination - 1,626
Equity in earnings and amortization charges of investee (25,086 ) (21,751 )
Equity distributions from investee 25,086 7,879
Amortization of debt financing costs 2,141 1,897
Loss on extinguishment of debt

-
2,434
Adjustments to derivative instruments 5,367 (3,289 )
Base management fees to be settled/settled in shares 18,529 15,188
Performance fees to be settled/settled in shares 4,960 46,482
Equipment lease receivable, net 2,028 2,074
Deferred rent 189 128
Deferred taxes 10,030 1,537
Other non-cash income, net (319 ) (1,492 )
Changes in other assets and liabilities:
Restricted cash 25,262 (9,490 )
Accounts receivable (10,851 ) (6,865 )
Inventories (1,227 ) (2,338 )
Prepaid expenses and other current assets 877 4,081
Due to manager - related party (51 ) 31
Accounts payable and accrued expenses 270 (2,960 )
Income taxes payable (313 ) (845 )
Other, net   (2,491 )   (2,434 )
Net cash provided by operating activities   131,335     77,097  
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired (232,947 ) -
Return of investment in unconsolidated business 12,297 -
Purchases of property and equipment (36,053 ) (38,450 )
Other, net   46     (10 )
Net cash used in investing activities   (256,657 )   (38,460 )
 
Financing activities
Proceeds from long-term debt 104,884 471,752
Dividends paid to shareholders (104,502 ) (35,881 )
Proceeds from the issuance of shares - 227,558
Offering and equity raise costs paid (17 ) (11,006 )
Proceeds from the issuance of shares pursuant to MIC Direct 130 -
Contributions received from noncontrolling interests - 22,362
Distributions paid to noncontrolling interests (1,406 ) (1,189 )
Payment of long-term debt (16,726 ) (732,037 )
Debt financing costs paid (2,317 ) (18,906 )
Change in restricted cash (2,599 ) 5,009
Payment of notes and capital lease obligations   (915 )   (907 )
Net cash used in financing activities   (23,468 )   (73,245 )
 
Net change in cash and cash equivalents (148,790 ) (34,608 )
Cash and cash equivalents, beginning of period   233,373     141,376  
Cash and cash equivalents, end of period

$
84,583   $ 106,768  
 

Supplemental disclosures of cash flow information

Non-cash investing and financing activities:

Accrued equity offering costs

$

286
 

$

11
 

Accrued financing costs

$

322
 

$

93
 

Accrued purchases of property and equipment

$

2,501
 

$

2,769
 

Acquisition of equipment through capital leases

$

-
 

$

 1,135
 

Issuance of shares to manager for performance fees

$

-
 

$

 65,862
 

Issuance of shares to manager for base management fees

$

 18,100
 

$

 13,434
 

Issuance of shares to independent directors

$

 750
 

$

 640
 

Conversion of construction loan to term loan

$

 60,360
 

$

-
 

Distributions payable to noncontrolling interests

$

 406
 

$

 288
 

Taxes paid

$

 4,254
 

$

 2,720
 

Interest paid

$

 24,173
 

$

 16,184
 
 
       

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS – MD&A
 
Change Change
Quarter Ended June 30, Favorable/(Unfavorable) Six Months Ended June 30, Favorable/(Unfavorable)
2014   2013 $   % 2014   2013 $   %
($ In Thousands) (Unaudited)
Revenue
Revenue from product sales $ 188,087 $ 167,181 20,906 12.5 $ 371,888 $ 341,296 30,592 9.0
Revenue from product sales - utility 37,117 34,193 2,924 8.6 72,262 71,114 1,148 1.6
Service revenue 55,029 50,286 4,743 9.4 111,531 102,401 9,130 8.9
Financing and equipment lease income   710     907   (197 ) (21.7 )   1,457     1,962   (505 ) (25.7 )
Total revenue   280,943     252,567   28,376   11.2   557,138     516,773   40,365   7.8
Costs and expenses
Cost of product sales 121,332 109,594 (11,738 ) (10.7 ) 244,249 226,587 (17,662 ) (7.8 )
Cost of product sales - utility 31,926 29,464 (2,462 ) (8.4 ) 61,306 60,953 (353 ) (0.6 )
Cost of services   12,836     12,073   (763 ) (6.3 )   23,732     23,007   (725 ) (3.2 )
Gross profit 114,849 101,436 13,413 13.2 227,851 206,226 21,625 10.5
Selling, general and administrative 56,836 52,120 (4,716 ) (9.0 ) 112,300 101,329 (10,971 ) (10.8 )
Fees to manager - related party 14,495 32,493 17,998 55.4 23,489 61,670 38,181 61.9
Depreciation 12,428 9,436 (2,992 ) (31.7 ) 24,582 18,691 (5,891 ) (31.5 )
Amortization of intangibles 9,456 8,620 (836 ) (9.7 ) 18,221 17,248 (973 ) (5.6 )
Loss from customer contract termination - 1,626 1,626 100.0 - 1,626 1,626 100.0
Loss on disposal of assets   866     3   (863 ) NM   866     176   (690 ) NM
Total operating expenses   94,081     104,298   10,217   9.8   179,458     200,740   21,282   10.6
Operating income (loss) 20,768 (2,862 ) 23,630 NM 48,393 5,486 42,907 NM
Other income (expense)
Interest income 31 49 (18 ) (36.7 ) 95 143 (48 ) (33.6 )
Interest expense (1) (17,945 ) (7,737 ) (10,208 ) (131.9 ) (31,956 ) (15,423 ) (16,533 ) (107.2 )
Loss on extinguishment of debt - (2,472 ) 2,472 100.0 - (2,472 ) 2,472 100.0
Equity in earnings and amortization charges of investee 10,799 11,289 (490 ) (4.3 ) 25,086 21,751 3,335 15.3
Other income (expense), net   1,576     (313 ) 1,889   NM   2,257     (315 ) 2,572   NM
Net income (loss) before income taxes 15,229 (2,046 ) 17,275 NM 43,875 9,170 34,705 NM
(Provision) benefit for income taxes   (5,485 )   1,090   (6,575 ) NM   (13,971 )   (3,412 ) (10,559 ) NM
Net income (loss) $ 9,744 $ (956 ) 10,700 NM $ 29,904 $ 5,758 24,146 NM
Less: net income (loss) attributable to noncontrolling interests   44     (108 ) (152 ) (140.7 )   (162 )   735   897   122.0
Net income (loss) attributable to MIC LLC $ 9,700   $ (848 ) 10,548   NM $ 30,066   $ 5,023   25,043   NM
 

NM - Not meaningful(1) Interest expense includes losses on derivative instruments of $8.6 million and $13.9 million for the quarter and six months ended June 30, 2014, respectively. For the quarter and six months ended June 30, 2013, interest expense includes losses on derivative instruments of $487,000 and $1.5 million, respectively.
               

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) ATTRIBUTABLE TO MIC LLC TO

EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW
 
Change Change
Quarter Ended June 30, Favorable/(Unfavorable) Six Months Ended June 30, Favorable/(Unfavorable)
2014 2013 $ % 2014 2013 $ %
($ In Thousands) (Unaudited)
 
Net income (loss) attributable to MIC LLC (1) $ 9,700 $ (848 ) $ 30,066 $ 5,023
Interest expense, net (2) 17,914 7,688 31,861 15,280
Provision (benefit) for income taxes 5,485 (1,090 ) 13,971 3,412
Depreciation (3) 12,428 9,436 24,582 18,691
Depreciation - cost of services (3) 1,707 1,703 3,411 3,401
Amortization of intangibles (4) 9,456 8,620 18,221 17,248
Loss from customer contract termination - 1,626 - 1,626
Loss on extinguishment of debt - 2,434 - 2,434
Loss on disposal of assets 816 - 816 106
Equity in earnings and amortization charges of investee (10,799 ) (11,289 ) (25,086 ) (21,751 )
Equity distributions from investee (5) 16,959 7,879 25,086 7,879
Base management fees to be settled/settled in shares 9,535 8,053 18,529 15,188
Performance fees to be settled/settled in shares 4,960 24,440 4,960 46,482
Other non-cash (income) expense, net   (828 )   377       (292 )   (629 )  
EBITDA excluding non-cash items $ 77,333   $ 59,029   18,304 31.0 $ 146,125   $ 114,390   31,735 27.7
 
EBITDA excluding non-cash items $ 77,333 $ 59,029 $ 146,125 $ 114,390
Interest expense, net (2) (17,914 ) (7,688 ) (31,861 ) (15,280 )
Adjustments to derivative instruments recorded in interest expense (2) 4,273 (1,950 ) 5,367 (3,289 )
Amortization of debt financing costs (2) 1,100 950 2,141 1,897
Equipment lease receivables, net 1,032 1,107 2,028 2,074
Provision/benefit for income taxes, net of changes in deferred taxes (1,894 ) (443 ) (3,941 ) (1,875 )
Pension contribution (6) (825 ) - (1,135 ) -
Changes in working capital   9,153     (7,577 )   12,611     (20,820 )
Cash provided by operating activities 72,258 43,428 131,335 77,097
Changes in working capital (9,153 ) 7,577 (12,611 ) 20,820
Maintenance capital expenditures   (3,638 )   (5,954 )     (6,463 )   (8,571 )  
Free cash flow $ 59,467   $ 45,051   14,416 32.0 $ 112,261   $ 89,346   22,915 25.6
 

(1) Net income (loss) attributable to MIC LLC excludes net income attributable to noncontrolling interests of $44,000 and net loss attributable to noncontrolling interests of $162,000 for the quarter and six months ended June 30, 2014, respectively, and net loss attributable to noncontrolling interests of $108,000 and net income attributable to noncontrolling interests of $735,000 for the quarter and six months ended June 30, 2013, respectively.(2) Interest expense, net, includes adjustment 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 CP&E 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 and $3.9 million for each of the quarters and six months ended June 30, 2014 and 2013, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.(4) Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $171,000 for each of the quarters and six months ended June 30, 2014 and 2013, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.(5) Equity 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) For the quarter and six months ended June 30, 2013, pension contribution of $900,000 and $1.4 million, respectively, were reported in changes in working capital for those periods.
               

MACQUARIE INFRASTRUCTURE COMPANY LLC

RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW

TO PROPORTIONATELY COMBINED FREE CASH FLOW
 
Change Change
Quarter Ended June 30, Favorable/(Unfavorable) Six Months Ended June 30, Favorable/(Unfavorable)
2014 2013 $ % 2014 2013 $ %
($ In Thousands) (Unaudited)
 
Free Cash Flow- Consolidated basis $ 59,467 $ 45,051 14,416 32.0 $ 112,261 $ 89,346 22,915 25.6
Equity distributions from investee (1) (16,959 ) (7,879 ) (25,086 ) (7,879 )
100% of CP&E Free Cash Flow included in consolidated Free Cash Flow (4,048 )

(4,682
) (6,823 )

(7,410
)
MIC's share of IMTT Free Cash Flow 16,111 12,145 37,527 29,345
MIC's share of CP&E Free Cash Flow   2,128    

2,343
      3,740    

3,658
   
Free Cash Flow- Proportionately Combined basis $ 56,699   $ 46,978   9,721 20.7 $ 121,619   $ 107,060   14,559 13.6

 

(1) Equity distributions from investee represents the portion of distributions received from IMTT that are recorded in cash from operating activities. 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 Six Months Ended
June 30, Change June 30, Change
2014 2013

Favorable/(Unfavorable)
2014 2013

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

($ In Thousands) (Unaudited)
Revenue
Terminal revenue

120,912
119,520 1,392 1.2 254,602 240,852 13,750 5.7
Environmental response revenue 21,606   6,301   15,305   NM 35,994   16,454   19,540   118.8
Total revenue 142,518 125,821 16,697 13.3 290,596 257,306 33,290 12.9
Costs and expenses
Terminal operating costs (1) 49,790 44,906 (4,884 ) (10.9 ) 101,637 95,210 (6,427 ) (6.8 )
Environmental response operating costs 15,682   5,573   (10,109 ) (181.4 ) 26,922   13,460   (13,462 ) (100.0 )
Total operating costs 65,472 50,479 (14,993 ) (29.7 ) 128,559 108,670 (19,889 ) (18.3 )
Terminal gross profit 71,122 74,614 (3,492 ) (4.7 ) 152,965 145,642 7,323 5.0
Environmental response gross profit 5,924   728   5,196   NM 9,072   2,994   6,078   NM
Gross profit 77,046 75,342 1,704 2.3 162,037 148,636 13,401 9.0
General and administrative expenses 10,497 7,854 (2,643 ) (33.7 ) 18,363 16,336 (2,027 ) (12.4 )
Depreciation and amortization 19,646 18,636 (1,010 ) (5.4 ) 37,920 37,058 (862 ) (2.3 )
Casualty losses, net (1) -   6,500   6,500   100.0 -   6,500   6,500   100.0
Operating income 46,903 42,352 4,551 10.7 105,754 88,742 17,012 19.2
Interest expense, net (2) (8,813 ) (1,117 ) (7,696 ) NM (15,946 ) (7,723 ) (8,223 ) (106.5 )
Other income 1,377 442 935 NM 1,871 1,184 687 58.0
Provision for income taxes (15,455 ) (16,592 ) 1,137 6.9 (36,557 ) (33,713 ) (2,844 ) (8.4 )
Noncontrolling interest (9 ) (101 ) 92   91.1 (138 ) (176 ) 38   21.6
Net income 24,003   24,984   (981 ) (3.9 ) 54,984   48,314   6,670   13.8
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income 24,003 24,984 54,984 48,314
Interest expense, net (2) 8,813 1,117 15,946 7,723
Provision for income taxes 15,455 16,592 36,557 33,713
Depreciation and amortization 19,646 18,636 37,920 37,058
Casualty losses, net (1) - 6,500 - 6,500
Other non-cash expenses (3) 1,518   101     3,501   176    
EBITDA excluding non-cash items 69,435   67,930   1,505   2.2 148,908   133,484   15,424   11.6
 
EBITDA excluding non-cash items 69,435 67,930 148,908 133,484
Interest expense, net (2) (8,813 ) (1,117 ) (15,946 ) (7,723 )
Adjustments to derivative instruments recorded in interest expense (2) (2,513 ) (9,607 ) (6,649 ) (14,016 )
Amortization of debt financing costs (2) 843 500 1,687 1,166
Provision for income taxes, net of changes in deferred taxes (11,612 ) (6,538 ) (26,721 ) (8,223 )
Changes in working capital (10,189 ) 18,803   (4,941 ) 1,416  
Cash provided by operating activities 37,151 69,971 96,338 106,104
Changes in working capital 10,189 (18,803 ) 4,941 (1,416 )
Maintenance capital expenditures (4) (15,119 ) (26,878 )   (26,226 ) (45,999 )  
Free cash flow 32,221   24,290   7,931   32.7 75,053   58,689   16,364   27.9

 

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 quarter and six months ended June 30, 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 $1.5 million and $3.3 million for the quarter and six months ended June 30, 2014, respectively. The non-cash pension expense of $2.8 million and $5.6 million was reported in changes in working capital for the quarter and six months ended June 30, 2013, respectively.(4) 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 quarter and six months ended June 30, 2013.
               

Hawaii Gas
 
Quarter Ended Six Months Ended
June 30, Change June 30, Change
2014 2013

Favorable/(Unfavorable)
2014 2013

Favorable/(Unfavorable)
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 32,017 28,420 3,597 12.7 66,223 60,505 5,718 9.5
Cost of revenue - non-utility 14,588   13,333   (1,255 ) (9.4 ) 31,551   26,687   (4,864 ) (18.2 )
Contribution margin - non-utility 17,429 15,087 2,342 15.5 34,672 33,818 854 2.5
Revenue - utility 37,117 34,193 2,924 8.6 72,262 71,114 1,148 1.6
Cost of revenue - utility 27,469   24,726   (2,743 ) (11.1 ) 52,698   51,380   (1,318 ) (2.6 )
Contribution margin - utility 9,648 9,467 181 1.9 19,564 19,734 (170 ) (0.9 )
Total contribution margin 27,077 24,554 2,523 10.3 54,236 53,552 684 1.3
Production 2,397 2,667 270 10.1 4,781 5,382 601 11.2
Transmission and distribution (1) 5,280   4,740   (540 ) (11.4 ) 10,083   10,606   523   4.9
Gross profit 19,400 17,147 2,253 13.1 39,372 37,564 1,808 4.8
Selling, general and administrative expenses 4,771 5,989 1,218 20.3 10,394 11,321 927 8.2
Depreciation and amortization 2,295   2,190   (105 ) (4.8 ) 4,553   4,348   (205 ) (4.7 )
Operating income 12,334 8,968 3,366 37.5 24,425 21,895 2,530 11.6
Interest expense, net (2) (1,891 ) (1,238 ) (653 ) (52.7 ) (3,678 ) (2,943 ) (735 ) (25.0 )
Other expense (57 ) (73 ) 16 21.9 (139 ) (105 ) (34 ) (32.4 )
Provision for income taxes (4,092 ) (2,995 ) (1,097 ) (36.6 ) (8,119 ) (7,478 ) (641 ) (8.6 )
Net income (3) 6,294   4,662   1,632   35.0 12,489   11,369   1,120   9.9
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income (3) 6,294 4,662 12,489 11,369
Interest expense, net (2) 1,891 1,238 3,678 2,943
Provision for income taxes 4,092 2,995 8,119 7,478
Depreciation and amortization 2,295 2,190 4,553 4,348
Other non-cash expenses (1) 408   326     1,132   988    
EBITDA excluding non-cash items 14,980   11,411   3,569   31.3 29,971   27,126   2,845   10.5
 
EBITDA excluding non-cash items 14,980 11,411 29,971 27,126
Interest expense, net (2) (1,891 ) (1,238 ) (3,678 ) (2,943 )
Adjustments to derivative instruments recorded in interest expense (2) 153 (617 ) 146 (695 )
Amortization of debt financing costs (2) 121 123 239 229
Provision for income taxes, net of changes in deferred taxes (2,625 ) (775 ) (5,336 ) (3,867 )
Pension contribution (4) (825 ) - (1,135 ) -
Changes in working capital 1,711   9,780   (3,777 ) (787 )
Cash provided by operating activities 11,624 18,684 16,430 19,063
Changes in working capital (1,711 ) (9,780 ) 3,777 787
Maintenance capital expenditures (2,133 ) (2,415 )   (3,791 ) (3,421 )  
Free cash flow 7,780   6,489   1,291   19.9 16,416   16,429   (13 ) (0.1 )

 

(1) For the quarter and six months ended June 30, 2013, transmission and distribution includes non-cash income of $518,000 for asset retirement obligation credit that is not expected to recur. This non-cash income is excluded when calculating EBITDA excluding non-cash items.(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.(4) For the quarter and six months ended June 30, 2013, pension contribution of $900,000 and $1.4 million, respectively, were reported in changes in working capital for those periods.
               

Atlantic Aviation
 
 
Quarter Ended Six Months Ended
June 30, Change June 30, Change
2014 2013

Favorable/(Unfavorable)
2014 2013

Favorable/(Unfavorable)
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 150,240 135,929 14,311 10.5 296,177 276,273 19,904 7.2
Non-fuel revenue 42,972   38,573   4,399   11.4 90,996   82,369   8,627   10.5
Total revenue 193,212 174,502 18,710 10.7 387,173 358,642 28,531 8.0
Cost of revenue
Cost of revenue-fuel 102,661 93,038 (9,623 ) (10.3 ) 204,719 192,823 (11,896 ) (6.2 )
Cost of revenue-non-fuel 4,091   3,625   (466 ) (12.9 ) 8,785   8,346   (439 ) (5.3 )
Total cost of revenue 106,752 96,663 (10,089 ) (10.4 ) 213,504 201,169 (12,335 ) (6.1 )
Fuel gross profit 47,579 42,891 4,688 10.9 91,458 83,450 8,008 9.6
Non-fuel gross profit 38,881   34,948   3,933   11.3 82,211   74,023   8,188   11.1
Gross profit 86,460   77,839   8,621   11.1 173,669   157,473   16,196   10.3
Selling, general and administrative expenses 47,067 42,910 (4,157 ) (9.7 ) 94,310 86,387 (7,923 ) (9.2 )
Depreciation and amortization 15,607 13,974 (1,633 ) (11.7 ) 30,540 27,845 (2,695 ) (9.7 )
Loss on disposal of assets 866   3   (863 ) NM 866   176   (690 ) NM
Operating income 22,920 20,952 1,968 9.4 47,953 43,065 4,888 11.4
Interest expense, net (1) (13,352 ) (4,626 ) (8,726 ) (188.6 ) (22,917 ) (8,725 ) (14,192 ) (162.7 )
Loss on extinguishment of debt - (2,472 ) 2,472 100.0 - (2,472 ) 2,472 100.0
Other (expense) income (15 ) 4 (19 ) NM (13 ) - (13 ) NM
Provision for income taxes (3,855 ) (5,426 ) 1,571   29.0 (8,770 ) (12,824 ) 4,054   31.6
Net income (2) 5,698   8,432   (2,734 ) (32.4 ) 16,253   19,044   (2,791 ) (14.7 )
 
Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:
 
Net income (2) 5,698 8,432 16,253 19,044
Interest expense, net (1) 13,352 4,626 22,917 8,725
Provision for income taxes 3,855 5,426 8,770 12,824
Depreciation and amortization 15,607 13,974 30,540 27,845
Loss on extinguishment of debt - 2,434 - 2,434
Loss on disposal of assets 816 - 816 106
Other non-cash expense (income) 88   (47 )   156   (115 )  
EBITDA excluding non-cash items 39,416   34,845   4,571   13.1 79,452   70,863   8,589   12.1
 
EBITDA excluding non-cash items 39,416 34,845 79,452 70,863
Interest expense, net (1) (13,352 ) (4,626 ) (22,917 ) (8,725 )
Adjustments to derivative instruments recorded in interest expense (1) 5,679 28 8,305 53
Amortization of debt financing costs (1) 785 648 1,516 1,309
Provision for income taxes, net of changes in deferred taxes (882 ) (1,127 ) (2,126 ) (5,175 )
Changes in working capital (1,274 ) 1,735   (2,245 ) 4,893  
Cash provided by operating activities 30,372 31,503 61,985 63,218
Changes in working capital 1,274 (1,735 ) 2,245 (4,893 )
Maintenance capital expenditures (1,182 ) (3,436 )   (1,999 ) (4,901 )  
Free cash flow 30,464   26,332   4,132   15.7 62,231   53,424   8,807   16.5

 

NM - Not meaningful(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
               

Contracted Power and Energy
 
 
Quarter Ended

Six Months Ended
June 30, Change

June 30,
Change
2014 2013

Favorable/(Unfavorable)
2014 2013

Favorable/(Unfavorable)
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Product sales 5,830 2,832 2,998 105.9 9,488 4,518 4,970 110.0
Service revenue 12,057 11,713 344 2.9 20,535 20,032 503 2.5
Finance lease revenue 710   907   (197 ) (21.7 ) 1,457   1,962   (505 ) (25.7 )
Total revenue 18,597   15,452   3,145   20.4 31,480   26,512   4,968   18.7
Cost of revenue — product 863 554 (309 ) (55.8 ) 1,723 662 (1,061 ) (160.3 )
Cost of revenue — service (1) 8,745   8,448   (297 ) (3.5 ) 14,947   14,661   (286 ) (2.0 )
Cost of revenue — total 9,608 9,002 (606 ) (6.7 ) 16,670 15,323 (1,347 ) (8.8 )
Gross profit 8,989 6,450 2,539 39.4 14,810 11,189 3,621 32.4
Selling, general and administrative expenses 2,765 1,117 (1,648 ) (147.5 ) 4,317 2,342 (1,975 ) (84.3 )
Depreciation 3,656 1,561 (2,095 ) (134.2 ) 7,062 3,078 (3,984 ) (129.4 )
Amortization of intangibles 326 331 5 1.5 648 668 20 3.0
Loss from customer contract termination -   1,626   1,626   100.0 -   1,626   1,626   100.0
Operating income 2,242 1,815 427 23.5 2,783 3,475 (692 ) (19.9 )
Interest expense, net (2) (2,690 ) (1,865 ) (825 ) (44.2 ) (5,335 ) (3,742 ) (1,593 ) (42.6 )
Other income (expense), net 1,648 (254 ) 1,902 NM 2,409 2,236 173 7.7
(Provision) benefit for income taxes (616 ) 548 (1,164 ) NM (1,215 ) (1,415 ) 200 14.1
Noncontrolling interest 570   172   398   NM 1,097   (256 ) 1,353   NM
Net income (loss) 1,154   416   738   177.4 (261 ) 298   (559 ) (187.6 )
 
Reconciliation of net income (loss) to EBITDA excluding non-cash items and cash provided by (used in) operating activities to Free Cash Flow:
 
Net income (loss) 1,154 416 (261 ) 298
Interest expense, net (2) 2,690 1,865 5,335 3,742
Provision (benefit) for income taxes 616 (548 ) 1,215 1,415
Depreciation (1) 5,363 3,264 10,473 6,479
Amortization of intangibles 326 331 648 668
Loss from customer contract termination - 1,626 - 1,626
Other non-cash income (2,125 ) (156 )   (2,890 ) (2,337 )  
EBITDA excluding non-cash items 8,024   6,798   1,226   18.0 14,520   11,891   2,629   22.1
 
EBITDA excluding non-cash items 8,024 6,798 14,520 11,891
Interest expense, net (2) (2,690 ) (1,865 ) (5,335 ) (3,742 )
Adjustments to derivative instruments recorded in interest expense (2) (1,559 ) (1,361 ) (3,084 ) (2,647 )
Amortization of debt financing costs (2) 194 179 386 359
Equipment lease receivable, net 1,032 1,107 2,028 2,074
Provision/benefit for income taxes, net of changes in deferred taxes (630 ) (73 ) (1,019 ) (276 )
Changes in working capital 9,698   (18,126 ) 22,121   (17,252 )
Cash provided by (used in) operating activities 14,069 (13,341 ) 29,617 (9,593 )
Changes in working capital (9,698 ) 18,126 (22,121 ) 17,252
Maintenance capital expenditures (323 ) (103 )   (673 ) (249 )  
Free cash flow 4,048   4,682   (634 ) (13.5 ) 6,823   7,410   (587 ) (7.9 )
 

NM - Not meaningful(1) Includes depreciation expense related to our district energy business of $1.7 million and $3.4 million for each of the quarters and six months ended June 30, 2014 and 2013, respectively.(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
               

Corporate and Other
 
Quarter Ended Six Months Ended
June 30, Change June 30, Change
2014 2013

Favorable/(Unfavorable)
2014 2013

Favorable/(Unfavorable)
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Base management fees 9,535 8,053 (1,482 ) (18.4 ) 18,529 15,188 (3,341 ) (22.0 )
Performance fees 4,960 24,440 19,480 79.7 4,960 46,482 41,522 89.3
Selling, general and administrative expenses 2,233   2,103   (130 ) (6.2 ) 3,279   3,709   430   11.6
Operating loss (16,728 ) (34,596 ) 17,868 51.6 (26,768 ) (65,379 ) 38,611 59.1
Interest income 19 41 (22 ) (53.7 ) 69 130 (61 ) (46.9 )
Other income (expense), net - 9 (9 ) (100.0 ) - (16 ) 16 100.0
Benefit for income taxes 3,078 8,963 (5,885 ) (65.7 ) 4,133 18,305 (14,172 ) (77.4 )
Noncontrolling interest (614 ) (64 ) (550 ) NM (935 ) (479 ) (456 ) (95.2 )
Net loss (1) (14,245 ) (25,647 ) 11,402   44.5 (23,501 ) (47,439 ) 23,938   50.5
 
Reconciliation of net loss to EBITDA excluding non-cash items and cash used in operating activities to Free Cash Flow:
 
Net loss (1) (14,245 ) (25,647 ) (23,501 ) (47,439 )
Interest income (19 ) (41 ) (69 ) (130 )
Benefit for income taxes (3,078 ) (8,963 ) (4,133 ) (18,305 )
Base management fees to be settled/settled in shares 9,535 8,053 18,529 15,188
Performance fees to be settled/settled in shares 4,960 24,440 4,960 46,482
Other non-cash expense 801   254     1,310   835    
EBITDA excluding non-cash items (2,046 ) (1,904 ) (142 ) (7.5 ) (2,904 ) (3,369 ) 465   13.8
 
EBITDA excluding non-cash items (2,046 ) (1,904 ) (2,904 ) (3,369 )
Interest income 19 41 69 130
Benefit for income taxes, net of changes in deferred taxes 2,243 1,532 4,540 7,443
Changes in working capital (982 ) (966 ) (3,488 ) (7,674 )
Cash used in operating activities (766 ) (1,297 ) (1,783 ) (3,470 )
Changes in working capital 982   966     3,488   7,674    
Free cash flow 216   (331 ) 547   165.3 1,705   4,204   (2,499 ) (59.4 )

 

(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 Quarter Ended June 30, 2014
 

($ in Thousands) (Unaudited)
Contracted
Atlantic Contracted MIC Power and
Hawaii Aviation Power and Corporate Proportionately

IMTT
Energy
IMTT 50%   Gas 100%  

100%
 

Energy (2)
  100%  

Combined (1)

100%
  100%
 
Net income (loss) attributable to MIC LLC 12,002 6,294 5,698 761 (14,245 ) 10,509 24,003 1,154
Interest expense (income), net (3) 4,407 1,891 13,352 1,779 (19 ) 21,409 8,813 2,690
Provision (benefit) for income taxes 7,728 4,092 3,855 314 (3,078 ) 12,911 15,455 616
Depreciation 9,587 1,983 6,789 3,561 - 21,920 19,174 5,363
Amortization of intangibles 236 312 8,818 163 - 9,529 472 326
Loss on disposal of assets - - 816 - - 816 - -
Base management fee to be settled in shares - - - - 9,535 9,535 - -
Performance fees to be to be settled in shares - - - - 4,960 4,960 - -
Other non-cash expense (income) (4) 759     408     88     (2,033 )   801     23   1,518     (2,125 )
EBITDA excluding non-cash items 34,718     14,980     39,416     4,544     (2,046 )   91,611   69,435     8,024  
 
EBITDA excluding non-cash items 34,718 14,980 39,416 4,544 (2,046 ) 91,611 69,435 8,024
Interest (expense) income, net (3) (4,407 ) (1,891 ) (13,352 ) (1,779 ) 19 (21,409 ) (8,813 ) (2,690 )
Adjustments to derivative instruments recorded in interest expense, net (3) (1,257 ) 153 5,679 (780 ) - 3,796 (2,513 ) (1,559 )
Amortization of deferred finance charges (3) 422 121 785 103 - 1,430 843 194
Equipment lease receivables, net - - - 516 - 516 - 1,032
Provision/benefit for income taxes, net of changes in deferred taxes (5,806 ) (2,625 ) (882 ) (315 ) 2,243 (7,385 ) (11,612 ) (630 )
Pension contribution - (825 ) - - - (825 ) - -
Changes in working capital (5,095 )   1,711     (1,274 )   8,411     (982 )   2,772   (10,189 )   9,698  
Cash provided by (used in) operating activities 18,576 11,624 30,372 10,700 (766 ) 70,506 37,151 14,069
Changes in working capital 5,095 (1,711 ) 1,274 (8,411 ) 982 (2,772 ) 10,189 (9,698 )
Maintenance capital expenditures (7,560 )   (2,133 )   (1,182 )   (162 )   -     (11,036 ) (15,119 )   (323 )
Free cash flow 16,111     7,780     30,464     2,128    

216
    56,699   32,221     4,048  

 
 

For the Quarter Ended June 30, 2013 (8)
 

($ in Thousands) (Unaudited)
Contracted
Atlantic Contracted MIC Power and
Hawaii Aviation Power and Corporate Proportionately IMTT Energy
IMTT 50%   Gas 100%   100%  

Energy (2)
  100%  

Combined (1)
100%   100%
 
Net income (loss) attributable to MIC LLC 12,492 4,662 8,432 729 (25,647 ) 668 24,984 416
Interest expense (income), net (3) 559 1,238 4,626 995 (41 ) 7,376 1,117 1,865
Provision (benefit) for income taxes 8,296 2,995 5,426 (547 ) (8,963 ) 7,207 16,592 (548 )
Depreciation 9,076 1,878 5,997 1,773 - 18,723 18,151 3,264
Amortization of intangibles 243 312 7,977 166 - 8,697 485 331
Loss from customer contract termination - - - 813 - 813 - 1,626
Casualty losses, net (5) 3,250 - - - - 3,250 6,500 -
Loss on extinguishment of debt - - 2,434 - - 2,434 - -
Base management fee settled in shares - - - - 8,053 8,053 - -
Performance fee settled in shares - - - - 24,440 24,440 - -
Other non-cash expense (income) (4) 51     326     (47 )   (466 )   254     117   101     (156 )
EBITDA excluding non-cash items 33,965     11,411     34,845     3,463     (1,904 )   81,780   67,930     6,798  
 
EBITDA excluding non-cash items 33,965 11,411 34,845 3,463 (1,904 ) 81,780 67,930 6,798
Interest (expense) income, net (3) (559 ) (1,238 ) (4,626 ) (995 ) 41 (7,376 ) (1,117 ) (1,865 )
Adjustments to derivative instruments recorded in interest expense, net (3) (4,804 ) (617 ) 28 (681 ) - (6,073 ) (9,607 ) (1,361 )
Amortization of deferred finance charges (3) 250 123 648 91 - 1,112 500 179
Equipment lease receivables, net - - - 554 - 554 - 1,107
Provision/benefit for income taxes, net of changes in deferred taxes (3,269 ) (775 ) (1,127 ) (37 ) 1,532 (3,676 ) (6,538 ) (73 )
Changes in working capital (6) 9,402     9,780     1,735     (15,047 )   (966 )   4,904   18,803     (18,126 )
Cash provided by (used in) operating activities 34,986 18,684 31,503 (12,652 ) (1,297 ) 71,224 69,971 (13,341 )
Changes in working capital (6) (9,402 ) (9,780 ) (1,735 ) 15,047 966 (4,904 ) (18,803 ) 18,126
Maintenance capital expenditures (7) (13,439 )   (2,415 )   (3,436 )   (52 )   -     (19,342 ) (26,878 )   (103 )
Free cash flow 12,145     6,489     26,332     2,343     (331 )   46,978   24,290     4,682  
 

(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 exclude 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 $1.5 million for the quarter ended June 30, 2014. The non-cash pension expense of $2.8 million was reported in changes in working capital for the quarter ended June 30, 2013.(5) 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 quarter ended June 30, 2013.(6) Pension contribution of $900,000 for Hawaii Gas for the quarter ended June 30, 2013 was reported in changes in working capital.(7) 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 quarter ended June 30, 2013(8) Reclassified to conform with current period presentation.
                 

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 Six Months Ended June 30, 2014
 

($ in Thousands) (Unaudited)
Contracted
Atlantic Contracted MIC Power and
Hawaii Aviation Power and Corporate Proportionately IMTT Energy
IMTT 50%   Gas 100%   100%  

Energy (2)
  100%  

Combined (1)
100%   100 %
 
Net income (loss) attributable to MIC LLC 27,492 12,489 16,253 1,286 (23,501 ) 34,019 54,984 (261 )
Interest expense (income), net (3) 7,973 3,678 22,917 3,510 (69 ) 38,009 15,946 5,335
Provision (benefit) for income taxes 18,279 8,119 8,770 743 (4,133 ) 31,778 36,557 1,215
Depreciation 18,492 3,929 13,591 6,915 - 42,926 36,983 10,473
Amortization of intangibles 469 624 16,949 324 - 18,366 937 648
Base management fee settled/to be settled in shares - - - - 18,529 18,529 - -
Performance fees to be settled in shares - - - - 4,960 4,960 - -
Loss on disposal of assets - - 816 - - 816 - -
Other non-cash expense (income) (4) 1,751     1,132     156     (4,355 )   1,310     (7 ) 3,501     (2,890 )
EBITDA excluding non-cash items 74,454     29,971     79,452     8,422     (2,904 )   189,395   148,908     14,520  
 
EBITDA excluding non-cash items 74,454 29,971 79,452 8,422 (2,904 ) 189,395 148,908 14,520
Interest (expense) income, net (3) (7,973 ) (3,678 ) (22,917 ) (3,510 ) 69 (38,009 ) (15,946 ) (5,335 )
Adjustments to derivative instruments recorded in interest expense, net (3) (3,325 ) 146 8,305 (1,542 ) - 3,584 (6,649 ) (3,084 )
Amortization of deferred finance charges (3) 844 239 1,516 203 - 2,802 1,687 386
Equipment lease receivables, net - - - 1,014 - 1,014 - 2,028
Provision/benefit for income taxes, net of changes in deferred taxes (13,361 ) (5,336 ) (2,126 ) (511 ) 4,540 (16,793 ) (26,721 ) (1,019 )
Pension contribution - (1,135 ) - - - (1,135 ) - -
Changes in working capital (2,471 )   (3,777 )   (2,245 )   18,942     (3,488 )   6,961   (4,941 )   22,121  
Cash provided by (used in) operating activities 48,169 16,430 61,985 23,018 (1,783 ) 147,819 96,338 29,617
Changes in working capital 2,471 3,777 2,245 (18,942 ) 3,488 (6,961 ) 4,941 (22,121 )
Maintenance capital expenditures (13,113 )   (3,791 )   (1,999 )   (337 )   -     (19,240 ) (26,226 )   (673 )
Free cash flow 37,527     16,416     62,231     3,740     1,705     121,619   75,053     6,823  
 
 
 

For the Six Months Ended June 30, 2013 (8)
 

($ in Thousands) (Unaudited)
Contracted
Atlantic Contracted MIC Power and
Hawaii Aviation Power and Corporate Proportionately IMTT Energy
IMTT 50%   Gas 100%   100%  

Energy (2)
  100%  

Combined (1)
100%   100%
 
Net income (loss) attributable to MIC LLC 24,157 11,369 19,044 1,011 (47,439 ) 8,142 48,314 298
Interest expense (income), net (3) 3,862 2,943 8,725 1,979 (130 ) 17,379 7,723 3,742
Provision (benefit) for income taxes 16,857 7,478 12,824 1,309 (18,305 ) 20,162 33,713 1,415
Depreciation 18,193 3,724 11,889 3,494 - 37,300 36,386 6,479
Amortization of intangibles 336 624 15,956 334 - 17,250 672 668
Loss from customer contract termination - - - 813 - 813 - 1,626
Casualty losses, net (5) 3,250 - - - - 3,250 6,500 -

Loss on disposal of assets
- - 106 - - 106 - -
Loss on extinguishment of debt - - 2,434 - - 2,434 - -
Base management fee settled in shares - - - - 15,188 15,188 - -
Performance fee settled in shares - - - - 46,482 46,482 - -
Other non-cash expense (income) (4) 88     988     (115 )   (2,935 )   835     (1,139 ) 176     (2,337 )
EBITDA excluding non-cash items 66,742     27,126     70,863     6,004     (3,369 )   167,366   133,484     11,891  
 
EBITDA excluding non-cash items 66,742 27,126 70,863 6,004 (3,369 ) 167,366 133,484 11,891
Interest (expense) income, net (3) (3,862 ) (2,943 ) (8,725 ) (1,979 ) 130 (17,379 ) (7,723 ) (3,742 )

Adjustments to derivative instruments recorded in interest expense, net (3)
(7,008 ) (695 ) 53 (1,324 ) - (8,974 ) (14,016 ) (2,647 )
Amortization of deferred finance charges (3) 583 229 1,309 182 - 2,303 1,166 359
Equipment lease receivables, net - - - 1,037 - 1,037 - 2,074
Provision/benefit for income taxes, net of changes in deferred taxes (4,112 ) (3,867 ) (5,175 ) (138 ) 7,443 (5,849 ) (8,223 ) (276 )
Changes in working capital (6) 708     (787 )   4,893     (13,588 )   (7,674 )   (16,448 ) 1,416     (17,252 )
Cash provided by (used in) operating activities 53,052 19,063 63,218 (9,805 ) (3,470 ) 122,058 106,104 (9,593 )
Changes in working capital (6) (708 ) 787 (4,893 ) 13,588 7,674 16,448 (1,416 ) 17,252
Maintenance capital expenditures (7) (23,000 )   (3,421 )   (4,901 )   (125 )   -     (31,446 ) (45,999 )   (249 )
Free cash flow 29,345     16,429     53,424     3,658     4,204     107,060   58,689     7,410  
 

(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 exclude 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 $3.3 million for the six months ended June 30, 2014. The non-cash pension expense of $5.6 million was reported in changes in working capital for the six months ended June 30, 2013.(5) 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 six months ended June 30, 2013.(6) Pension contribution of $1.4 million for Hawaii Gas for the six months ended June 30, 2013 was reported in changes in working capital.(7) 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 six months ended June 30, 2013.(8) Reclassified to conform with current period presentation.

Copyright Business Wire 2010

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