Market Overview

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

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NEW YORK--(BUSINESS WIRE)--

Macquarie Infrastructure Company LLC (NYSE: MIC) reported financial results for the third quarter of 2012 including proportionately combined free cash flow of $32.1 million or $0.69 per share. Proportionately combined free cash flow decreased 12.7% compared with the third quarter of 2011 primarily as a result of a swap break payment incurred in connection with the previously disclosed refinancing of debt facilities at Hawaii Gas.

For the nine months ended September 30, 2012 proportionately combined free cash flow increased 9.8% to $2.57 per share compared with $2.34 per share for the nine months ended September 30, 2011.

“I am pleased we were able to increase the dividend on the back of these results. MIC now expects to generate proportionately combined free cash flow of approximately $3.51 per share for the full year, and $3.70 per share as previously indicated, normalized for the swap break payment,” said James Hooke, Chief Executive Officer of Macquarie Infrastructure Company LLC.

“While the refinancing payment at Hawaii Gas reduced our headline result, the underlying growth in proportionately combined free cash flow in the third quarter was strong and we have not seen any significant slowing in our business,” Hooke added.

MIC regards free cash flow as an important tool in assessing the performance of its capital intensive, cash generative businesses. Proportionately combined free cash flow refers to the sum of the free cash flow generated by MIC's businesses and investments in proportion to its equity interest in each and after holding company costs.

MIC notes that free cash flow does not fully reflect its ability to freely deploy generated cash, as it does not reflect required principal payments on indebtedness, payments of dividends, potential growth capital expenditures and other fixed obligations or the other cash items excluded when calculating free cash flow. Free cash flow may be calculated differently by other companies which limits its usefulness as a comparative measure. Free cash flow, as defined by MIC, should be used as a supplemental measure and not in lieu of financial results reported under GAAP. See “Cash Generation” below for MIC's definition of free cash flow and further information.

The Company's Board approved an increase in its quarterly cash dividend from $0.625 per share to $0.6875 per share. The 10% increase in the cash dividend to $2.75 per share is consistent with MIC's current intent to return a substantial proportion of the cash it generates to shareholders. The increased dividend will be paid on November 15, 2012 to shareholders of record on November 12, 2012.

MIC reported that it has received all distributions for periods through and including the second quarter of 2012 from its investment in International-Matex Tank Terminals, or IMTT, a bulk liquid storage terminal business, consistent with the Shareholders' Agreement between the Company and its co-investor in the business. The distributions include payments totaling $50.3 million for the first and second quarters of 2012, $18.2 million of which had been received earlier in the year.

A distribution of $15.2 million per shareholder for the third quarter of 2012, also consistent with the Shareholders' Agreement, was declared by the IMTT board on October 25, 2012. MIC received the payment on October 31, 2012.

“I am pleased that our co-investor in IMTT supported the full payment of the distributions due from IMTT for the first three quarters. We believe that we have a framework for an agreement that will result in the continued payment of full distributions from IMTT,” said Hooke.

MIC updated its guidance with respect to the payment of federal cash income taxes in consolidation. MIC now believes that it will not have a material federal cash income tax liability until early 2015. The further deferral of a federal cash income tax liability is based on revised assumptions regarding the rate of utilization of net operating loss carryforwards. MIC had previously expected to incur federal cash income taxes early in 2014.

Consolidated Results for Third Quarter and Nine Month Periods

The Company reported net loss, before tax, of $1.9 million for the third quarter of 2012 compared with a net income of $14.6 million in the third quarter of 2011. The loss reflects primarily a $23.5 million performance fee payable to MIC's Manager for the third quarter of 2012 that was not incurred in the prior comparable period. A performance fee is payable when the total return to MIC shareholders at the end of a quarter is in excess of total return produced by the Company's benchmark, including any prior underperformance. The fee for the third quarter of 2012 will be reinvested in additional MIC LLC interests and is therefore effectively a non-cash expense.

For the nine months ended September 30, 2012, MIC reported net income, before tax, of $40.8 million compared with net income of $28.1 million for the comparable period in 2011.

MIC's consolidated revenue for the third quarter of 2012 increased 3.1% to $259.3 million compared with $251.6 million for the third quarter of 2011. Consolidated revenue increased 6.0% for the nine-month period ended September 30, 2012 compared with the same period in 2011. The growth in revenue in 2012 reflects the increased volume of products sold and higher energy costs, such as those for aviation fuel and gas products, which are passed through to customers of MIC's businesses.

Reported gross profit – defined as revenue less cost of goods sold – removes the volatility in revenue associated with fluctuations in energy costs and provides a clearer indication of trends in both the volume of and margin on the products and services the Company provides. MIC's consolidated gross profit totaled $101.5 million in the third quarter of 2012, an increase of 2.5% over the same period in 2011. For the nine months ended September 30, 2012 the Company's gross profit increased 5.2% compared with the same period in 2011.

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.

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, less maintenance capital expenditures and changes in working capital.

 

For the Quarter Ended September 30, 2012

($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1)       IMTT 100%   District Energy 100%
           
 
Gross profit 31,590 16,676 3,394 78,069 N/A 129,728 63,179 6,786
EBITDA excluding non-cash items 27,955 12,632 4,019 33,893 (1,875 ) 76,624 55,909 8,037
Free cash flow 12,689     (440 )   2,675     17,679     (552 )   32,050   25,377     5,348  
 

For the Quarter Ended September 30, 2011

IMTT 50%   Hawaii Gas   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Gross profit 30,496 15,680 3,393 76,571 N/A 126,140 60,992 6,785
EBITDA excluding non-cash items 26,542 12,072 4,494 32,608 (2,035 ) 73,681 53,083 8,987
Free cash flow 12,099     6,881     2,898     16,178     (1,696 )   36,359   24,197     5,794  
                           
Gross profit variance 3.6 %   6.4 %   0.0 %   2.0 %   N/A     2.8 % 3.6 %   0.0 %
EBITDA excluding non-cash items variance 5.3 %   4.6 %   (10.6 )%   3.9 %   7.9 %   4.0 % 5.3 %   (10.6 )%
Free cash flow variance 4.9 %   (106.4 )%   (7.7 )%   9.3 %   67.5 %   (11.9 )% 4.9 %   (7.7 )%
_____________________
(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
 
 

For the Nine Months Ended September 30, 2012

($ in Thousands) (Unaudited) IMTT 50%   Hawaii Gas   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Gross profit 96,484 53,451 7,775 230,863 N/A 388,572 192,967 15,546
EBITDA excluding non-cash items 86,127 41,262 9,141 99,379 (8,848 ) 227,060 172,253 18,278
Free cash flow 50,268     16,165     5,942     51,422     (4,224 )   119,573   100,535     11,882  
 
 

For the Nine Months Ended September 30, 2011

IMTT 50%   Hawaii Gas   District Energy 50.01%   Atlantic Aviation   MIC Corporate   Proportionately Combined(1) IMTT 100%   District Energy 100%
 
Gross profit 87,930 46,204 7,115 224,630 N/A 365,879 175,860 14,228
EBITDA excluding non-cash items 76,764 35,241 9,038 93,846 (5,224 ) 209,665 153,528 18,073
Free cash flow 39,736     18,224     5,767     45,893     (2,036 )   107,584   79,471     11,532  
                           
Gross profit variance 9.7 %   15.7 %   9.3 %   2.8 %   N/A     6.2 % 9.7 %   9.3 %
EBITDA excluding non-cash items variance 12.2 %   17.1 %   1.1 %   5.9 %   (69.4 )%   8.3 % 12.2 %   1.1 %
Free cash flow variance 26.5 %   (11.3 )%   3.0 %   12.0 %   (107.5 )%   11.1 % 26.5 %   3.0 %
_____________________
(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
 

IMTT

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

In 2012 compared with the prior comparable periods in 2011:

  • Terminal revenue increased 8.5% and 7.1% for the quarter and nine months ended September 30, 2012, respectively;
    • Average storage rental rates increased 9.2% and 6.9% for the quarter and nine months ended September 30, 2012, respectively - average storage rental rates are expected to increase by approximately 7.0% for the full year;
    • Capacity utilization was 93.3% and 94.5% for the quarter and nine months ended September 30, 2012, respectively - utilization decreased from 94.1% in the comparable quarter in 2011 and increased from 94.0% for the nine month period as a relatively larger portion of total capacity was out of service for cleaning and inspection in the third quarter of 2012;
    • Terminal operating costs increased 7.0% and 1.0% for the quarter and nine months ended September 30, 2012, respectively - the majority of the increase in the third quarter was attributable to an approximately $2.0 million increase in repairs and maintenance related to the effects of Hurricane Isaac;
    • Terminal gross profit increased 9.8% and 12.2% for the quarter and nine months ended September 30, 2012, respectively - excluding the expenses incurred in connection with the storm damage, terminal gross profit increased by 13.0% in the quarter and 13.2% in the nine month period.

Free cash flow generated by IMTT increased 4.9% to $25.4 million and 26.5% to $100.5 million for the third quarter and nine months ended September 30, 2012, respectively. The growth in free cash flow reflects the improved operating results, primarily the increased terminal revenue, partially offset by higher operating costs noted above, higher cash interest and cash capital expenditures (in the third quarter), and a reduced contribution from IMTT's environmental services subsidiary.

Hurricane Isaac contributed to an increase in repairs and maintenance expenses, generally, in the form of replacement of wind-damaged pipe and tank insulation at facilities on the Lower Mississippi River. Excluding the expenses incurred in connection with the storm damage, free cash flow would have increased by approximately 12.5% in the third quarter of 2012 compared with the third quarter of 2011.

The smaller contribution to IMTT's financial results from its environmental services business in 2012 reflects a reduced level of spill response activity this year compared with last. Through nine months the environmental services business operated at a small net loss.

IMTT has now paid all of the distributions that are due to MIC and its co-investor through and including the third quarter of 2012 under the Shareholders' Agreement.

Hawaii Gas

MIC's gas processing and distribution business in Hawaii, previously referred to as The Gas Company, has been rebranded as 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.

In 2012 compared with the prior comparable periods in 2011:

  • Non-utility contribution margin increased 19.1% and 29.3% in the quarter and nine months ended September 30, 2012, respectively - the impact of margin management and lower input costs was partially offset by a modest 1.4% decrease in the volume of gas sold during the quarter however the volume of gas sold has increased 5.1% year to date; and
  • Utility contribution margin decreased 2.2% in the quarter and increased 0.2% for the nine months ended September 30, 2012 – higher transportation costs offset a 1.4% increase in the volume of gas sold in the third quarter and a 1.9% increase in the volume of gas sold year to date.

Free cash flow was slightly negative at Hawaii Gas for the third quarter, primarily as a result of a payment associated with breaking interest rate swap agreements in connection with the previously announced refinance of the business' debt facilities. Hawaii Gas recorded a break payment of $8.7 million in the quarter that reduced free cash flow to ($0.44) million. Excluding the impact of the swap break payment, free cash flow at Hawaii Gas would have increased by 20.1% to $8.3 million.

Hawaii Gas' improved operating results, particularly the increased non-utility contribution margin, reduced cash interest paid and lower capital expenditures, were entirely offset by several items. In addition to the swap break payment, the business incurred higher cash taxes, and increased wages and benefits. Hawaii Gas also incurred costs in connection with both the preparation of filings related to a proposed small scale importation of LNG into Hawaii and the rebranding of the business.

In August 2012, MIC successfully refinanced the debt facilities of Hawaii Gas and established a new revolving credit facility that is expected to partially support the continued growth of the business. Existing operating company level debt was replaced with $100.0 million of senior secured 10-year private placement notes and a 5-year senior secured $60.0 million revolving credit facility (undrawn). Existing intermediate holding debt was replaced with a 5-year $80.0 million senior secured term loan facility. The weighted average cost of all Hawaii Gas debt facilities, including interest rate hedges, was reduced from 4.9% to 3.6% and cash interest expense is expected to be reduced by approximately $2.4 million annually.

District Energy

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

In 2012 compared with the prior comparable periods in 2011:

  • Cooling consumption revenue decreased 5.4% in the third quarter and increased 7.2% for the nine months ended September 30, 2012 - cooling consumption, net of electricity costs passed through to consumers, increased 4.4% in the third quarter and 16.0% for the year to date versus the prior comparable periods as higher average temperatures in 2012 compared with 2011 resulted in increased demand for cooling;
  • Capacity revenue increased 1.6% and 2.4% to $5.6 million and $16.7 million for the quarter and nine months ended September 30, 2012, respectively - capacity revenue growth reflects increases in the number of customers being served and inflation adjustments to existing contracts; and
  • Gross profit was flat with the prior comparable quarter and up 9.3% for the nine months ended September 30.

Free cash flow decreased 7.7% to $5.3 million for the third quarter and increased 3.0% to $11.9 million for the nine months ended September 30, 2012. The decrease in the current quarter reflects primarily the reduction in electricity load abatement payments and higher maintenance capital expenditures in 2012 compared with 2011. The year to date increase reflects the higher average temperatures resulting in increased demand for cooling in Chicago in 2012 compared with 2011 and lower taxes partially offset by higher capital expenditures. Effective with the third quarter of 2012, 100% of the excess cash generated by District Energy is being swept to the repayment of the business' outstanding debt.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed-base operations (FBO) that primarily provide fuel, terminal services and aircraft hangar services to owners and operators of general aviation (GA) aircraft at 63 airports in the US. The network is one of the largest in the US air transportation industry.

In 2012 compared with the prior comparable periods in 2011:

  • GA fuel-related gross profit increased 5.4% and 5.3% for the third quarter and nine months ended September 30, 2012, respectively; on a same store basis, total fuel-related gross profit increased 4.0% and 3.3% for the quarter and year to date periods;
  • GA fuel-related gross profit improvement was partially offset by declines in non-GA and non-fuel gross profit – in particular, de-icing gross profit for the nine months ended September 30, 2012 declined 67.3% compared with the same period in 2011 as a result of the unseasonably mild winter in the northeast and central U.S. in 2012; and,
  • EBITDA excluding non-cash items increased 3.9% and 5.9% for the third quarter and nine months ended September 30, 2012, respectively; on a same store basis, EBITDA excluding non-cash items increased 8.3% and 6.8% for the quarter and year to date periods.

Free cash flow generated by Atlantic Aviation increased 9.3% to $17.7 million and 12.0% to $51.4 million for the quarter and nine months ended September 30, 2012, respectively. The increase in cash generation reflects primarily improved operating results, lower cash interest expense and reduced swap break costs partially offset by higher maintenance capital expenditures and cash taxes.

Interest payable on Atlantic Aviation's term loan capital expenditure facilities decreased in early October from an all-in 6.47% to LIBOR + 1.725% as a result of the expiration of interest rate hedges. As a result, cash interest payable by the business going forward is expected to decline by approximately $30.0 million per year. Effective with the expiration of the hedges 100% of Atlantic Aviation's free cash flow is being swept to the reduction of the business' term loan balance. Atlantic's pro-forma leverage ratio at quarter end decreased to 5.53x including a principal payment of $14.6 million made on October 16, 2012.

Business Outlook

MIC has revised its full year 2012 guidance for proportionately combined free cash flow to approximately $3.51 per share taking into consideration the impact of the interest rate swap break payment associated with the refinancing of debt facilities at Hawaii Gas. Normalized for the impact of the swap break payment, the Company's guidance for proportionately combined free cash flow remains $3.70 per share. For the nine months ended September 30, 2012, MIC's businesses generated $2.57 per share in proportionately combined free cash flow.

The Company also reaffirmed its segment level guidance for 2012.

IMTT

  • The business is expected to produce EBITDA of between $230.0 and $240.0 million
  • Increases in average storage rates are expected to be between 6.5% and 7.5%
  • Maintenance capital expenditures are expected to be approximately $50.0 million
  • The business is expected to pay cash state and federal income taxes of approximately $20.5 million - IMTT is not a part of MIC's consolidated federal income tax group

Hawaii Gas

  • The business is expected to generate EBITDA of between $55.0 and $57.5 million
  • Maintenance capital expenditures are expected to be approximately $7.0 million.
  • The business is expected to incur cash state income taxes of approximately $1.5 million - a federal tax liability of approximately $4.8 million will be offset in consolidation by holding company level net operating loss carryforwards

District Energy

  • The business is expected to generate EBITDA of between $21.0 and $22.0 million.
  • Maintenance capital expenditures are expected to be approximately $1.0 million
  • The business is expected to incur cash income taxes totaling $1.0 million after application of available net operating loss carryforwards

Atlantic Aviation

  • The business is expected to generate EBITDA of between $130.0 and $135.0 million.
  • The volume of GA fuel sold and the margin achieved on those sales is expected to continue to improve with the broader economy in the U.S.
  • Maintenance capital expenditures are expected to be approximately $11.5 million
  • The business is expected to incur cash state income taxes totaling $1.8 million - a federal income tax liability of approximately $0.6 million will be offset in consolidation by holding company level net operating loss carryforwards

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, November 1, 2012 to review the Company's results.

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

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company's website the morning of November 1, 2012 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on November 1, 2012 through November 8, 2012, at +1(404) 537-3406, Passcode: 43885180. An online archive of the webcast will be available on the Company's website for one year following the call. MIC-G

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of three energy-related businesses including a gas processing and distribution business, Hawaii Gas, a controlling interest in a District Energy business in Chicago, and a 50% interest in a bulk liquid storage terminal business, International-Matex Tank Terminals. MIC also owns and operates an 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)
 
 

September 30,

 

December 31,

2012

2011

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

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

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

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

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

_____________________

(1)

 

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

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

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

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

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS – MD&A

 
 

Quarter Ended

 

Change

 

Nine Months Ended

 

Change

September 30,

Favorable/(Unfavorable)

September 30,

Favorable/(Unfavorable)

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

______________________

NM - Not meaningful

(1)

 

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

 

MACQUARIE INFRASTRUCTURE COMPANY LLC

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

 
 

Quarter Ended

 

Change

 

Nine Months Ended

 

Change

September 30,

Favorable/(Unfavorable)

September 30,

Favorable/(Unfavorable)

2012   2011 $   % 2012   2011 $   %

($ In Thousands) (Unaudited)

 

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

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

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

___________________

(1)

 

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

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

 

MACQUARIE INFRASTRUCTURE COMPANY LLC

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

 

IMTT

 
 

Quarter Ended

       

Nine Months Ended

   

September 30,

September 30,

 

Change

 

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

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

Hawaii Gas

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

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

District Energy

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

2012 2011

Favorable/(Unfavorable)

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

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

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

 

NM - Not meaningful

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

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

 
 

Atlantic Aviation

 

Quarter Ended

Nine Months Ended

September 30,

September 30,

Change

Change

2012 2011

Favorable/(Unfavorable)

    2012 2011

Favorable/(Unfavorable)

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

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

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

MACQUARIE INFRASTRUCTURE COMPANY LLC

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

 
 

For the Quarter Ended September 30, 2012

($ in Thousands) (Unaudited) IMTT 50%  

Hawaii Gas

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

For the Quarter Ended September 30, 2011

($ in Thousands) (Unaudited) IMTT 50%  

Hawaii

Gas

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

For the Nine Months Ended September 30, 2012

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

District Energy 50.01%

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

Gain on disposal of assets

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

For the Nine Months Ended September 30, 2011

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

Loss on disposal of assets

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

Investor enquiries
Macquarie Infrastructure Company
Jay A. Davis, 212-231-1825
Investor Relations
or
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Macquarie Infrastructure Company
Paula Chirhart, 212-231-1310
Corporate Communications

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