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8-K - MACQUARIE INFRASTRUCTURE COMPANY LLC 8-K - Macquarie Infrastructure Corpa50573707.htm

Exhibit 99.1

Macquarie Infrastructure Company Reports 2012 Financial Results, Highlights Increase in Free Cash Flow

  • Reports 9.3% growth in proportionately combined free cash flow per share
  • Announces early Q4 distribution from IMTT, successful refinance of IMTT revolving credit facility and amendment of Shareholders’ Agreement
  • Intends to seek refinance of Atlantic Aviation in the first half of 2013
  • Announces introduction of Direct Stock Purchase Plan
  • Adds solar power generation to portfolio of operating companies
  • Forecasts 13% growth in proportionately combined free cash flow in 2013

NEW YORK--(BUSINESS WIRE)--February 20, 2013--Macquarie Infrastructure Company LLC (NYSE: MIC) reported improved financial results for 2012 including a 9.3% year on year increase in proportionately combined free cash flow per share. Including the effect of refinancing and acquisition related expenses proportionately combined free cash flow totaled $3.45 per share in 2012 compared with $3.16 per share in 2011.

Underlying proportionately combined free cash flow improved to $3.66, reflecting improved operating results at each of MIC’s businesses. The improvement was partially offset by $0.19 per share of refinancing related expenses incurred by Hawaii Gas in the third quarter of 2012, and $0.02 per share of costs associated with the acquisition of two solar power generating facilities in the fourth quarter.

“Operations at each of our businesses produced financial performance in line with our expectations for the year. At $3.66 per share in underlying proportionately combined free cash flow, we ended the year just about where we expected to given that the impact of Hurricane Sandy was at least $0.10 per share,” said James Hooke, Chief Executive Officer of MIC.

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.

MIC has a 50% stake in IMTT, one of the largest bulk liquid storage terminalling businesses in the U.S. The Company received a distribution of $12.0 million from IMTT in December 2012. The distribution for the fourth quarter would ordinarily have been paid in early 2013 but was accelerated into 2012 in light of the legislative stalemate in Washington, D.C. late in the year. All of the distributions due MIC and its co-investor in IMTT through and including the fourth quarter of 2012 have been paid.

The Company facilitated the successful closing of a refinancing of IMTT’s revolving credit facility on February 15, 2013. Under the terms of the refinancing, IMTT’s debt maturity was extended to February 2018 from June 2014 and the size of the facility was increased to $1.04 billion. At closing the drawn balance on the facility was $752.2 million.

MIC shares ownership and control of IMTT with a trust representing the family of the founder of the business. The joint ownership is subject to a Shareholders’ Agreement between the parties. In February the parties agreed to amend the Shareholders’ Agreement and replaced a provision that required the maintenance of reserves equal to the “normal requirements of the business and approved unexpended capital expenditures” with one that specifies reserves of $185.0 million.

The Shareholders’ Agreement was also amended to grant either party the right to seek injunctive relief to enforce the payment of a dividend consistent with the requirements of the Shareholders’ Agreement.

MIC owns and operates Atlantic Aviation, a nationwide network of 62 fixed based operations, or FBOs, that provide primarily fuel services to owners and operators of private jet aircraft. Atlantic Aviation is capitalized in part with a debt package that matures in October of 2014. Prior to the maturity or earlier refinance of the debt, a significant portion of the excess cash generated by Atlantic Aviation is being applied to the repayment of debt principal.

MIC anticipates seeking to refinance the Atlantic Aviation debt package in the first half of 2013. The Company expects that, following the refinancing of the debt package, it will have access to the excess cash generated by Atlantic Aviation. A portion of the excess cash is expected to be used to supplement MIC’s quarterly cash dividend.



Reflecting a heightened level of interest from shareholders, MIC is preparing to implement a direct stock purchase plan. The Company anticipates making the program available to investors around the end of the first quarter. “We’re listening to our investors and providing them with an economical means of reinvesting our quarterly cash dividend. We hope that this will improve the attractiveness of MIC to retail shareholders,” said Hooke.

Commenting on trading to date in 2013 and the Company’s forecast for the full year Hooke said, “Our businesses, generally, have been and continue to be remarkably stable performers. We expect this to continue to be the case in 2013 and to supplement our results with the contribution from our MIC Solar operations.”

Hooke said that he expects year on year growth in proportionately combined free cash flow, excluding the Hawaii Gas refinancing costs and costs related to the solar acquisitions, to be approximately 13% in 2013. MIC has provided guidance on proportionately combined free cash flow per share in 2013 of between $4.10 and $4.20 per share.

MIC invested $9.4 million in two solar power generating (photovoltaic) facilities in the fourth quarter of 2012 in partnership with Chevron Energy Solutions. The facilities have a combined generating capacity of approximately 30 megawatts. Located in the U.S. southwest, in Tucson, Arizona and Presidio, Texas, the operations are capable of producing enough clean electricity to power 6,200 homes. The power being produced has been sold to regional utilities pursuant to 20 and 25 year power purchase agreements.

MIC reported consolidated revenue of $1.03 billion for 2012 compared with $988.8 million in 2011. The 4.6% growth in revenue reflects primarily higher energy prices, such as the cost of jet fuel and gas feedstock that typically are passed through to customers of MIC’s businesses and a higher volume of products sold.

Reported gross profit - defined as revenue less cost of goods sold - removes the volatility in revenue associated with fluctuations in energy prices that typically are passed through to customers. MIC’s consolidated gross profit totaled $397.0 million in 2012, an increase of 3.8% over 2011. The year on year growth is the result of increases in both the volume of product sold, and the margins on sales, generally, at each of MIC’s businesses.

MIC’s net income from continuing operations, after tax, was $14.3 million and $28.9 million for years ended December 31, 2012 and 2011, respectively. The Company’s net income declined in 2012 compared with 2011 primarily as a result of its incurring pre-tax performance fees of $67.3 million. The performance fees were generated as a result of MIC having produced a total shareholder return significantly in excess of its benchmark index. The fee is recorded as an expense even though it was reinvested in additional shares of MIC. The reinvestment renders the payment a non-cash expense.

MIC’s accumulated net operating loss carry forward (NOL) was used to offset its consolidated federal income tax liability for 2012. At year-end 2012 MIC’s federal NOL balance was $192.2 million. The Company expects utilization of this NOL balance will offset any current federal income tax liability, other than Alternative Minimum Tax, through the 2015 tax year and into 2016.



Cash Generation

MIC reports EBITDA excluding non-cash items on a consolidated and operating segment basis and reconciles each to consolidated net income (loss). EBITDA excluding non-cash items is a measure relied upon by management in evaluating the performance of its businesses and investments. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, which include impairments, gains and losses on derivatives and adjustments for certain other non-cash items reflected in the statement of operations including base and performance fees settled in shares.

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

MIC also reports free cash flow, as defined below, on both a consolidated and operating segment basis as a means of assessing the amount of cash generated by its businesses and as a supplement to other information provided in accordance with GAAP, and reconciles each to cash from operating activities. MIC believes that reporting free cash flow provides additional insight into its ability to deploy cash, as GAAP measures, such as net income (loss) and cash from operating activities, do not reflect all of the items that management considers in estimating the amount of cash generated by its operating businesses. MIC defines free cash flow as cash from operating activities, less maintenance capital expenditures and changes in working capital except with respect to MIC Solar for which free cash flow is defined as distributions received from the business.

                   
 

For the Year Ended December 31, 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 130,415 72,439 9,365 305,434 355 518,008 260,830 18,726
EBITDA excluding non-cash items 115,843 56,305 11,087 130,755 (15,999 ) 297,991 231,686 22,169
Free cash flow 59,566     34,551     7,034     74,065     (14,367 )   160,849       119,132     14,066  
 
 

For the Year Ended December 31, 2011

($ 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 117,929 62,998 8,921 301,749 N/A 491,596 235,857 17,838
EBITDA excluding non-cash items 103,195 49,032 11,350 126,680 (8,529 ) 281,728 206,390 22,695
Free cash flow 54,298     28,508     7,168     61,714     (6,550 )   145,137       108,595     14,333  
                               
Gross profit variance 10.6 %   15.0 %   5.0 %   1.2 %   N/A     5.4 %     10.6 %   5.0 %
EBITDA excluding non-cash items variance 12.3 %   14.8 %   (2.3 )%   3.2 %   87.6 %   5.8 %     12.3 %   (2.3 )%
Free cash flow variance 9.7 %   21.2 %   (1.9 )%   20.0 %   119.3 %   10.8 %     9.7 %   (1.9 )%
_____________________
(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 Quarter Ended December 31, 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 33,932 18,988 1,590 74,571 355 129,436 67,863 3,180
EBITDA excluding non-cash items 29,717 15,043 1,946 31,376 (7,151) 70,930 59,433 3,891
Free cash flow 9,299   18,386   1,092   22,643   (10,143)   41,277     18,597   2,184
 

For the Quarter Ended December 31, 2011

($ 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 29,999 16,794 1,805 77,119 N/A 125,717 59,997 3,610
EBITDA excluding non-cash items 26,431 13,791 2,311 32,834 (3,305) 72,062 52,862 4,622
Free cash flow 14,562   10,284   1,401   15,821   (4,514)   37,554     29,124   2,801
                               
Gross profit variance 13.1%   13.1%   (11.9)%   (3.3)%   N/A   3.0%     13.1%   (11.9)%
EBITDA excluding non-cash items variance 12.4%   9.1%   (15.8)%   (4.4)%   116.4%   (1.6)%     12.4%   (15.8)%
Free cash flow variance (36.1)%   78.8%   (22.0)%   43.1%   124.7%   9.9%     (36.1)%   (22.0)%
_____________________
(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.

For the quarter and year ended December 31, 2012 compared with the comparable periods in 2011:

  • Terminal revenue increased 9.7% and 7.8% respectively, primarily as a result of growth in average storage rates and an increase in storage capacity.
  • Average storage rental rates increased 7.6% and 7.0% respectively - the increase was at the higher end of the forecast range primarily as a result of strong demand in the Lower Mississippi River and New York Harbor markets.
  • Terminal operating costs increased 4.5% and 1.9% respectively, with the majority of the increase attributable to $4.2 million in repairs and maintenance related to the effects of Hurricanes Isaac and Sandy (largely property insurance deductibles) in the second half of the year as well as the planned conversion of certain tanks in Bayonne from residual to distillate service.
  • Terminal gross profit increased 14.0% and 12.6% respectively, reflecting the construction of additional storage capacity during the year, the full year effect of rate increases implemented in the prior year and the part-year effect of rate increases implemented in 2012.

Capacity utilization was 92.8% and 94.1% in the fourth quarter and full year periods, respectively. Capacity utilization for the full year 2011 was 94.3%. A larger portion of total capacity, including a 500,000 barrel tank taken offline for cleaning and inspection, was out of service in the fourth quarter of 2012.

“IMTT’s results for 2012 highlight the strength of its position in its two key markets, New York Harbor and the Lower Mississippi River, and the supply/demand imbalance in those markets in particular,” said Hooke.

EBITDA excluding non-cash items grew by 12.4% and 12.3% in each of the fourth quarter and full year ended December 31, 2012, respectively, compared with the same periods in 2011. The improvement was principally the result of growth in terminal gross profit in 2012 compared with 2011, partially offset by an increase in selling, general and administrative expenses.

Free cash flow generated by IMTT decreased 36.1% in the fourth quarter of 2012 compared with the fourth quarter of 2011. The decline reflects primarily an increase in taxes and costs incurred in connection with repairs and maintenance at the business’ Bayonne, New Jersey facility. These relate principally to the effects of hurricane Sandy and expenses not yet reimbursed by property insurance coverage and planned tank cleaning and conversions at the same location.

For the full year IMTT’s free cash flow increased 9.7% compared with 2011. The growth in free cash flow year on year reflects the business’ improved operating results, primarily increased terminal gross profit, partially offset by increases in taxes, higher maintenance capital expenditures and a smaller contribution from IMTT’s environmental response subsidiary.



Hawaii Gas

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

The performance of Hawaii Gas during 2012 reflects the ongoing recovery of the Hawaiian economy, notably the tourism industry. Aggregate gas sales increased 1.9% for the full-year period compared with 2011. Aggregate sales of gas decreased 2.0% for the fourth quarter of 2012 compared with the comparable period in 2011. The decline in the fourth quarter was primarily attributable to a single commercial customer of the non-utility business being off-line for repairs for most of the period.

Aggregate gross profit at Hawaii Gas – revenue less the cost of feedstock, production and transmission, and distribution – increased 13.1% and 15.0%, respectively, for the fourth quarter and full-year periods ended December 31, 2012 compared with the same periods in 2011. The improvement reflects the growth in the volume of gas sold as noted above, and improvement in the margins on sales in the non-utility portion of the business. The growth was partially offset by higher costs, particularly overtime, those related to medical and benefits programs and costs associated with re-branding the business as Hawaii Gas.

“The strong performance of Hawaii Gas in 2012 can be attributed in part to the recovery in the Hawaiian economy but also to the hard work of the Hawaii Gas team attracting new business based on the many benefits of gas in the Hawaiian energy complex,” said Hooke.

EBITDA excluding non-cash items at Hawaii Gas increased 9.1% and 14.8% for the quarter and full-year ended December 31, 2012. The primary driver of the improvement was the increase in gross profit generated by the business, partially offset by an increase in selling, general and administrative expenses and costs associated with rebranding of the business from The Gas Company to Hawaii Gas.

Hawaii Gas generated $18.4 million and $34.6 million in free cash flow for the fourth quarter and full-year periods ended December 31, 2012. The 78.8% and 21.2% increases versus the prior comparable periods, respectively, reflect the improved operating results, a lower tax burden and differences in the timing of certain purchases, particularly shipments of foreign-sourced propane and the refinancing related expenses noted above.

District Energy

MIC’s District Energy business produces chilled water that it distributes via underground pipelines to buildings in downtown Chicago. The cold energy is used in air conditioning and process cooling applications. The business also operates a site-specific facility in Las Vegas, Nevada that supplies both cooling and heating services to a resort/casino complex, a condominium and a shopping mall. MIC has a 50.01% interest in District Energy.

District Energy’s gross profit declined 11.9% in the fourth quarter of 2012 compared with the fourth quarter in 2011 as a result of relatively cooler weather at the end of 2012 that reduced demand for cooling services. However, full-year gross profit increased 5.0% compared with 2011 primarily as a result of contractual rate increases and the overall warmer temperatures in Chicago in 2012 compared with 2011.

EBITDA excluding non-cash items declined for the fourth quarter and full year periods ending December 31, 2012 by 15.8% and 2.3%, respectively. The decrease in full year EBITDA was the result of higher selling, general and administrative expenses and a reduction in payments under agreements to manage the business’ energy consumption during periods of peak demand partially offset by an increase in gross profit.

Free cash flow generated by District Energy in the fourth quarter totaled $2.2 million, down 22.0% compared with 2011 largely as a result of the reduction in gross profit for the period. For the full year 2012, District Energy generated $14.1 million in free cash flow, down 1.9% compared with 2011, principally as a result of the increased maintenance capital expenditures.

From the third quarter of 2012 the free cash flow generated by District Energy is being used to reduce the principal balance on the business’ debt facilities in advance of the maturity of these facilities in third quarter of 2014. Including a payment made in January 2013 District Energy has repaid $9.0 million in debt principal.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed base operations (FBOs) located at 62 airports in the U.S. Atlantic Aviation’s FBOs provide primarily fuel, terminal services, and aircraft hangar services to owners and operators of private (general aviation or GA) jet aircraft. The network is one of the largest of its type in the U.S. air transportation industry.

Atlantic Aviation reported a decrease in gross profit of 3.3% for the fourth quarter of 2012 compared with 2011, but an increase of 1.2% for full year. The full year increase in gross profit reflected an increase in GA fuel gross profit of 1.4% in the aggregate and 2.7% on a same-store basis. The quarterly decline is largely attributable to the interruption of GA activity in the wake of Hurricane Sandy. The same-store basis is adjusted for acquisitions and divestitures of certain facilities during the prior year. Average GA fuel margins increased by 1.2% in 2012 compared with 2011.

Overall gross profit growth was constrained by a 55.2% decrease in de-icing gross profit in 2012 compared with 2011. The decrease was the result of the unseasonably mild winter across the northern tier of the U.S. in 2012.

A portion of the value in Atlantic Aviation is derived from the average length of the leases underlying its portfolio of FBOs. Along with the leasehold from the relevant airport authorities comes the right to sell fuel on those airports and the potential to generate cash flows in the process. The longer Atlantic has that right, the higher the present value of those cash flows, all else being unchanged.

“The management at Atlantic Aviation has done an excellent job extending the average lease maturity of the portfolio. The remaining average lease life increased from 17.8 years at December 2011 to 19.0 years at December 2012 including the passing of another year and this has created substantial value for MIC,” said Hooke.

Free cash flow generated by Atlantic Aviation increased to $22.6 million and $74.1million, respectively, in the fourth quarter and full-year period in 2012 compared with 2011. The 43.1% and 20.0% increases reflect primarily a reduction in interest expense associated with an approximately 400 basis point reduction in interest rates associated with Atlantic Aviation’s primary debt facility and changes in the timing of certain payments, particularly those related to wholesale fuel purchases.

The interest rate reduction was the result of the expiration of interest rate hedges that had been used to swap floating rate interest for fixed. From the fourth quarter of 2012 through to the maturity of Atlantic Aviation’s debt facilities in October 2014, or the earlier refinance of the facilities, the majority of the excess cash generated by the business will be used to repay debt principal of those facilities.

MIC believes, based on the current performance of the business and debt market conditions that it will seek to refinance the debt of Atlantic Aviation in the first half of 2013.



MIC Solar

MIC completed an investment in two utility-scale solar (photovoltaic) power generation facilities in the fourth quarter of 2012. The facilities, one each in Arizona and Texas, are capable of generating a combined 30 megawatts of electric power. The power has been sold to regional utilities pursuant to 20 and 25 year power purchase agreements.

The Arizona facility is currently in operation. The facility in Texas is expected to commence operations in the second quarter of 2013.

The Company’s $9.4 million investment has been contributed through a structure from which it will receive a disproportionate share of the cash flows produced by the business. MIC’s co-investor in the facilities, Chevron Energy Solutions, will receive a disproportionate share of the tax benefits produced by the investment.

MIC Solar does not meet the threshold for treatment as a reportable segment within MIC’s financial reports. For the fourth quarter of 2012, MIC recorded an expense of $3.8 million as a component of its corporate segment in connection with its investment in MIC Solar.

Business Outlook

MIC has provided the following guidance on the financial performance of its businesses and the Company in total in 2013. Among other things, the guidance reflects the benefit of the 50% bonus depreciation for assets placed in service in 2013 provided for in the American Taxpayer Relief Act of 2012. The capital intensity of MIC’s businesses, and the significant depreciation and amortization of their assets provides significant shelter from federal income taxes. MIC does not expect to generate a federal income tax liability in consolidation at least through the end of 2015.

IMTT – MIC expects IMTT to generate between $260.0 and $270.0 million of EBITDA in 2013. The anticipated increase relative to 2012 reflects the addition of new storage capacity and the impact of storage rate increases, partially offset by expected reductions in capacity resulting from two large tanks being taken off line for cleaning and inspection.

Storage rates are expected to increase in a range of between 5% and 7%, on average, in 2013. Approximately 25% of all storage contracts are expected to renew in 2013.

The additional storage capacity brought on line at the end of 2012 combined with that expected to be commissioned in 2013 is forecast to produce an incremental annualized $22.9 million in gross profit and EBITDA in 2013 over 2012. In addition, MIC expects IMTT to deploy approximately $60.0 million in maintenance capital expenditures over the full year.

Hawaii Gas is expected to generate between $57.0 and $63.0 million of EBITDA in 2013. The increase over 2012 is tied to the continued recovery in the Hawaiian economy and the ability of the business to increase the volume of gas it sells. Maintenance capital expenditures are anticipated to be approximately $8.3 million for the full year, in line with 2012.

District Energy is expected to generate approximately $20.0 million of EBITDA in 2013. Maintenance capital expenditures are expected to be approximately $1.0 million for the full year. MIC anticipates that all of the excess cash generated by District Energy will be swept to the reduction of the business’ debt principal. MIC does not expect to refinance District Energy prior to the fourth quarter of 2013.

Atlantic Aviation is expected to generate between $137.0 and $145.0 million of EBITDA in 2013. Maintenance capital expenditures are expected to be approximately $11.4 million for the full year.

MIC anticipates refinancing Atlantic Aviation’s debt facilities prior to the anniversary of those facilities in early October. In order to achieve a target leverage level of 4x trailing EBITDA or less ahead of the refinancing, MIC may use a portion of its holding company level cash to accelerate the repayment of Atlantic Aviation’s debt principal.

MIC Solar – The second of the two solar power generation facilities that MIC acquired in the fourth quarter of 2012 is expected to be commissioned in 2013. The two facilities are expected to produce a total of approximately $1.0 million in distributable cash flow in 2013. In addition, the Company expects to receive approximately $3.8 million as a return of capital in 2013.

The forecast results for the Company’s operating businesses, including the expenses of the holding company, are expected to produce proportionately combined free cash flow in a range of between $4.10 and $4.20 per share in 2013.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, February 21, 2013 to review the Company’s results.

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

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company’s website the morning of February 21, 2013 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on February 21, 2013 through February 28, 2013, at +1(404) 537-3406, Passcode: 94587428. 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 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 and two solar power generation facilities, collectively MIC Solar. The Company is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic.

Forward-Looking Statements

This release contains forward-looking statements. MIC may, in some cases, use words such as "project”, "believe”, "anticipate”, "plan”, "expect”, "estimate”, "intend”, "should”, "would”, "could”, "potentially”, or "may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this release are subject to a number of risks and uncertainties, some of which are beyond MIC’s control and which are described in the Company’s filings with the Securities and Exchange Commission on Forms 10-K, 10-Q and 8-K. These risks and uncertainties include, among other things, changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; its shared decision-making with co-investors over investments including the distribution of dividends; its regulatory environment establishing rate structures and monitoring quality of service, demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks, fuel and gas costs; its ability to recover increases in costs from customers, reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

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

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


               
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED BALANCE SHEETS
($ in Thousands, Except Share Data)
 
December 31,

2012

December 31,

2011

ASSETS
Current assets:
Cash and cash equivalents $ 141,376 $ 22,786
Accounts receivable, less allowance for doubtful accounts
of $875 and $445, respectively 56,553 56,458
Inventories 20,617 23,106
Prepaid expenses 8,908 7,338
Deferred income taxes 6,803 19,102
Other   19,653     14,523  
Total current assets 253,910 143,313
Property, equipment, land and leasehold improvements, net 708,031 561,022
Restricted cash 7,326 12,769
Equipment lease receivables 28,177 32,189
Investment in unconsolidated business 75,205 230,401
Goodwill 514,640 516,175
Intangible assets, net 626,902 662,135
Deferred financing costs, net of accumulated amortization 7,845 8,845
Other   1,658     1,784  
Total assets $ 2,223,694   $ 2,168,633  
 
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party $ 50,253 $ 4,300
Accounts payable 26,499 29,199
Accrued expenses 35,499 23,827
Current portion of notes payable and capital leases 1,667 1,952
Current portion of long-term debt 106,580 34,535
Fair value of derivative instruments 7,450 39,339
Customer deposits 4,650 4,679
Other   12,732     11,071  
Total current liabilities 245,330 148,902
Notes payable and capital leases, net of current portion 2,303 2,026
Long-term debt, net of current portion 1,052,584 1,086,053
Deferred income taxes 169,392 177,262
Fair value of derivative instruments 5,360 15,576
Other   51,160     44,954  
Total liabilities   1,526,129     1,474,773  
Commitments and contingencies - -
Members’ equity:
LLC interests, no par value; 500,000,000 authorized; 47,453,943 LLC

interests issued and outstanding at December 31, 2012 and 46,338,225 LLC

interests issued and outstanding at December 31, 2011

883,143 951,729
Additional paid in capital 21,447 21,447
Accumulated other comprehensive loss (20,801 ) (27,412 )
Accumulated deficit   (228,761 )   (242,082 )
Total members’ equity 655,028 703,682
Noncontrolling interests   42,537     (9,822 )
Total equity   697,565     693,860  
Total liabilities and equity $ 2,223,694   $ 2,168,633  
 
 

               
 
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands, Except Share and Per Share Data)
 
 
  Year Ended

December 31,

2012

  Year Ended

December 31,

2011

  Year Ended

December 31,

2010

Revenue
Revenue from product sales $ 677,164 $ 639,521 $ 514,344
Revenue from product sales - utility 144,439 140,746 113,752
Service revenue 207,907 203,532 204,852
Financing and equipment lease income   4,536     4,992     7,843  
Total revenue   1,034,046     988,791     840,791  
Costs and expenses
Cost of product sales 462,229 437,049 326,734
Cost of product sales - utility 122,254 116,413 90,542
Cost of services 52,609 52,744 53,088
Selling, general and administrative 213,372 202,486 201,787
Fees to manager - related party 89,227 15,475 10,051
Depreciation 31,587 33,815 29,721
Amortization of intangibles 34,601 42,107 34,898
(Gain) loss on disposal of assets   (1,358 )   1,522     17,869  
Total operating expenses   1,004,521     901,611     764,690  
Operating income 29,525 87,180 76,101
Other income (expense)
Interest income 222 112 29
Interest expense(1) (46,623 ) (59,361 ) (106,834 )
Equity in earnings and amortization charges of investee 32,327 22,763 31,301
Other income, net   1,085     912     712  
Net income from continuing operations before income taxes 16,536 51,606 1,309
(Provision) benefit for income taxes   (2,285 )   (22,718 )   8,697  
Net income from continuing operations $ 14,251 $ 28,888 $ 10,006
Net income from discontinued operations, net of taxes   -     -     81,323  
Net income $ 14,251 $ 28,888 $ 91,329
Less: net income attributable to noncontrolling interests   930     1,545     659  
Net income attributable to MIC LLC $ 13,321   $ 27,343   $ 90,670  
Basic income per share from continuing operations attributable
to MIC LLC interest holders $ 0.29 $ 0.59 $ 0.21
Basic income per share from discontinued operations attributable
to MIC LLC interest holders   -     -     1.78  
Basic income per share attributable to MIC LLC interest holders $ 0.29   $ 0.59   $ 1.99  
Weighted average number of shares outstanding: basic   46,635,049     45,995,207     45,549,803  
Diluted income per share from continuing operations attributable
to MIC LLC interest holders $ 0.29 $ 0.59 $ 0.21
Diluted income per share from discontinued operations
attributable to MIC LLC interest holders   -     -     1.78  
Diluted income per share attributable to MIC LLC interest holders $ 0.29   $ 0.59   $ 1.99  
Weighted average number of shares outstanding: diluted   46,655,289     46,021,015     45,631,610  
Cash dividends declared per share $ 2.20   $ 0.80   $ -  
 

(1) Interest expense includes non-cash losses on derivative instruments of $21.6 million, $35.0 million and $81.3 million for the years ended December 31, 2012, 2011 and 2010, respectively.

 

 
 

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

December 31,

2012

    Year Ended

December 31,

2011

    Year Ended

December 31,

2010

 
Operating activities
Net income $ 14,251 $ 28,888 $ 91,329
Adjustments to reconcile net income to net cash provided by operating
activities from continuing operations:
Net income from discontinued operations before noncontrolling interests - - (81,323 )
Depreciation and amortization of property and equipment 38,314 40,454 36,276
Amortization of intangible assets 34,601 42,107 34,898
(Gain) loss on disposal of assets (1,979 ) 617 17,869
Equity in earnings and amortization charges of investees (32,327 ) (22,763 ) (31,301 )
Equity distributions from investees 86,952 - 15,000
Amortization of debt financing costs 4,232 4,086 4,347
Adjustments to derivative instruments (26,428 ) (18,244 ) 23,410
Base management fees settled in LLC interests 21,898 15,475 5,403
Performance fees settled in LLC interests 67,329 - -
Equipment lease receivable, net 3,548 3,105 2,761
Deferred rent 421 385 413
Deferred taxes (1,580 ) 19,209 (11,729 )
Other non-cash expenses, net 2,036 2,748 1,817
Changes in other assets and liabilities, net of acquisitions:
Restricted cash - - 50
Accounts receivable (933 ) (4,633 ) (2,424 )
Inventories 3,087 (5,061 ) (2,833 )
Prepaid expenses and other current assets (3,461 ) (3,602 ) 453
Due to manager - related party 57 10 (15 )
Accounts payable and accrued expenses 6,479 (9,696 ) (4,821 )
Income taxes payable (414 ) 668 1,051
Other, net   1,828     (2,711 )   (2,076 )
Net cash provided by operating activities from continuing operations 217,911 91,042 98,555
 
Investing activities
Acquisitions of businesses and investments, net of cash acquired (64,817 ) (23,149 ) -
Proceeds from sale of assets 5,625 17,006 -
Purchases of property and equipment (39,288 ) (33,764 ) (22,690 )
Investment in capital leased assets - (24 ) (2,976 )
Return of investment in unconsolidated business 101,110 - -
Other   (153 )   249     892  
Net cash provided by (used in) investing activities from continuing operations 2,477 (39,682 ) (24,774 )
 
Financing activities
Proceeds from long-term debt 192,570 13,406 141
Net proceeds on line of credit facilities - 4,600 500
Dividends paid to holders of LLC interests (112,487 ) (27,618 ) -
Contributions received from noncontrolling interests 55,473 - 300
Distributions paid to noncontrolling interests (4,781 ) (8,077 ) (5,346 )
Payment of long-term debt (237,240 ) (36,330 ) (74,036 )
Debt financing costs paid (2,942 ) (4 ) (186 )
Change in restricted cash 8,663 1,010 2,236
Payment of notes and capital lease obligations   (1,054 )   (124 )   (137 )
Net cash used in financing activities from continuing operations

 

 

(101,798

)

 

 

 

(53,137

)

 

 

 

(76,528

)

                 
Net change in cash and cash equivalents from continuing operations   118,590     (1,777 )   (2,747 )
 
 

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

December 31,

2012

Year Ended

December 31,

2011

  Year Ended

December 31,

2010

 
Cash flows (used in) provided by discontinued operations:
Net cash used in operating activities $ - $ - $ (12,703 )
Net cash provided by investing activities - - 134,356
Net cash used in financing activities   -   -     (124,183 )
Cash used in discontinued operations(1) - - (2,530 )
Change in cash of discontinued operations held for sale(1) - - 2,385
Net change in cash and cash equivalents 118,590 (1,777 ) (2,892 )
Cash and cash equivalents, beginning of period   22,786   24,563     27,455  
Cash and cash equivalents, end of period- continuing operations $ 141,376 $ 22,786   $ 24,563  
 
Supplemental disclosures of cash flow information for continuing
operations:
Non-cash investing and financing activities:
Accrued purchases of property and equipment $ 9,623 $ 3,201   $ 3,593  
Acquisition of equipment through capital leases $ 3,117 $ 2,663   $ 139  
Issuance of LLC interests to manager for performance fees $ 23,509 $ -   $ -  
Issuance of LLC interests to manager for base management fees $ 19,821 $ 14,467   $ 4,083  
Issuance of LLC interests to independent directors $ 571 $ 450   $ 450  
Taxes paid $ 4,870 $ 2,913   $ 1,655  
Interest paid $ 58,916 $ 72,949   $ 78,718  
 
(1) Cash of discontinued operations held for sale is reported in assets of discontinued operations held for sale in the accompanying consolidated balance sheets. The cash used in discontinued operations is different than the change in cash of discontinued operations held for sale due to intercompany transactions that are eliminated in consolidation.
 
 

 
 

Macquarie Infrastructure Company LLC

                                   
 

CONSOLIDATED STATEMENT OF OPERATIONS – MD&A

 
  Quarter Ended

December 31,

Change

Favorable/(Unfavorable)

Year Ended

December 31,

Change

Favorable/(Unfavorable)

2012 2011 $ % 2012 2011 $ %
($ In Thousands) (Unaudited)
Revenue
 
Revenue from product sales $ 168,696 $ 165,041 3,655 2.2 $ 677,164 $ 639,521 37,643 5.9
Revenue from product sales - utility 33,783 34,964 (1,181 ) (3.4 ) 144,439 140,746 3,693 2.6
Service revenue 47,854 48,942 (1,088 ) (2.2 ) 207,907 203,532 4,375 2.1
Financing and equipment lease income   1,088     1,208   (120 ) (9.9 )   4,536     4,992   (456 ) (9.1 )
Total revenue   251,421     250,155   1,266   0.5   1,034,046     988,791   45,255   4.6
Costs and expenses
Cost of product sales 115,451 111,023 (4,428 ) (4.0 ) 462,229 437,049 (25,180 ) (5.8 )
Cost of product sales - utility 27,757 29,571 1,814 6.1 122,254 116,413 (5,841 ) (5.0 )
Cost of services   11,120     12,040   920   7.6   52,609     52,744   135   0.3
Gross profit 97,093 97,521 (428 ) (0.4 ) 396,954 382,585 14,369 3.8
Selling, general and administrative 56,071 51,801 (4,270 ) (8.2 ) 213,372 202,486 (10,886 ) (5.4 )
Fees to manager - related party 50,119 4,222 (45,897 ) NM 89,227 15,475 (73,752 ) NM
Depreciation 8,883 7,910 (973 ) (12.3 ) 31,587 33,815 2,228 6.6
Amortization of intangibles 8,709 8,707 (2 ) (0.0 ) 34,601 42,107 7,506 17.8
Loss (gain) on disposal of assets   21     (221 ) (242 ) (109.5 )   (1,358 )   1,522   2,880   189.2
Total operating expenses   123,803     72,419   (51,384 ) (71.0 )   367,429     295,405   (72,024 ) (24.4 )
Operating (loss) income (26,710 ) 25,102 (51,812 ) NM 29,525 87,180 (57,655 ) (66.1 )
Other income (expense)
Interest income 106 8 98 NM 222 112 110 98.2
Interest expense(1) (7,547 ) (10,388 ) 2,841 27.3 (46,623 ) (59,361 ) 12,738 21.5
Equity in earnings and amortization charges of investees 9,032 8,695 337 3.9 32,327 22,763 9,564 42.0
Other income, net   840     107   733   NM   1,085     912   173   19.0

Net (loss) income before income taxes

(24,279 ) 23,524 (47,803 ) NM 16,536 51,606 (35,070 ) (68.0 )
Benefit (provision) for income taxes   12,413     (11,083 ) 23,496   NM   (2,285 )   (22,718 ) 20,433   89.9
Net (loss) income $ (11,866 ) $ 12,441 (24,307 ) (195.4 ) $ 14,251 $ 28,888 (14,637 ) (50.7 )
Less: net (loss) income attributable to noncontrolling interests   (1,836 )   149   1,985   NM   930     1,545   615   39.8
Net (loss) income attributable to MIC LLC $ (10,030 ) $ 12,292   (22,322 ) (181.6 ) $ 13,321   $ 27,343   (14,022 ) (51.3 )
 
NM - Not meaningful
 

(1) Interest expense includes non-cash losses on derivative instruments of $1.3 million and $21.6 million for the quarter and year ended December 31, 2012, respectively, and non-cash losses on derivative instruments of $3.8 million and $35.0 million for the quarter and year ended December 31, 2011, respectively.

 

 
 

    Quarter Ended

December 31,

 

Change

Year Ended

December 31,

 

Change

2012   2011   $   % 2012   2011 $   %
($ In Thousands) (Unaudited)
Net (loss) income attributable to MIC LLC(1) $ (10,030 ) $ 12,292 $ 13,321 $ 27,343
Interest expense, net(2) 7,441 10,380 46,401 59,249
(Benefit) provision for income taxes (12,413 ) 11,083 2,285 22,718
Depreciation(3) 8,883 7,910 31,587 33,815
Depreciation - cost of services(3) 1,691 1,670 6,727 6,639
Amortization of intangibles(4) 8,709 8,707 34,601 42,107

(Gain) loss on disposal of assets

(176 ) (332 ) (1,979 ) 617
Equity in earnings and amortization charges of investees(5) - (8,695 ) - (22,763 )
Base management fees settled/to be settled in LLC interests 6,299 4,222 21,898 15,475
Perfromance fees settled/to be settled in LLC interests 43,820 - 67,329 -
Other non-cash (income) expense, net   (2,033 )   705       3,387     4,678    
EBITDA excluding non-cash items $ 52,191   $ 47,942   4,249 8.9 $ 225,557   $ 189,878   35,679 18.8
EBITDA excluding non-cash items $ 52,191 $ 47,942 $ 225,557 $ 189,878
Interest expense, net(2) (7,441 ) (10,380 ) (46,401 ) (59,249 )
Interest rate swap breakage fee - Hawaii Gas(2) - - (8,701 ) -
Interest rate swap breakage fee - Atlantic Aviation(2) - (80 ) (595 ) (2,327 )
Adjustments to derivative instruments recorded in interest expense(2) (2,748 ) (8,591 ) (17,132 ) (15,917 )
Amortization of debt financing costs(2) 942 1,012 4,232 4,086
Cash distribution recevied in excess of equity in earning and amortization charges of investee(6)

 

 

 

 

-

-

54,625

-

Equipment lease receivables, net 953 834 3,548 3,105
Provision/benefit for income taxes, net of changes in deferred taxes 374 (554 ) (3,865 ) (3,509 )
Changes in working capital   9,057     (6,306 )   6,643     (25,025 )
Cash provided by operating activities 53,328 23,877 217,911 91,042
Changes in working capital (9,057 ) 6,306 (6,643 ) 25,025
Adjustment to free cash flow for MIC Solar(7) 3,850 - 3,850 -
Maintenance capital expenditures   (6,019 )   (5,791 )     (19,851 )   (18,062 )  
Free cash flow $ 42,102   $ 24,392   17,710 72.6 $ 195,267   $ 98,005   97,262 99.2
(1) Net (loss) income attributable to MIC LLC excludes net loss of $1.8 million and net income of $930,000 attributable to noncontrolling interests for the quarter and year ended December 31, 2012, respectively, and net income of $149,000 and $1.5 million attributable to noncontrolling interests for the quarter and year ended December 31, 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 statements of operations. Depreciation and Depreciation - cost of services does not include acquisition- related step-up depreciation expense of $2.0 million and $7.8 million for the quarter and year ended December 31, 2012, respectively, and $2.0 million and $7.5 million for the quarter and year ended December 31, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated statements of operations.
(4) Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $342,000 for the quarter and year ended December 31, 2012, respectively, and $85,000 and $606,000 for the quarter and year ended December 31, 2011, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investees in our consolidated statements of operations.

(5) Equity in earnings and amortization charges of investee in the above table includes our 50% share of IMTT's earnings, offset by the distributions we received only up to our share of the earnings recorded in the calculation for EBITDA excluding non-cash items. For the quarter and year ended December 31, 2012, we recognized equity in earnings and amortization charges of investee income of $9.0 million and $32.3 million, respectively, in the consolidated condensed statement of operations, which was fully offset by the cash distributions received during the year ended December 31, 2012.

(6) Cash distributions received in excess of equity in earnings and amortization charges of investee in the above table is the excess cumulative distributions received to the cumulative earnings recorded in equity in earnings and amortization charges of investee, since our investment in IMTT, adjusted for the current periods equity in earnings and amortization charges of investee in the calculation from net income attributable to MIC LLC to EBITDA excluding non-cash items above. The cumulative allocation of the $188.1 million distributions received during the year ended December 31, 2012 was $87.0 million recorded in net cash provided by operating activities and $101.1 million recorded in net cash provided by investing activities, as a return of investment, on the consolidated statements of cash flows.

(7) Adjustment to free cash flow for MIC Solar represents the net loss and the cash distribution received, if any, from this business for the quarter and year ended December 31, 2012. No cash distributions were received during the quarter and year ended December 31, 2012.


IMTT              
 
 
Quarter Ended

December 31,

 

Year Ended

December 31,

 

2012   2011  

Change

Favorable/(Unfavorable)

2012   2011  

Change

Favorable/(Unfavorable)

$   $   $   %   $   $   $   %  
($ In Thousands) (Unaudited)
Revenue
Terminal revenue 117,611 107,177 10,434 9.7 449,927 417,422 32,505 7.8
Environmental response revenue 6,409   7,565   (1,156 ) (15.3 ) 24,461   29,670   (5,209 ) (17.6 )
Total revenue 124,020 114,742 9,278 8.1 474,388 447,092 27,296 6.1
Costs and expenses
Terminal operating costs 49,905 47,763 (2,142 ) (4.5 ) 191,791 188,222 (3,569 ) (1.9 )
Environmental response operating costs 6,252   6,982   730   10.5 21,767   23,013   1,246   5.4
Total operating costs 56,157 54,745 (1,412 ) (2.6 ) 213,558 211,235 (2,323 ) (1.1 )
Terminal gross profit 67,706 59,414 8,292 14.0 258,136 229,200 28,936 12.6
Environmental response gross profit 157   583   (426 ) (73.1 ) 2,694   6,657   (3,963 ) (59.5 )
Gross profit 67,863 59,997 7,866 13.1 260,830 235,857 24,973 10.6
General and administrative expenses 8,645 7,401 (1,244 ) (16.8 ) 31,050 30,976 (74 ) (0.2 )
Depreciation and amortization 19,000   16,383   (2,617 ) (16.0 ) 70,016   64,470   (5,546 ) (8.6 )
Operating income 40,218 36,213 4,005 11.1 159,764 140,411 19,353 13.8
Interest expense, net(1) (6,330 ) (6,944 ) 614 8.8 (35,244 ) (52,257 ) 17,013 32.6
Other income 210 272 (62 ) (22.8 ) 1,890 1,486 404 27.2
Provision for income taxes (13,426 ) (9,836 ) (3,590 ) (36.5 ) (51,293 ) (34,820 ) (16,473 ) (47.3 )
Noncontrolling interests (203 ) (48 ) (155 ) NM (839 ) 137   (976 ) NM
Net income 20,469   19,657   812   4.1 74,278   54,957   19,321   35.2
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 20,469 19,657 74,278 54,957
Interest expense, net(1) 6,330 6,944 35,244 52,257
Provision for income taxes 13,426 9,836 51,293 34,820
Depreciation and amortization 19,000 16,383 70,016 64,470
Other non-cash expense (income) 208   42     855   (114 )  
EBITDA excluding non-cash items 59,433   52,862   6,571   12.4 231,686   206,390   25,296   12.3
 
EBITDA excluding non-cash items 59,433 52,862 231,686 206,390
Interest expense, net(1) (6,330 ) (6,944 ) (35,244 ) (52,257 )
Adjustments to derivative instruments recorded in interest expense(1) (4,369 ) (1,998 ) (4,271 ) 16,655
Amortization of debt financing costs(1) 802 807 3,221 3,233
Provision for income taxes, net of changes in deferred taxes (3,320 ) 5,596 (17,885 ) (8,169 )
Changes in working capital (4,044 ) (6,233 ) 13,636   (36,701 )
Cash provided by operating activities 42,172 44,090 191,143 129,151
Changes in working capital 4,044 6,233 (13,636 ) 36,701
Maintenance capital expenditures (27,619 ) (21,199 )   (58,375 ) (57,257 )  
Free cash flow 18,597   29,124   (10,527 ) (36.1 ) 119,132   108,595   10,537   9.7
_____________________
NM - Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.

Hawaii Gas            
 
 
Quarter Ended

December 31,

Change

Favorable/(Unfavorable)

Year Ended

December 31,

Change

Favorable/(Unfavorable)

2012 2011       2012 2011      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility 27,828 29,678 (1,850) (6.2) 116,099 112,020 4,079 3.6
Cost of revenue - non-utility 11,571 14,956 3,385 22.6 52,091 60,369 8,278 13.7
Contribution margin - non-utility 16,257 14,722 1,535 10.4 64,008 51,651 12,357 23.9
Revenue - utility 33,783 34,964 (1,181) (3.4) 144,439 140,746 3,693 2.6
Cost of revenue - utility 24,155 25,455 1,300 5.1 105,723 102,213 (3,510) (3.4)
Contribution margin - utility 9,628 9,509 119 1.3 38,716 38,533 183 0.5
Total contribution margin 25,885 24,231 1,654 6.8 102,724 90,184 12,540 13.9
Production 1,617 2,089 472 22.6 8,569 7,410 (1,159) (15.6)
Transmission and distribution 5,280 5,348 68 1.3 21,716 19,776 (1,940) (9.8)
Gross profit 18,988 16,794 2,194 13.1 72,439 62,998 9,441 15.0
Selling, general and administrative expenses 4,062 3,353 (709) (21.1) 18,637 16,025 (2,612) (16.3)
Depreciation and amortization 2,173 1,800 (373) (20.7) 7,981 7,218 (763) (10.6)
Operating income 12,753 11,641 1,112 9.6 45,821 39,755 6,066 15.3
Interest expense, net(1) (1,758) (1,226) (532) (43.4) (10,860) (9,138) (1,722) (18.8)
Other expense (152) (11) (141) NM (437) (220) (217) (98.6)
Provision for income taxes (4,561) (4,324) (237) (5.5) (13,904) (12,225) (1,679) (13.7)
Net income(2) 6,282 6,080 202 3.3 20,620 18,172 2,448 13.5
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income(2) 6,282 6,080 20,620 18,172
Interest expense, net(1) 1,758 1,226 10,860 9,138
Provision for income taxes 4,561 4,324 13,904 12,225
Depreciation and amortization 2,173 1,800 7,981 7,218
Other non-cash expense 269 361   2,940 2,279  
EBITDA excluding non-cash items 15,043 13,791 1,252 9.1 56,305 49,032 7,273 14.8
 
EBITDA excluding non-cash items 15,043 13,791 56,305 49,032
Interest expense, net(1) (1,758) (1,226) (10,860) (9,138)
Interest rate swap breakage fees(1) - - (8,701) -
Adjustments to derivative instruments recorded in interest expense(1) (51) (1,157) 3,038 (225)
Amortization of debt financing costs(1) 112 120 858 478
Provision for income taxes, net of changes in deferred taxes 7,862 971 1,974 (3,136)
Changes in working capital (7,829) (1,871) (6,712) (9,350)
Cash provided by operating activities 13,379 10,628 35,902 27,661
Changes in working capital 7,829 1,871 6,712 9,350
Maintenance capital expenditures (2,822) (2,215)   (8,063) (8,503)  
Free cash flow 18,386 10,284 8,102 78.8 34,551 28,508 6,043 21.2
_____________________
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

December 31,

Change

Favorable/(Unfavorable)

Year Ended

December 31,

Change

Favorable/(Unfavorable)

2012 2011       2012 2011      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
 
Cooling capacity revenue 5,636 5,502 134 2.4 22,311 21,784 527 2.4
Cooling consumption revenue 2,816 3,262 (446) (13.7) 23,669 22,707 962 4.2
Other revenue 759 676 83 12.3 2,782 2,957 (175) (5.9)
Finance lease revenue 1,088 1,208 (120) (9.9) 4,536 4,992 (456) (9.1)
Total revenue 10,299 10,648 (349) (3.3) 53,298 52,440 858 1.6
Direct expenses — electricity 1,907 2,323 416 17.9 14,494 14,641 147 1.0
Direct expenses — other(1) 5,212 4,715 (497) (10.5) 20,078 19,961 (117) (0.6)
Direct expenses — total 7,119 7,038 (81) (1.2) 34,572 34,602 30 0.1
Gross profit 3,180 3,610 (430) (11.9) 18,726 17,838 888 5.0
Selling, general and administrative expenses 1,166 925 (241) (26.1) 3,841 3,374 (467) (13.8)
Amortization of intangibles 345 345 - - 1,372 1,368 (4) (0.3)
Operating income 1,669 2,340 (671) (28.7) 13,513 13,096 417 3.2
Interest expense, net(2) (1,191) (1,458) 267 18.3 (7,712) (13,208) 5,496 41.6
Other income 83 166 (83) (50.0) 651 1,478 (827) (56.0)
Provision for income taxes (151) (344) 193 56.1 (2,322) (212) (2,110) NM
Noncontrolling interests (195) (212) 17 8.0 (817) (850) 33 3.9
Net income 215 492 (277) (56.3) 3,313 304 3,009 NM
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income 215 492 3,313 304
Interest expense, net(2) 1,191 1,458 7,712 13,208
Provision for income taxes 151 344 2,322 212
Depreciation(1) 1,691 1,670 6,727 6,639
Amortization of intangibles 345 345 1,372 1,368
Other non-cash expense 298 313   723 964  
EBITDA excluding non-cash items 3,891 4,622 (731) (15.8) 22,169 22,695 (526) (2.3)
 
EBITDA excluding non-cash items 3,891 4,622 22,169 22,695
Interest expense, net(2) (1,191) (1,458) (7,712) (13,208)
Adjustments to derivative instruments recorded in interest expense(2) (1,448) (1,221) (2,906) 2,587
Amortization of debt financing costs(2) 177 170 699 681
Equipment lease receivable, net 953 834 3,548 3,105

Provision for income taxes, net of changes in deferred taxes

51 224 (841) (868)
Changes in working capital 2,346 1,128 893 520
Cash provided by operating activities 4,779 4,299 15,850 15,512
Changes in working capital (2,346) (1,128) (893) (520)
Maintenance capital expenditures (249) (370)   (891) (659)  
Free cash flow 2,184 2,801 (617) (22.0) 14,066 14,333 (267) (1.9)
_____________________
NM - Not meaningful
(1) Includes depreciation expense of $1.7 million and $6.7 million for the quarter and year ended December 31, 2012, respectively, and $1.7 million and $6.6 million for the quarter and year ended December 31, 2011, respectively.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.

Atlantic Aviation          
 
Quarter Ended

December 31,

Change

Favorable/(Unfavorable)

Year Ended

December 31,

Change

Favorable/(Unfavorable)

2012 2011       2012 2011      
$ $ $ % $ $ $ %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue 140,513 135,363 5,150 3.8 560,710 527,501 33,209 6.3
Non-fuel revenue 38,643 39,502 (859) (2.2) 159,145 156,084 3,061 2.0
Total revenue 179,156 174,865 4,291 2.5 719,855 683,585 36,270 5.3
Cost of revenue
Cost of revenue-fuel 100,584 92,745 (7,839) (8.5) 396,384 363,694 (32,690) (9.0)
Cost of revenue-non-fuel 4,001 5,001 1,000 20.0 18,037 18,142 105 0.6
Total cost of revenue 104,585 97,746 (6,839) (7.0) 414,421 381,836 (32,585) (8.5)
Fuel gross profit 39,929 42,618 (2,689) (6.3) 164,326 163,807 519 0.3
Non-fuel gross profit 34,642 34,501 141 0.4 141,108 137,942 3,166 2.3
Gross profit 74,571 77,119 (2,548) (3.3) 305,434 301,749 3,685 1.2
Selling, general and administrative expenses 43,209 44,043 834 1.9 174,039 174,148 109 0.1
Depreciation and amortization 14,920 14,472 (448) (3.1) 56,681 67,336 10,655 15.8
Loss (gain) on disposal of assets 21 (221) (242) (109.5) (1,358) 1,522 2,880 189.2
Operating income 16,421 18,825 (2,404) (12.8) 76,072 58,743 17,329 29.5
Interest expense, net(1) (4,515) (7,696) 3,181 41.3 (27,963) (36,905) 8,942 24.2
Other income (expense) 931 (49) 980 NM 969 (244) 1,213 NM
Provision for income taxes (5,525) (7,716) 2,191 28.4 (21,340) (11,952) (9,388) (78.5)
Net income(2) 7,312 3,364 3,948 117.4 27,738 9,642 18,096 187.7
 
Reconciliation of net income to EBITDA excluding non-cash items:
Net income(2) 7,312 3,364 27,738 9,642
Interest expense, net(1) 4,515 7,696 27,963 36,905
Provision for income taxes 5,525 7,716 21,340 11,952
Depreciation and amortization 14,920 14,472 56,681 67,336
(Gain) loss on disposal of assets (176) (332) (1,979) 617
Other non-cash (income) expense (720) (82)   (988) 228  
EBITDA excluding non-cash items 31,376 32,834 (1,458) (4.4) 130,755 126,680 4,075 3.2
 
EBITDA excluding non-cash items 31,376 32,834 130,755 126,680
Interest expense, net(1) (4,515) (7,696) (27,963) (36,905)
Interest rate swap breakage fees(1) - (80) (595) (2,327)
Adjustments to derivative instruments recorded in interest expense(1) (1,249) (6,214) (17,264) (18,280)
Amortization of debt financing costs(1) 653 722 2,675 2,927

Provision for income taxes, net of changes in deferred taxes

(674) (539) (2,646) (1,481)
Changes in working capital (2,503) (7,825) 46 (15,307)
Cash provided by operating activities 23,088 11,202 85,008 55,307
Changes in working capital 2,503 7,825 (46) 15,307
Maintenance capital expenditures (2,948) (3,206)   (10,897) (8,900)  
Free cash flow 22,643 15,821 6,822 43.1 74,065 61,714 12,351 20.0
_____________________
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.

For the Year Ended December 31, 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 37,139 20,620 1,657 27,738 (70,677) 16,477 74,278 3,313
Interest expense (income), net(2) 17,622 10,860 3,857 27,963 (134) 60,168 35,244 7,712
Provision (benefit) for income taxes 25,647 13,904 1,161 21,340 (35,281) 26,771 51,293 2,322
Depreciation 32,819 6,982 3,364 24,451 154 67,770 65,637 6,727
Amortization of intangibles 2,190 999 686 32,230 - 36,105 4,379 1,372
Gain on disposal of assets - - - (1,979) - (1,979) - -
Base management fee paid in LLC interests - - - - 21,898 21,898 - -
Performance fee paid in LLC interests - - - - 67,329 67,329 - -
Other non-cash expense (income) 428 2,940 362 (988) 712 3,453 855 723
EBITDA excluding non-cash items 115,843 56,305 11,087 130,755 (15,999) 297,991 231,686 22,169
 
EBITDA excluding non-cash items 115,843 56,305 11,087 130,755 (15,999) 297,991 231,686 22,169
Interest (expense) income, net(2) (17,622) (10,860) (3,857) (27,963) 134 (60,168) (35,244) (7,712)
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, net(2) (2,136) 3,038 (1,453) (17,264) - (17,815) (4,271) (2,906)
Amortization of deferred finance charges(2) 1,611 858 350 2,675 - 5,493 3,221 699
Equipment lease receivables, net - - 1,774 - - 1,774 - 3,548
Provision/benefit for income taxes, net of changes in deferred taxes (8,943) 1,974 (421) (2,646) (2,352) (12,387) (17,885) (841)
Changes in working capital 6,818 (6,712) 447 46 12,416 13,015 13,636 893
Cash provided by (used in) operating activities 95,572 35,902 7,927 85,008 (5,801) 218,607 191,143 15,850
Changes in working capital (6,818) 6,712 (447) (46) (12,416) (13,015) (13,636) (893)
Adjustment to free cash flow for MIC Solar(3) - - - - 3,850 3,850 - -
Maintenance capital expenditures (29,188) (8,063) (446) (10,897) - (48,593) (58,375) (891)
 
Free cash flow 59,566 34,551 7,034 74,065 (14,367) 160,849 119,132 14,066
 
 

For the Year Ended December 31, 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 27,479 18,172 152 9,642 (23,538) 31,907 54,957 304
Interest expense (income), net(2) 26,129 9,138 6,605 36,905 (2) 78,775 52,257 13,208
Provision (benefit) for income taxes 17,410 12,225 106 11,952 (1,671) 40,022 34,820 212
Depreciation 30,978 6,395 3,320 27,420 - 68,113 61,955 6,639
Amortization of intangibles 1,258 823 684 39,916 - 42,681 2,515 1,368
Loss on disposal of assets - - - 617 - 617 - -
Base management fee paid in LLC interests - - - - 15,475 15,475 - -
Other non-cash (income) expense (57) 2,279 482 228 1,207 4,139 (114) 964
EBITDA excluding non-cash items 103,195 49,032 11,350 126,680 (8,529) 281,728 206,390 22,695
 
EBITDA excluding non-cash items 103,195 49,032 11,350 126,680 (8,529) 281,728 206,390 22,695

Interest (expense) income, net(2)

(26,129) (9,138) (6,605) (36,905) 3 (78,774) (52,257) (13,208)
Interest rate swap breakage fees(2) - - - (2,327) - (2,327) - -
Adjustments to derivative instruments recorded in interest expense(2) 8,328 (225) 1,294 (18,280) - (8,884) 16,655 2,587
Amortization of deferred finance charges(2) 1,617 478 341 2,927 - 5,362 3,233 681
Equipment lease receivables, net - - 1,553 - - 1,553 - 3,105
Provision/benefit for income taxes, net of changes in deferred taxes (4,085) (3,136) (434) (1,481) 1,976 (7,160) (8,169) (868)
Changes in working capital (18,351) (9,350) 260 (15,307) (888) (43,635) (36,701) 520
Cash provided by (used in) operating activities 64,576 27,661 7,758 55,307 (7,438) 147,863 129,151 15,512
Changes in working capital 18,351 9,350 (260) 15,307 888 43,635 36,701 (520)
Maintenance capital expenditures (28,629) (8,503) (330) (8,900) - (46,361) (57,257) (659)
 
Free cash flow 54,298 28,508 7,168 61,714 (6,550) 145,137 108,595 14,333
___________________________

 

(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
(2) Interest (expense) income, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees at Hawaii Gas and Atlantic Aviation.

(3) Adjustment to free cash flow for MIC Solar represents the net loss and the cash distribution received, if any, from this business for the year ended December 31, 2012. No cash distributions were received during the year ended December 31, 2012.

 


 

For the Quarter Ended December 31, 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 10,235 6,282 108 7,312 (32,871) (8,935) 20,469 215
Interest expense (income), net(2) 3,165 1,758 596 4,515 (23) 10,011 6,330 1,191
Provision (benefit) for income taxes 6,713 4,561 76 5,525 (22,650) (5,775) 13,426 151
Depreciation 8,382 1,791 846 6,938 154 18,110 16,763 1,691
Amortization of intangibles 1,119 382 173 7,982 - 9,655 2,237 345
Gain on disposal of assets - - - (176) - (176) - -
Base management fee paid in LLC interests - - - - 6,299 6,299 - -
Performance fee paid in LLC interests - - - - 43,820 43,820 - -
Other non-cash expense (income) 104 269 149 (720) (1,880) (2,078) 208 298
EBITDA excluding non-cash items 29,717 15,043 1,946 31,376 (7,151) 70,930 59,433 3,891
 
EBITDA excluding non-cash items 29,717 15,043 1,946 31,376 (7,151) 70,930 59,433 3,891
Interest (expense) income, net(2) (3,165) (1,758) (596) (4,515) 23 (10,011) (6,330) (1,191)
Adjustment to derivative instruments recorded in interest expense, net(2) (2,185) (51) (724) (1,249) - (4,209) (4,369) (1,448)
Amortization of deferred finance charges(2) 401 112 89 653 - 1,255 802 177
Equipment lease receivables, net - - 477 - - 477 - 953
Provision/benefit for income taxes, net of changes in deferred taxes (1,660) 7,862 26 (674) (6,865) (1,311) (3,320) 51
Changes in working capital (2,022) (7,829) 1,173 (2,503) 17,043 5,862 (4,044) 2,346
Cash provided by operating activities 21,086 13,379 2,390 23,088 3,050 62,993 42,172 4,779
Changes in working capital 2,022 7,829 (1,173) 2,503 (17,043) (5,862) 4,044 (2,346)
Adjustment to free cash flow for MIC Solar(3) - - - - 3,850 3,850 - -
Maintenance capital expenditures (13,810) (2,822) (125) (2,948) - (19,704) (27,619) (249)
Free cash flow 9,299 18,386 1,092 22,643 (10,143) 41,277 18,597 2,184
 

For the Quarter Ended December 31, 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 9,829 6,080 246 3,364 (6,339) 13,180 19,657 492
Interest expense, net(2) 3,472 1,226 729 7,696 - 13,123 6,944 1,458
Provision (benefit) for income taxes 4,918 4,324 172 7,716 (1,301) 15,829 9,836 344
Depreciation 7,821 1,594 835 6,316 - 16,566 15,641 1,670
Amortization of intangibles 371 206 172 8,156 - 8,905 742 345
Loss on disposal of assets - - - (332) - (332) - -
Base management fee paid in LLC interests - - - - 4,222 4,222 - -
Other non-cash expense (income) 21 361 157 (82) 113 570 42 313
EBITDA excluding non-cash items 26,431 13,791 2,311 32,834 (3,305) 72,062 52,862 4,622
 
EBITDA excluding non-cash items 26,431 13,791 2,311 32,834 (3,305) 72,062 52,862 4,622
Interest (expense) income, net(2) (3,472) (1,226) (729) (7,696) 1 (13,122) (6,944) (1,458)
Interest rate swap breakage fees(2) - - - (80) - (80) - -
Adjustments to derivative instruments recorded in interest expense(2) (999) (1,157) (611) (6,214) - (8,981) (1,998) (1,221)
Amortization of deferred finance charges(2) 404 120 85 722 - 1,331 807 170
Equipment lease receivables, net - - 417 - - 417 - 834
Provision/benefit for income taxes, net of changes in deferred taxes 2,798 971 112 (539) (1,210) 2,132 5,596 224
Changes in working capital (3,117) (1,871) 564 (7,825) 2,262 (9,986) (6,233) 1,128
Cash provided by (used in) operating activities 22,045 10,628 2,150 11,202 (2,252) 43,773 44,090 4,299
Changes in working capital 3,117 1,871 (564) 7,825 (2,262) 9,986 6,233 (1,128)
Maintenance capital expenditures (10,600) (2,215) (185) (3,206) - (16,206) (21,199) (370)
 
Free cash flow 14,562 10,284 1,401 15,821 (4,514) 37,554 29,124 2,801
 
___________________________
(1) Proportionately combined free cash flow is equal to the sum of free cash flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
(2) Interest (expense) income, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and interest rate swap breakage fees at Atlantic Aviation.

(3) Adjustment to free cash flow for MIC Solar represents the net loss and the cash distribution received, if any, from this business for the quarter and year ended December 31, 2012. No cash distributions were received during the quarter and year ended December 31, 2012.

 

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