NEW YORK--(BUSINESS WIRE)--Macquarie Infrastructure Corporation (NYSE:MIC) reported its financial results for the second quarter of 2016 including net income of $21.1 million versus a net loss of $63.5 million in the second quarter of 2015. For the six months ended June 30, 2016, MIC reported net income of $41.3 million versus a net loss of $154.0 million in the prior comparable period.
Net income increased primarily as a result of the absence of any performance fees payable to the Company’s manager, the absence of transaction related expenses in connection with the acquisition of Bayonne Energy Center (“BEC”) in 2015 and the generation of increased gross profit by each of MIC’s operating companies in 2016. Partially offsetting the increases were higher interest expense and an increased provision for income taxes.
MIC’s financial performance metric, Proportionately Combined Free Cash Flow (“PCFCF”), increased 8.8% to $126.3 million in the second quarter of 2016 compared with the underlying PCFCF of $116.1 million generated in the second quarter in 2015. For the six month period, MIC reported an increase in PCFCF of 8.5% to $259.7 million versus an underlying $239.5 million in the prior comparable period. The increase in both periods was primarily the result of improvement in operations at each of MIC’s businesses including contributions from acquisitions in 2015 and 2016. Underlying figures in the prior comparable period excluded primarily the interest rate swap break fees at IMTT and transaction fees related to the acquisition of BEC. See “Use of Non-GAAP Measures” below for MIC’s definition of PCFCF.
The weighted average number of MIC shares outstanding during the quarter ended June 30, 2016 increased 1.4% year over year to 80,369,575. The increase was primarily the result of the reinvestment of base management fees payable to MIC’s manager in new shares during 2015 and 2016.
“Our businesses performed well during the second quarter and produced a result consistent with our guidance for the full year,” said James Hooke, chief executive officer of MIC. “Both Atlantic Aviation and the businesses comprising our Contracted Power and Energy (CP&E) segment delivered attractive year on year growth – Atlantic benefited from increases in both volume and margin on fuel sales as well as contributions from acquisitions completed in 2015 and 2016 and BEC produced more power than it did in the second quarter of last year. IMTT’s terminal operations grew in line with expectations, although its OMI Environmental Services (“OMI”) subsidiary operated at a small loss, and Hawaii Gas produced modest growth on an approximately 2% increase in the volume of gas sold.”
Reflective of the performance of MIC’s businesses during the period, the Company’s board of directors has authorized a cash dividend of $1.25 per share, or $5.00 annualized, for the second quarter of 2016. The dividend will be payable August 16, 2016 to shareholders of record on August 11, 2016. The cash payment represents a 12.6% increase over the dividend paid for the second quarter of 2015.
MIC remains on target to deliver a previously announced increase in its 2016 dividend to between $5.00 and $5.10 per share, up from $4.46 in 2015. Through two quarters, MIC will have distributed $2.45 per share in dividends. The payment of a future dividend is subject to the continued stable performance of MIC’s businesses and authorization by the Company’s board of directors.
MIC deployed $60.7 million of capital in support of growth projects and bolt-on acquisitions during the second quarter. Through the first half of the year the Company has deployed $123.2 million. MIC expects to deploy a total of approximately $250.0 million in growth capital in 2016.
“The receipt of regulatory consents and approval by our board of directors of our investment in containerized LNG in Hawaii and the expansion of BEC in New Jersey means that our backlog of growth investments is now nearly $370.0 million,” Hooke noted. The planned investment of $130.0 million in the development of 130MW of gas-fired power generating capacity at BEC in Bayonne, NJ is expected to be made largely in 2017.
The Company also reported that it completed the previously announced construction of a 6.5MW solar photovoltaic power generation facility in Hawaii. The first half of the facility was placed in service in late June followed by the second half in late July.
Overview of Consolidated (GAAP) Results for the Quarter and Six Months Ended June 30, 2016
MIC’s revenue decreased 6.2% to $397.6 million and 3.4% to $794.0 million versus the prior comparable quarter and six month periods, respectively. The decrease in the quarter reflects primarily:
- declines in the cost of jet fuel sold by Atlantic Aviation and gas sold by Hawaii Gas;
- reductions in revenue at IMTT related to the absence of any material spill response activity at OMI; and,
- decreases in certain services including rail car handling at IMTT; partially offset by,
- growth in revenue generated by the businesses in MIC’s CP&E segment.
The $26.1 million decrease in revenue in the quarter was entirely offset by a $37.8 million decrease in direct expenses, primarily the energy inputs noted above, recorded in cost of services/cost of product sales at each of Atlantic Aviation and Hawaii Gas. A reduction in direct expenses of $60.8 million for the six months to June 30 completely offset the decline in revenue for the half year. The pass-through of energy input costs, up or down, makes gross profit – revenue less direct expenses - effectively the “top line” to which MIC manages its businesses.
Gross profit increased 5.1% to $241.7 million and 7.1% to $488.6 million versus the prior comparable quarter and six month periods, respectively. The increase in the quarter reflects primarily:
- improved performance by Atlantic Aviation as a result of increases in general aviation flight activity and acquisitions of additional sites;
- a larger contribution from CP&E based on an increased utilization of BEC and improved wind and solar resources generally; and,
- unrealized gains on propane price hedges at Hawaii Gas.
The improvement through six months reflects each of the above factors plus incremental gross profit from BEC in the first quarter.
Selling, general and administrative expenses decreased by 10.7% to $72.4 million in the second quarter and by 4.6% to $144.7 million in the first half of 2016. The decreases reflect primarily:
- the absence of transaction related expenses associated with the acquisition of BEC primarily in the second quarter in 2015; and,
- the absence of costs related to the conversion of MIC from a limited liability company to a corporation; partially offset by,
- incremental costs associated with the ongoing operation of BEC in the second quarter; and,
- higher salary and benefits costs at Atlantic Aviation together with incremental costs associated with acquired FBOs in both the quarter and six month periods.
Fees payable to MIC’s external manager decreased 89.4% to $16.4 million in the second quarter and 90.2% to $31.2 million in the first half of 2016 primarily as a result of the absence of any performance fees in 2016. All base management fees generated were reinvested in new shares.
The items above resulted in MIC reporting net income of $21.1 million and $41.3 million in the quarter and six months ended June 30, 2016, respectively, compared with net losses of $63.5 million and $154.0 million, respectively, in the prior comparable periods. Net income also reflects:
- higher interest expense as a result of unfavorable mark to market of interest rate swaps; and,
- an increased provision for income taxes as a result of the absence of any tax benefit associated with performance fees incurred in 2015; partially offset by,
- the absence of impairments at Atlantic Aviation incurred in the first quarter of 2015.
MIC deployed an aggregate $69.6 million and $145.3 million in the second quarter and six months ended June 30, 2016, respectively, in the acquisition of businesses and purchases of property and equipment.
Overview of Proportionately Combined non-GAAP Results for the Quarter and Six Months Ended June 30, 2016
The following items are discussed on a proportionately combined basis reflective of MIC’s partial interest in certain of its businesses. See “Use of Non-GAAP Measures” below for MIC’s definition of Free Cash Flow, EBITDA excluding Non-Cash Items and proportionately combined metrics as well as further information on MIC’s use of these measures. See also the reconciliation of Net Income (Loss) to EBITDA excluding Non-Cash Items and Free Cash Flow attached to this release.
The above Overview of Consolidated Results, adjusted for non-cash items, generated an increase in EBITDA excluding non-cash items of 4.0% to $164.2 million and 8.1% to $337.1 million in the quarter and six months ended June 30, 2016, respectively.
Cash interest expense decreased 14.3% to $26.4 million versus the prior comparable quarter and by 2.7% to $52.9 million versus the prior comparable six month period. The decrease in cash interest expense in both periods reflects primarily a reduction in the interest rate and outstanding debt balance at BEC, partially offset by increased debt balances at each of IMTT and MIC Corporate.
Cash taxes increased to $1.7 million from a tax benefit of $0.4 million in the second quarter and to $4.2 million from $0.4 million through six months primarily as a result of the absence of a performance fee and associated tax benefits in 2016 versus the comparable periods in 2015. Any federal income tax liability generated in 2016, other than Alternative Minimum Tax, is expected to be offset by net operating loss carryforwards available at the holding company level.
Maintenance capital expenditures decreased by 13.6% to $9.8 million in the second quarter and increased by 15.7% to $20.3 million through the first six months of the year. The changes in the quarter and six month periods were attributable to reduced maintenance capital expenditures at Atlantic Aviation and Hawaii Gas (net of customer reimbursements) in the quarter, partially offset by an increase in maintenance capital expenditures at IMTT in the half-year.
Free Cash Flow increased 8.8% to $126.3 million in the second quarter and by 8.5% to $259.7 million in the first half of 2016. The growth in cash generation was primarily a result of improved performance at Atlantic Aviation, an increased contribution from the renewables portion of CP&E based on an improvement in wind and solar resources in both quarters, and based on the acquisition of BEC in the second quarter of 2015. Underlying figures in the prior comparable period excluded primarily the interest rate swap break fees at IMTT of $31.4 million and transaction fees related to the acquisition of BEC of $9.1 million.
Conference Call and Webcast
When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Tuesday, August 2, 2016 during which it will review and comment on the Company’s results for the second quarter.
How: To listen to the conference call please dial +1(650) 521-5252 or +1(877) 852-2928 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 August 2, 2016 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 August 2, 2016 through midnight on August 8, 2016, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 49732812. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G
About MIC
MIC owns and operates a diversified group of businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, a gas processing and distribution business, Hawaii Gas, and entities comprising a Contracted Power and Energy segment. For additional information, please visit the MIC website at www.macquarie.com/mic.
Use of Non-GAAP Measures
In analyzing the financial performance of its businesses, MIC focuses primarily on cash generation and Free Cash Flow in particular. The Company believes investors use Free Cash Flow as a measure of its ability to sustain and potentially increase its quarterly cash dividend.
In addition, MIC measures EBITDA excluding non-cash items, a component of Free Cash Flow, as it reflects its businesses’ ability to effectively manage the volume of products sold or services provided, the margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses.
MIC also uses proportionately combined financial metrics, which reflect its ownership interest in each of its businesses and MIC Corporate. The Company uses these measures to assess the amount of cash generated in proportion to its ownership interest in its businesses. Given its varied ownership levels in some of its businesses, principally in the CP&E segment, together with the Company’s obligations to report the results of these businesses on a consolidated basis, management believes that GAAP measures such as net income (loss) do not fully reflect all of the items it considers in assessing the amount of cash generated based on its ownership interest in its businesses. MIC notes that the proportionately combined metrics it uses may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Therefore, proportionately combined metrics should be used as a supplemental measure to help understand its financial performance and not in lieu of its financial results reported under GAAP.
MIC defines Free Cash Flow as EBITDA excluding non-cash items less cash paid for interest, taxes, pension contributions, and maintenance capital expenditures, including principal repayments on capital lease obligations used to fund maintenance capital expenditures. Thus, MIC views Free Cash Flow and EBITDA excluding non-cash items as key performance indicators with respect to the ongoing performance of its businesses and their ability to generate cash, in part in support of the Company’s dividend. In this release, MIC has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate.
MIC defines EBITDA excluding non-cash items as net income (loss) or earnings - the most comparable GAAP measure - before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses and adjustments for other non-cash items reflected in the statements of operations. EBITDA excluding non-cash items also excludes base management fees and performance fees, if any, whether paid in cash or stock.
MIC believes that both Free Cash Flow and EBITDA excluding non-cash items support a more complete understanding of the business factors and economic trends reflected in the financial performance of its businesses than would otherwise be achieved using GAAP results alone. Specifically, both Free Cash Flow and EBITDA excluding non-cash items reflect the ability of the Company’s businesses to generate cash on an ongoing basis. MIC’s businesses can be characterized as owners of high-value, long-lived assets which tend to generate Free Cash Flow in excess of GAAP net income as a result of: (i) non-cash depreciation, amortization and impairment charges; (ii) MIC’s ability to defer all or a portion of current federal income taxes; (iii) non-cash unrealized gains or losses on derivative instruments; and, (iv) various other non-cash items such as pension expense, amortization of tolling liabilities and gains (losses) on disposal of assets. The non-cash pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. In addition, management uses Free Cash Flow as a measure of the Company’s ability to sustain and potentially increase its quarterly cash dividend. MIC believes that external consumers of its financial statements, including investors and research analysts, use this metric to assess the performance of the Company and as an indicator of its success in generating a cash return on investment.
MIC does not consider Free Cash Flow to be a measure of liquidity because it does not fully reflect the Company’s ability to deploy generated cash for discretionary spending. It does not take into consideration required payments on indebtedness and other fixed obligations or the other cash items that are excluded when calculating Free Cash Flow. MIC notes that Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure to help understand the Company’s financial performance and not in lieu of its financial results reported under GAAP.
Classification of Maintenance Capital Expenditures and Growth Capital Expenditures
MIC categorizes capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, MIC has adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain the Company’s businesses at current levels of operations, capability, profitability or cash flow. MIC considers a number of factors to determine whether a specific capital expenditure will be classified as maintenance or growth.
In some cases, specific capital expenditures contain characteristics of both maintenance and growth capital expenditures. MIC does not bifurcate specific capital expenditures into growth and maintenance components. Each discrete capital expenditure is considered within the above framework and the entire expenditure is classified as either maintenance or growth.
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; risks associated with development, investment and expansion in the power industry; 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 and other commodity 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 Corporation 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 Corporation.
MACQUARIE INFRASTRUCTURE CORPORATION | |||||||
CONSOLIDATED CONDENSED BALANCE SHEETS | |||||||
($ in Thousands, Except Share Data) | |||||||
June 30, 2016 | December 31, 2015(1) | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 23,261 | $ | 22,394 | |||
Restricted cash | 14,482 | 18,946 | |||||
Accounts receivable, less allowance for doubtful accounts | |||||||
of $1,387 and $1,690, respectively |
96,799 | 95,597 | |||||
Inventories | 31,492 | 29,489 | |||||
Prepaid expenses | 14,407 | 21,690 | |||||
Other current assets | 17,614 | 28,453 | |||||
Total current assets | 198,055 | 216,569 | |||||
Property, equipment, land and leasehold improvements, net | 4,128,736 | 4,116,163 | |||||
Investment in unconsolidated business | 9,025 | 8,274 | |||||
Goodwill | 2,021,611 | 2,017,211 | |||||
Intangible assets, net | 911,922 | 934,892 | |||||
Other noncurrent assets | 11,040 | 15,695 | |||||
Total assets | $ | 7,280,389 | $ | 7,308,804 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Due to Manager - related party | $ | 73,618 | $ | 73,317 | |||
Accounts payable | 50,312 | 56,688 | |||||
Accrued expenses | 69,961 | 78,527 | |||||
Current portion of long-term debt | 61,096 | 40,099 | |||||
Fair value of derivative instruments | 19,601 | 19,628 | |||||
Other current liabilities | 39,618 | 40,531 | |||||
Total current liabilities | 314,206 | 308,790 | |||||
Long-term debt, net of current portion | 2,763,545 | 2,746,525 | |||||
Deferred income taxes | 850,034 | 816,836 | |||||
Fair value of derivative instruments | 46,008 | 15,698 | |||||
Tolling agreements - noncurrent | 64,261 | 68,150 | |||||
Other noncurrent liabilities | 149,030 | 150,363 | |||||
Total liabilities | 4,187,084 | 4,106,362 | |||||
Commitments and contingencies | - | - | |||||
Stockholders’ equity (2): | |||||||
Common stock ($0.001 par value; 500,000,000 authorized;80,502,929 shares issued and outstanding at June 30, 2016 and 80,006,744 shares issued and outstanding at December 31, 2015) |
$ | 81 | $ | 80 | |||
Additional paid in capital | 2,167,561 | 2,317,421 | |||||
Accumulated other comprehensive loss | (25,757) | (23,295) | |||||
Retained earnings | 777,531 | 735,984 | |||||
Total stockholders’ equity | 2,919,416 | 3,030,190 | |||||
Noncontrolling interests | 173,889 | 172,252 | |||||
Total equity | 3,093,305 | 3,202,442 | |||||
Total liabilities and equity | $ | 7,280,389 | $ | 7,308,804 | |||
_________________ | |||||||
(1) Conformed to current period presentation. See Note 2, "Basis of
Presentation", for Recently Issued Accounting Standards adopted in
the six months ended June 30, 2016. |
|||||||
(2) See Note 8, "Stockholders' Equity", for discussions on preferred stock and special stock. | |||||||
MACQUARIE INFRASTRUCTURE CORPORATION | |||||||||||||||||
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS | |||||||||||||||||
(Unaudited) | |||||||||||||||||
($ in Thousands, Except Share and Per Share Data) | |||||||||||||||||
Quarter Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Revenue | |||||||||||||||||
Service revenue | $ | 306,221 | $ | 327,809 | $ | 618,462 | $ | 653,811 | |||||||||
Product revenue | 91,358 | 95,880 | 175,504 | 168,376 | |||||||||||||
Total revenue | 397,579 | 423,689 | 793,966 | 822,187 | |||||||||||||
Costs and expenses | |||||||||||||||||
Cost of services | 120,857 | 148,417 | 237,320 | 281,834 | |||||||||||||
Cost of product sales | 35,018 | 45,247 | 68,078 | 84,374 | |||||||||||||
Selling, general and administrative | 72,430 | 81,064 | 144,714 | 151,717 | |||||||||||||
Fees to Manager - related party | 16,392 | 154,559 | 31,188 | 319,832 | |||||||||||||
Depreciation | 59,662 | 51,801 | 112,883 | 109,223 | |||||||||||||
Amortization of intangibles | 16,713 | 17,902 | 34,500 | 65,873 | |||||||||||||
Total operating expenses | 321,072 | 498,990 | 628,683 | 1,012,853 | |||||||||||||
Operating income (loss) | 76,507 | (75,301) | 165,283 | (190,666) | |||||||||||||
Other income (expense) | |||||||||||||||||
Interest income | 25 | 7 | 58 | 13 | |||||||||||||
Interest expense(1) | (39,502) | (22,342) | (96,397) | (53,863) | |||||||||||||
Other income, net | 271 | 588 | 3,700 | 1,620 | |||||||||||||
Net income (loss) before income taxes | 37,301 | (97,048) | 72,644 | (242,896) | |||||||||||||
(Provision) benefit for income taxes | (16,220) | 33,531 | (31,387) | 88,864 | |||||||||||||
Net income (loss) | $ | 21,081 | $ | (63,517) | $ | 41,257 | $ | (154,032) | |||||||||
Less: net income (loss) attributable to noncontrolling interests | 1,889 | (421) | (290) | (1,934) | |||||||||||||
Net income (loss) attributable to MIC | $ | 19,192 | $ | (63,096) | $ | 41,547 | $ | (152,098) | |||||||||
Basic income (loss) per share attributable to MIC | $ | 0.24 | $ | (0.80) | $ | 0.52 | $ | (2.00) | |||||||||
Weighted average number of shares outstanding: basic | 80,369,575 | 79,246,069 | 80,241,293 | 76,214,929 | |||||||||||||
Diluted income (loss) per share attributable to MIC | $ | 0.24 | $ | (0.80) | $ | 0.51 | $ | (2.00) | |||||||||
Weighted average number of shares outstanding: diluted | 81,323,294 | 79,246,069 | 81,194,505 | 76,214,929 | |||||||||||||
Cash dividends declared per share | $ | 1.25 | $ | 1.11 | $ | 2.45 | $ | 2.18 | |||||||||
(1) Interest expense includes losses on derivative instruments of
$14.9 million and $46.7 million for the quarter and six months ended
June 30,
2016, respectively. For the quarter and six months ended June 30, 2015, interest expense includes gains on derivative instruments of $3.5 million and losses on derivative instruments of $8.9 million, respectively. |
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MACQUARIE INFRASTRUCTURE CORPORATION | ||||||||
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
($ in Thousands) | ||||||||
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
Operating activities | ||||||||
Net income (loss) | $ | 41,257 | $ | (154,032) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization of property and equipment | 112,883 | 109,223 | ||||||
Amortization of intangible assets | 34,500 | 65,873 | ||||||
Amortization of debt financing costs | 5,249 | 4,566 | ||||||
Adjustments to derivative instruments | 29,030 | (40,465) | ||||||
Fees to Manager- related party | 31,188 | 252,012 | ||||||
Deferred taxes | 27,219 | (89,312) | ||||||
Other non-cash expense, net | 2,646 | 3,390 | ||||||
Changes in other assets and liabilities, net of acquisitions: | ||||||||
Restricted cash | 2,368 | 2,071 | ||||||
Accounts receivable | (1,788) | (13,081) | ||||||
Inventories | (2,104) | (152) | ||||||
Prepaid expenses and other current assets | 9,498 | 3,580 | ||||||
Due to Manager - related party | 90 | 67,813 | ||||||
Accounts payable and accrued expenses | (13,789) | (10,489) | ||||||
Income taxes payable | 1,393 | (5,461) | ||||||
Other, net | (1,722) | (1,592) | ||||||
Net cash provided by operating activities | 277,918 | 193,944 | ||||||
Investing activities | ||||||||
Acquisitions of businesses and investments, net of cash acquired | (16,613) | (236,956) | ||||||
Purchases of property and equipment | (118,734) | (50,025) | ||||||
Proceeds from insurance claim | 7,235 | - | ||||||
Other, net | 513 | 522 | ||||||
Net cash used in investing activities | (127,599) | (286,459) | ||||||
Financing activities | ||||||||
Proceeds from long-term debt | $ | 251,000 | $ | 1,654,569 | ||||
Payment of long-term debt | (216,581) | (1,744,761) | ||||||
Proceeds from the issuance of shares | 1,323 | 488,125 | ||||||
Dividends paid to common stockholders | (188,608) | (162,967) | ||||||
Contributions received from noncontrolling interests | 15,431 | 532 | ||||||
Purchase of noncontrolling interest | (9,909) | - | ||||||
Distributions paid to noncontrolling interests | (2,505) | (1,238) | ||||||
Offering and equity raise costs paid | (149) | (16,540) | ||||||
Debt financing costs paid | (1,203) | (14,293) | ||||||
Change in restricted cash | 2,096 | 10,975 | ||||||
Payment of capital lease obligations | (789) | (1,419) | ||||||
Net cash (used in) provided by financing activities | (149,894) | 212,983 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 442 | (298) | ||||||
Net change in cash and cash equivalents | 867 | 120,170 | ||||||
Cash and cash equivalents, beginning of period | 22,394 | 48,014 | ||||||
Cash and cash equivalents, end of period | $ | 23,261 | $ | 168,184 | ||||
Supplemental disclosures of cash flow information | ||||||||
Non-cash investing and financing activities: | ||||||||
Accrued equity offering costs | $ | 260 | $ | 168 | ||||
Accrued financing costs | $ | 443 | $ | 887 | ||||
Accrued purchases of property and equipment | $ | 20,794 | $ | 16,359 | ||||
Acquisition of equipment through capital leases | $ | - | $ | 398 | ||||
Issuance of shares to Manager | $ | 30,977 | $ | 182,513 | ||||
Issuance of shares to independent directors | $ | 750 | $ | 750 | ||||
Conversion of convertible senior notes to shares | $ | 4 | $ | 25 | ||||
Conversion of LLC interests to common stock(1) | $ | - | $ | 79 | ||||
Conversion of LLC interests to additional paid in capital(1) | $ | - | $ | 2,428,334 | ||||
Distributions payable to noncontrolling interests | $ | - | $ | 39 | ||||
Taxes paid, net | $ | 2,766 | $ | 5,909 | ||||
Interest paid | $ | 55,956 | $ | 54,209 | ||||
______________ | ||||||||
(1) See Note 8, "Stockholders' Equity", for discussion on common stock, LLC interests and additional paid in capital. | ||||||||
MACQUARIE INFRASTRUCTURE CORPORATION |
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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – MD&A |
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Quarter Ended
June 30, |
Change
Favorable/(Unfavorable) |
Six Months Ended
June 30, |
Change
Favorable/(Unfavorable) |
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2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||
($ In Thousands, Except Share and Per Share Data) (Unaudited) |
||||||||||||||||||||||
Revenue | ||||||||||||||||||||||
Service revenue | $ | 306,221 | $ | 327,809 | (21,588) | (6.6) | $ | 618,462 | $ | 653,811 | (35,349) | (5.4) | ||||||||||
Product revenue | 91,358 | 95,880 | (4,522) | (4.7) | 175,504 | 168,376 | 7,128 | 4.2 | ||||||||||||||
Total revenue | 397,579 | 423,689 | (26,110) | (6.2) | 793,966 | 822,187 | (28,221) | (3.4) | ||||||||||||||
Costs and expenses | ||||||||||||||||||||||
Cost of services(1) | 120,857 | 148,417 | 27,560 | 18.6 | 237,320 | 281,834 | 44,514 | 15.8 | ||||||||||||||
Cost of product sales(1) | 35,018 | 45,247 | 10,229 | 22.6 | 68,078 | 84,374 | 16,296 | 19.3 | ||||||||||||||
Gross profit | 241,704 | 230,025 | 11,679 | 5.1 | 488,568 | 455,979 | 32,589 | 7.1 | ||||||||||||||
Selling, general and administrative | 72,430 | 81,064 | 8,634 | 10.7 | 144,714 | 151,717 | 7,003 | 4.6 | ||||||||||||||
Fees to Manager - related party | 16,392 | 154,559 | 138,167 | 89.4 | 31,188 | 319,832 | 288,644 | 90.2 | ||||||||||||||
Depreciation | 59,662 | 51,801 | (7,861) | (15.2) | 112,883 | 109,223 | (3,660) | (3.4) | ||||||||||||||
Amortization of intangibles | 16,713 | 17,902 | 1,189 | 6.6 | 34,500 | 65,873 | 31,373 | 47.6 | ||||||||||||||
Total operating expenses | 165,197 | 305,326 | 140,129 | 45.9 | 323,285 | 646,645 | 323,360 | 50.0 | ||||||||||||||
Operating income (loss) | 76,507 | (75,301) | 151,808 | NM | 165,283 | (190,666) | 355,949 | 186.7 | ||||||||||||||
Other income (expense) | ||||||||||||||||||||||
Interest income | 25 | 7 | 18 | NM | 58 | 13 | 45 | NM | ||||||||||||||
Interest expense(2) | (39,502) | (22,342) | (17,160) | (76.8) | (96,397) | (53,863) | (42,534) | (79.0) | ||||||||||||||
Other income, net | 271 | 588 | (317) | (53.9) | 3,700 | 1,620 | 2,080 | 128.4 | ||||||||||||||
Net income (loss) before income taxes | 37,301 | (97,048) | 134,349 | 138.4 | 72,644 | (242,896) | 315,540 | 129.9 | ||||||||||||||
(Provision) benefit for income taxes | (16,220) | 33,531 | (49,751) | (148.4) | (31,387) | 88,864 | (120,251) | (135.3) | ||||||||||||||
Net income (loss) | $ | 21,081 | $ | (63,517) | 84,598 | 133.2 | $ | 41,257 | $ | (154,032) | 195,289 | 126.8 | ||||||||||
Less: net income (loss) attributable to noncontrolling interests | 1,889 | (421) | (2,310) | NM | (290) | (1,934) | (1,644) | (85.0) | ||||||||||||||
Net income (loss) attributable to MIC | $ | 19,192 | $ | (63,096) | 82,288 | 130.4 | $ | 41,547 | $ | (152,098) | 193,645 | 127.3 | ||||||||||
Basic income (loss) per share attributable to MIC | $ | 0.24 | $ | (0.80) | 1.04 | 130.0 | $ | 0.52 | $ | (2.00) | 2.52 | 126.0 | ||||||||||
Weighted average number of shares outstanding: basic | 80,369,575 | 79,246,069 | 1,123,506 | 1.4 | 80,241,293 | 76,214,929 | 4,026,364 | 5.3 | ||||||||||||||
NM - Not meaningful | ||||||||||||||||||||||
(1) Cost of services and cost of product sales exclude depreciation. | ||||||||||||||||||||||
(2) Interest expense includes losses on derivative instruments of $14.9 million and $46.7 million for the quarter and six months ended June 30, 2016, respectively. For the quarter and six months ended June 30, 2015, interest expense includes gains on derivative instruments of $3.5 million and losses on derivative instruments of $8.9 million, respectively. |
MACQUARIE INFRASTRUCTURE CORPORATION |
||||||||||||||||||||||||
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND TO FREE CASH FLOW |
||||||||||||||||||||||||
Quarter Ended
June 30, |
Change
Favorable/(Unfavorable) |
Six Months Ended
June 30, |
Change
Favorable/(Unfavorable) |
|||||||||||||||||||||
2016 | 2015 | $ | % | 2016 | 2015 | $ | % | |||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||
Net income (loss) | $ | 21,081 | $ | (63,517) | $ | 41,257 | $ | (154,032) | ||||||||||||||||
Interest expense, net(1) | 39,477 | 22,335 | 96,339 | 53,850 | ||||||||||||||||||||
Provision (benefit) for income taxes | 16,220 | (33,531) | 31,387 | (88,864) | ||||||||||||||||||||
Depreciation | 59,662 | 51,801 | 112,883 | 109,223 | ||||||||||||||||||||
Amortization of intangibles | 16,713 | 17,902 | 34,500 | 65,873 | ||||||||||||||||||||
Fees to Manager- related party(2) | 16,392 | 154,559 | 31,188 | 319,832 | ||||||||||||||||||||
Other non-cash (income) expense, net (3) | (2,761) | 2,433 | (4,795) | 1,344 | ||||||||||||||||||||
EBITDA excluding non-cash items | $ | 166,784 | $ | 151,982 | 14,802 | 9.7 | $ | 342,759 | $ | 307,226 | 35,533 | 11.6 | ||||||||||||
EBITDA excluding non-cash items | $ | 166,784 | $ | 151,982 | $ | 342,759 | $ | 307,226 | ||||||||||||||||
Interest expense, net(1) | (39,477) | (22,335) | (96,339) | (53,850) | ||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense(1) | 9,866 | (12,387) | 36,471 | (7,034) | ||||||||||||||||||||
Amortization of debt financing costs(1) | 2,370 | 2,951 | 5,249 | 4,566 | ||||||||||||||||||||
Interest rate swap breakage fees | - | (31,385) | - | (31,385) | ||||||||||||||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | (1,662) | 357 | (4,168) | (448) | ||||||||||||||||||||
Maintenance capital expenditures | (9,840) | (11,390) | (20,253) | (17,505) | ||||||||||||||||||||
Free cash flow | $ | 128,041 | $ | 77,793 | 50,248 | 64.6 | $ | 263,719 | $ | 201,570 | 62,149 | 30.8 | ||||||||||||
(1) Interest expense, net, includes adjustment to derivative instruments and non-cash amortization of deferred financing fees. Interest expense also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas for the six months ended June 30, 2016 and a non-cash write-off of deferred financing costs related to the May 2015 refinancing at IMTT for the quarter and six months ended June 30, 2015. |
||||||||||||||||||||||||
(2) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 monthly volume weighted average share price of $71.84. |
||||||||||||||||||||||||
(3) Other non-cash (income) expense, net, primarily includes non-cash pension expense, amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. |
||||||||||||||||||||||||
MACQUARIE INFRASTRUCTURE CORPORATION |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO PROPORTIONATELY COMBINED FREE CASH FLOW |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
Quarter Ended
June 30, |
Change
Favorable/(Unfavorable) |
Six Months Ended
June 30, |
Change Favorable/(Unfavorable) |
||||||||||||||||||||
2016 | 2015 | $ | % | 2016 | 2015 | $ | % | ||||||||||||||||
($ In Thousands) (Unaudited) | |||||||||||||||||||||||
Free Cash Flow- Consolidated basis | $ | 128,041 | $ | 77,793 | 50,248 | 64.6 | $ | 263,719 | $ | 201,570 | 62,149 | 30.8 | |||||||||||
100% of CP&E Free Cash Flow included in consolidated Free Cash Flow | (17,871) | (4,341) | (29,814) | (7,030) | |||||||||||||||||||
MIC's share of CP&E Free Cash Flow | 16,147 | 2,863 | 25,807 | 4,456 | |||||||||||||||||||
Free Cash Flow- Proportionately Combined basis | $ | 126,317 | $ | 76,315 | 50,002 | 65.5 | $ | 259,712 | $ | 198,996 | 60,716 | 30.5 | |||||||||||
MACQUARIE INFRASTRUCTURE CORPORATION |
|||||||||||||||||||
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND TO FREE CASH FLOW |
|||||||||||||||||||
IMTT |
|||||||||||||||||||
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||||||
2016 | 2015 |
Change |
2016 | 2015 |
Change (Unfavorable) |
||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | ||||||||||||
($ In Thousands) (Unaudited) | |||||||||||||||||||
Revenues | 128,218 | 142,384 | (14,166) | (9.9) | 263,643 | 280,445 | (16,802) | (6.0) | |||||||||||
Cost of services(1) | 46,459 | 61,052 | 14,593 | 23.9 | 96,760 | 114,643 | 17,883 | 15.6 | |||||||||||
Gross profit | 81,759 | 81,332 | 427 | 0.5 | 166,883 | 165,802 | 1,081 | 0.7 | |||||||||||
General and administrative expenses | 7,790 | 8,302 | 512 | 6.2 | 15,964 | 16,006 | 42 | 0.3 | |||||||||||
Depreciation and amortization | 35,282 | 31,673 | (3,609) | (11.4) | 67,903 | 67,552 | (351) | (0.5) | |||||||||||
Operating income | 38,687 | 41,357 | (2,670) | (6.5) | 83,016 | 82,244 | 772 | 0.9 | |||||||||||
Interest expense, net(2) | (13,764) | (6,263) | (7,501) | (119.8) | (33,635) | (13,169) | (20,466) | (155.4) | |||||||||||
Other income, net | 464 | 769 | (305) | (39.7) | 3,452 | 1,401 | 2,051 | 146.4 | |||||||||||
Provision for income taxes | (10,409) | (14,659) | 4,250 | 29.0 | (21,638) | (28,748) | 7,110 | 24.7 | |||||||||||
Net income(3) | 14,978 | 21,204 | (6,226) | (29.4) | 31,195 | 41,728 | (10,533) | (25.2) | |||||||||||
Less: net income attributable to noncontrolling interests | - | 108 | 108 | 100.0 | 59 | 358 | 299 | 83.5 | |||||||||||
Net income attributable to MIC(3) | 14,978 | 21,096 | (6,118) | (29.0) | 31,136 | 41,370 | (10,234) | (24.7) | |||||||||||
Reconciliation of net income to EBITDA excluding non-cash items and Free Cash Flow: | |||||||||||||||||||
Net income(3) | 14,978 | 21,204 | 31,195 | 41,728 | |||||||||||||||
Interest expense, net(2) | 13,764 | 6,263 | 33,635 | 13,169 | |||||||||||||||
Provision for income taxes | 10,409 | 14,659 | 21,638 | 28,748 | |||||||||||||||
Depreciation and amortization | 35,282 | 31,673 | 67,903 | 67,552 | |||||||||||||||
Other non-cash expense, net (4) | 1,946 | 1,849 | 4,220 | 2,855 | |||||||||||||||
EBITDA excluding non-cash items | 76,379 | 75,648 | 731 | 1.0 | 158,591 | 154,052 | 4,539 | 2.9 | |||||||||||
EBITDA excluding non-cash items | 76,379 | 75,648 | 158,591 | 154,052 | |||||||||||||||
Interest expense, net(2) | (13,764) | (6,263) | (33,635) | (13,169) | |||||||||||||||
Adjustments to derivative instruments recorded in interest expense(2) | 3,546 | (3,955) | 13,156 | (6,334) | |||||||||||||||
Amortization of debt financing costs(2) | 411 | 1,416 | 831 | 1,529 | |||||||||||||||
Interest rate swap breakage fees | - | (31,385) | - | (31,385) | |||||||||||||||
Provision for income taxes, net of changes in deferred taxes | (937) | 473 | (2,167) | (104) | |||||||||||||||
Maintenance capital expenditures | (6,942) | (6,043) | (13,239) | (8,514) | |||||||||||||||
Free cash flow | 58,693 | 29,891 | 28,802 | 96.4 | 123,537 | 96,075 | 27,462 | 28.6 | |||||||||||
_____________________ | |||||||||||||||||||
(1) Cost of services excludes depreciation. | |||||||||||||||||||
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. For the quarter and six months ended June 30, 2015, interest expense also includes non-cash write-off of deferred financing costs related to the May 2015 refinancing. |
|||||||||||||||||||
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation. |
|||||||||||||||||||
(4) Other non-cash expense, net, primarily includes non-cash adjustments related to pension expense and non-cash gains (losses) related to disposal of assets. | |||||||||||||||||||
Atlantic Aviation |
||||||||||||||||||
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
|||||||||||||||
2016 | 2015 |
Change |
2016 | 2015 |
Change (Unfavorable) |
|||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||
Revenues | 179,218 | 185,425 | (6,207) | (3.3) | 357,206 | 373,366 | (16,160) | (4.3) | ||||||||||
Cost of services(1) | 74,440 | 87,365 | 12,925 | 14.8 | 140,602 | 167,191 | 26,589 | 15.9 | ||||||||||
Gross profit | 104,778 | 98,060 | 6,718 | 6.9 | 216,604 | 206,175 | 10,429 | 5.1 | ||||||||||
Selling, general and administrative expenses | 51,381 | 50,037 | (1,344) | (2.7) | 103,992 | 102,046 | (1,946) | (1.9) | ||||||||||
Depreciation and amortization | 24,702 | 21,810 | (2,892) | (13.3) | 46,893 | 81,525 | 34,632 | 42.5 | ||||||||||
Operating income | 28,695 | 26,213 | 2,482 | 9.5 | 65,719 | 22,604 | 43,115 | 190.7 | ||||||||||
Interest expense, net(2) | (8,924) | (5,605) | (3,319) | (59.2) | (22,238) | (18,690) | (3,548) | (19.0) | ||||||||||
Other (expense) income, net | (49) | (65) | 16 | 24.6 | 341 | (637) | 978 | 153.5 | ||||||||||
Provision for income taxes | (7,973) | (8,275) | 302 | 3.6 | (17,715) | (1,586) | (16,129) | NM | ||||||||||
Net income(3) | 11,749 | 12,268 | (519) | (4.2) | 26,107 | 1,691 | 24,416 | NM | ||||||||||
Reconciliation of net income to EBITDA excluding non-cash
items and Free Cash Flow: |
||||||||||||||||||
Net income(3) | 11,749 | 12,268 | 26,107 | 1,691 | ||||||||||||||
Interest expense, net(2) | 8,924 | 5,605 | 22,238 | 18,690 | ||||||||||||||
Provision for income taxes | 7,973 | 8,275 | 17,715 | 1,586 | ||||||||||||||
Depreciation and amortization | 24,702 | 21,810 | 46,893 | 81,525 | ||||||||||||||
Other non-cash expense, net (4) | 356 | 748 | 282 | 1,473 | ||||||||||||||
EBITDA excluding non-cash items | 53,704 | 48,706 | 4,998 | 10.3 | 113,235 | 104,965 | 8,270 | 7.9 | ||||||||||
EBITDA excluding non-cash items | 53,704 | 48,706 | 113,235 | 104,965 | ||||||||||||||
Interest expense, net(2) | (8,924) | (5,605) | (22,238) | (18,690) | ||||||||||||||
Adjustments to derivative instruments recorded in interest expense(2) | 1,179 | (2,485) | 6,787 | 2,581 | ||||||||||||||
Amortization of debt financing costs(2) | 905 | 806 | 1,705 | 1,614 | ||||||||||||||
Provision for income taxes, net of changes in deferred taxes | (910) | (278) | (2,362) | (633) | ||||||||||||||
Maintenance capital expenditures | (1,457) | (3,558) | (3,741) | (6,181) | ||||||||||||||
Free cash flow | 44,497 | 37,586 | 6,911 | 18.4 | 93,386 | 83,656 | 9,730 | 11.6 | ||||||||||
_____________________ | ||||||||||||||||||
NM - Not meaningful | ||||||||||||||||||
(1) Cost of services excludes depreciation. | ||||||||||||||||||
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. | ||||||||||||||||||
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation. | ||||||||||||||||||
(4) Other non-cash expense, net, primarily includes non-cash gains (losses) related to disposal of assets. | ||||||||||||||||||
Contracted Power and Energy |
||||||||||||||||||
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
|||||||||||||||
2016 | 2015 |
Change |
2016 | 2015 |
Change (Unfavorable) |
|||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||
Revenues | 38,300 | 36,121 | 2,179 | 6.0 | 68,479 | 47,953 | 20,526 | 42.8 | ||||||||||
Cost of product sales(1) | 5,794 | 5,136 | (658) | (12.8) | 10,151 | 7,783 | (2,368) | (30.4) | ||||||||||
Gross profit | 32,506 | 30,985 | 1,521 | 4.9 | 58,328 | 40,170 | 18,158 | 45.2 | ||||||||||
Selling, general and administrative expenses | 6,547 | 14,170 | 7,623 | 53.8 | 12,507 | 16,808 | 4,301 | 25.6 | ||||||||||
Depreciation and amortization | 13,847 | 13,854 | 7 | 0.1 | 27,693 | 21,299 | (6,394) | (30.0) | ||||||||||
Operating income | 12,112 | 2,961 | 9,151 | NM | 18,128 | 2,063 | 16,065 | NM | ||||||||||
Interest expense, net(2) | (11,002) | (4,945) | (6,057) | (122.5) | (28,850) | (11,283) | (17,567) | (155.7) | ||||||||||
Other income | 3 | - | 3 | NM | 308 | 1,116 | (808) | (72.4) | ||||||||||
(Provision) benefit for income taxes | (1,917) | (3,683) | 1,766 | 48.0 | 387 | (2,865) | 3,252 | 113.5 | ||||||||||
Net loss(3) | (804) | (5,667) | 4,863 | 85.8 | (10,027) | (10,969) | 942 | 8.6 | ||||||||||
Less: net income (loss) attributable to noncontrolling interests | 1,889 | (529) | (2,418) | NM | (349) | (2,292) | (1,943) | (84.8) | ||||||||||
Net loss attributable to MIC(3) | (2,693) | (5,138) | 2,445 | 47.6 | (9,678) | (8,677) | (1,001) | (11.5) | ||||||||||
Reconciliation of net loss to EBITDA excluding non-cash items and Free Cash Flow: | ||||||||||||||||||
Net loss(3) | (804) | (5,667) | (10,027) | (10,969) | ||||||||||||||
Interest expense, net(2) | 11,002 | 4,945 | 28,850 | 11,283 | ||||||||||||||
Provision (benefit) for income taxes | 1,917 | 3,683 | (387) | 2,865 | ||||||||||||||
Depreciation and amortization | 13,847 | 13,854 | 27,693 | 21,299 | ||||||||||||||
Other non-cash income, net (4) | (1,945) | (1,570) | (3,965) | (2,748) | ||||||||||||||
EBITDA excluding non-cash items | 24,017 | 15,245 | 8,772 | 57.5 | 42,164 | 21,730 | 20,434 | 94.0 | ||||||||||
EBITDA excluding non-cash items | 24,017 | 15,245 | 42,164 | 21,730 | ||||||||||||||
Interest expense, net(2) | (11,002) | (4,945) | (28,850) | (11,283) | ||||||||||||||
Adjustments to derivative instruments recorded in interest expense(2) | 4,504 | (5,939) | 15,772 | (3,412) | ||||||||||||||
Amortization of debt financing costs(2) | 354 | 31 | 737 | 48 | ||||||||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | (2) | - | (9) | (2) | ||||||||||||||
Maintenance capital expenditures | - | (51) | - | (51) | ||||||||||||||
Free cash flow | 17,871 | 4,341 | 13,530 | NM | 29,814 | 7,030 | 22,784 | NM | ||||||||||
_____________________ | ||||||||||||||||||
NM- Not meaningful | ||||||||||||||||||
(1) Cost of product sales excludes depreciation. | ||||||||||||||||||
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. | ||||||||||||||||||
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation. | ||||||||||||||||||
(4) Other non-cash income, net, primarily includes amortization of tolling liabilities. | ||||||||||||||||||
Hawaii Gas |
||||||||||||||||||
Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
|||||||||||||||
2016 | 2015 |
Change |
2016 | 2015 |
Change (Unfavorable) |
|||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||
Revenues | 53,058 | 59,759 | (6,701) | (11.2) | 107,025 | 120,423 | (13,398) | (11.1) | ||||||||||
Cost of product sales(1) | 29,224 | 40,111 | 10,887 | 27.1 | 57,927 | 76,591 | 18,664 | 24.4 | ||||||||||
Gross profit | 23,834 | 19,648 | 4,186 | 21.3 | 49,098 | 43,832 | 5,266 | 12.0 | ||||||||||
Selling, general and administrative expenses | 4,434 | 4,862 | 428 | 8.8 | 9,690 | 10,218 | 528 | 5.2 | ||||||||||
Depreciation and amortization | 2,544 | 2,366 | (178) | (7.5) | 4,894 | 4,720 | (174) | (3.7) | ||||||||||
Operating income | 16,856 | 12,420 | 4,436 | 35.7 | 34,514 | 28,894 | 5,620 | 19.5 | ||||||||||
Interest expense, net(2) | (2,229) | (1,806) | (423) | (23.4) | (4,653) | (3,749) | (904) | (24.1) | ||||||||||
Other expense, net | (147) | (116) | (31) | (26.7) | (401) | (260) | (141) | (54.2) | ||||||||||
Provision for income taxes | (5,706) | (4,068) | (1,638) | (40.3) | (11,617) | (9,600) | (2,017) | (21.0) | ||||||||||
Net income(3) | 8,774 | 6,430 | 2,344 | 36.5 | 17,843 | 15,285 | 2,558 | 16.7 | ||||||||||
Reconciliation of net income to EBITDA excluding non-cash items and Free Cash Flow: | ||||||||||||||||||
Net income(3) | 8,774 | 6,430 | 17,843 | 15,285 | ||||||||||||||
Interest expense, net(2) | 2,229 | 1,806 | 4,653 | 3,749 | ||||||||||||||
Provision for income taxes | 5,706 | 4,068 | 11,617 | 9,600 | ||||||||||||||
Depreciation and amortization | 2,544 | 2,366 | 4,894 | 4,720 | ||||||||||||||
Other non-cash (income) expense, net(4) | (3,305) | 1,219 | (5,707) | (611) | ||||||||||||||
EBITDA excluding non-cash items | 15,948 | 15,889 | 59 | 0.4 | 33,300 | 32,743 | 557 | 1.7 | ||||||||||
EBITDA excluding non-cash items | 15,948 | 15,889 | 33,300 | 32,743 | ||||||||||||||
Interest expense, net(2) | (2,229) | (1,806) | (4,653) | (3,749) | ||||||||||||||
Adjustments to derivative instruments recorded in interest expense(2) | 637 | (8) | 756 | 131 | ||||||||||||||
Amortization of debt financing costs(2) | 88 | 120 | 752 | 241 | ||||||||||||||
Provision for income taxes, net of changes in deferred taxes | (2,129) | - | (5,146) | - | ||||||||||||||
Maintenance capital expenditures | (1,441) | (1,738) | (3,273) | (2,759) | ||||||||||||||
Free cash flow | 10,874 | 12,457 | (1,583) | (12.7) | 21,736 | 26,607 | (4,871) | (18.3) | ||||||||||
_____________________ | ||||||||||||||||||
(1) Cost of product sales includes unrealized gains (losses) on commodity hedges and excludes depreciation. | ||||||||||||||||||
(2) Interest expense, net, includes adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees. For the six months ended June 30, 2016, interest expense also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing. |
||||||||||||||||||
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation. | ||||||||||||||||||
(4) Other non-cash (income) expense, net, primarily includes non-cash adjustments related to pension expense and unrealized gains (losses) on commodity hedges. | ||||||||||||||||||
Corporate and Other |
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Quarter Ended
June 30, |
|
Six Months Ended
June 30, |
|
||||||||||||||||
2016 | 2015 |
Change |
2016 | 2015 |
Change (Unfavorable) |
||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | ||||||||||||
($ In Thousands) (Unaudited) | |||||||||||||||||||
Fees to Manager-related party | 16,392 | 154,559 | 138,167 | 89.4 | 31,188 | 319,832 | 288,644 | 90.2 | |||||||||||
Selling, general and administrative expenses | 3,451 | 3,693 | 242 | 6.6 | 4,906 | 6,639 | 1,733 | 26.1 | |||||||||||
Operating loss | (19,843) | (158,252) | 138,409 | 87.5 | (36,094) | (326,471) | 290,377 | 88.9 | |||||||||||
Interest expense, net(1) | (3,558) | (3,716) | 158 | 4.3 | (6,963) | (6,959) | (4) | (0.1) | |||||||||||
Benefit for income taxes | 9,785 | 64,216 | (54,431) | (84.8) | 19,196 | 131,663 | (112,467) | (85.4) | |||||||||||
Net loss(2) | (13,616) | (97,752) | 84,136 | 86.1 | (23,861) | (201,767) | 177,906 | 88.2 | |||||||||||
Reconciliation of net loss to EBITDA excluding non-cash items and Free Cash Flow: | |||||||||||||||||||
Net loss(2) | (13,616) | (97,752) | (23,861) | (201,767) | |||||||||||||||
Interest expense, net(1) | 3,558 | 3,716 | 6,963 | 6,959 | |||||||||||||||
Benefit for income taxes | (9,785) | (64,216) | (19,196) | (131,663) | |||||||||||||||
Fees to Manager-related party(3) | 16,392 | 154,559 | 31,188 | 319,832 | |||||||||||||||
Other non-cash expense, net | 187 | 187 | 375 | 375 | |||||||||||||||
EBITDA excluding non-cash items | (3,264) | (3,506) | 242 | 6.9 | (4,531) | (6,264) | 1,733 | 27.7 | |||||||||||
EBITDA excluding non-cash items | (3,264) | (3,506) | (4,531) | (6,264) | |||||||||||||||
Interest expense, net (1) | (3,558) | (3,716) | (6,963) | (6,959) | |||||||||||||||
Amortization of debt financing costs(1) | 612 | 578 | 1,224 | 1,134 | |||||||||||||||
Benefit for income taxes, net of changes in deferred taxes | 2,316 | 162 | 5,516 | 291 | |||||||||||||||
Free cash flow | (3,894) | (6,482) | 2,588 | 39.9 | (4,754) | (11,798) | 7,044 | 59.7 | |||||||||||
_____________________ | |||||||||||||||||||
(1) Interest expense, net, includes non-cash amortization of deferred financing fees. | |||||||||||||||||||
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation. | |||||||||||||||||||
(3) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 monthly volume weighted average share price of $71.84. |
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MACQUARIE INFRASTRUCTURE CORPORATION |
||||||||||||||||
RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO |
||||||||||||||||
For the Quarter Ended June 30, 2016 | ||||||||||||||||
($ in Thousands) (Unaudited) | IMTT |
Atlantic |
Contracted |
Hawaii Gas | MIC Corporate |
Proportionately |
Contracted Power |
|||||||||
Net income (loss) | 14,978 | 11,749 | (153) | 8,774 | (13,616) | 21,732 | (804) | |||||||||
Interest expense, net(3) | 13,764 | 8,924 | 9,661 | 2,229 | 3,558 | 38,136 | 11,002 | |||||||||
Provision (benefit) for income taxes | 10,409 | 7,973 | 1,915 | 5,706 | (9,785) | 16,218 | 1,917 | |||||||||
Depreciation and amortization of intangibles | 35,282 | 24,702 | 11,973 | 2,544 | - | 74,501 | 13,847 | |||||||||
Fees to Manager-related party | - | - | - | - | 16,392 | 16,392 | - | |||||||||
Other non-cash expense (income), net(4) | 1,946 | 356 | (1,945) | (3,305) | 187 | (2,761) | (1,945) | |||||||||
EBITDA excluding non-cash items | 76,379 | 53,704 | 21,451 | 15,948 | (3,264) | 164,218 | 24,017 | |||||||||
EBITDA excluding non-cash items | 76,379 | 53,704 | 21,451 | 15,948 | (3,264) | 164,218 | 24,017 | |||||||||
Interest expense, net(3) | (13,764) | (8,924) | (9,661) | (2,229) | (3,558) | (38,136) | (11,002) | |||||||||
Adjustments to derivative instruments recorded in interest expense, net(3) | 3,546 | 1,179 | 4,019 | 637 | - | 9,381 | 4,504 | |||||||||
Amortization of deferred finance charges(3) | 411 | 905 | 340 | 88 | 612 | 2,356 | 354 | |||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | (937) | (910) | (2) | (2,129) | 2,316 | (1,662) | (2) | |||||||||
Maintenance capital expenditures | (6,942) | (1,457) | - | (1,441) | - | (9,840) | - | |||||||||
Free cash flow | 58,693 | 44,497 | 16,147 | 10,874 | (3,894) | 126,317 | 17,871 | |||||||||
For the Quarter Ended June 30, 2015 | ||||||||||||||||
($ in Thousands) (Unaudited) | IMTT (5) |
Atlantic |
Contracted |
Hawaii Gas | MIC Corporate |
Proportionately |
Contracted Power |
|||||||||
Net income (loss) | 21,204 | 12,268 | (6,151) | 6,430 | (97,752) | (64,001) | (5,667) | |||||||||
Interest expense, net(3) | 6,263 | 5,605 | 4,854 | 1,806 | 3,716 | 22,244 | 4,945 | |||||||||
Provision (benefit) for income taxes | 14,659 | 8,275 | 3,683 | 4,068 | (64,216) | (33,531) | 3,683 | |||||||||
Depreciation and amortization of intangibles | 31,673 | 21,810 | 11,983 | 2,366 | - | 67,832 | 13,854 | |||||||||
Fees to Manager-related party(6) | - | - | - | - | 154,559 | 154,559 | - | |||||||||
Other non-cash expense (income), net(4) | 1,849 | 748 | (1,570) | 1,219 | 187 | 2,433 | (1,570) | |||||||||
EBITDA excluding non-cash items | 75,648 | 48,706 | 12,799 | 15,889 | (3,506) | 149,536 | 15,245 | |||||||||
EBITDA excluding non-cash items | 75,648 | 48,706 | 12,799 | 15,889 | (3,506) | 149,536 | 15,245 | |||||||||
Interest expense, net(3) | (6,263) | (5,605) | (4,854) | (1,806) | (3,716) | (22,244) | (4,945) | |||||||||
Adjustments to derivative instruments recorded in interest expense, net(3) | (3,955) | (2,485) | (5,056) | (8) | - | (11,504) | (5,939) | |||||||||
Amortization of deferred finance charges(3) | 1,416 | 806 | 25 | 120 | 578 | 2,945 | 31 | |||||||||
Interest rate swap breakage fees | (31,385) | - | - | - | - | (31,385) | - | |||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | 473 | (278) | - | - | 162 | 357 | - | |||||||||
Maintenance capital expenditures | (6,043) | (3,558) | (51) | (1,738) | - | (11,390) | (51) | |||||||||
Free cash flow | 29,891 | 37,586 | 2,863 | 12,457 | (6,482) | 76,315 | 4,341 | |||||||||
MACQUARIE INFRASTRUCTURE CORPORATION |
||||||||||||||||
RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO |
||||||||||||||||
For the Six Months Ended June 30, 2016 | ||||||||||||||||
($ in Thousands) (Unaudited) | IMTT(5) |
Atlantic |
Contracted |
Hawaii Gas | MIC Corporate |
Proportionately |
Contracted Power |
|||||||||
Net income (loss) | 31,195 | 26,107 | (8,593) | 17,843 | (23,861) | 42,691 | (10,027) | |||||||||
Interest expense, net(3) | 33,635 | 22,238 | 25,449 | 4,653 | 6,963 | 92,938 | 28,850 | |||||||||
Provision (benefit) for income taxes | 21,638 | 17,715 | (389) | 11,617 | (19,196) | 31,385 | (387) | |||||||||
Depreciation and amortization | 67,903 | 46,893 | 23,945 | 4,894 | - | 143,635 | 27,693 | |||||||||
Fees to Manager-related party | - | - | - | - | 31,188 | 31,188 | - | |||||||||
Other non-cash expense (income), net(4) | 4,220 | 282 | (3,946) | (5,707) | 375 | (4,776) | (3,965) | |||||||||
EBITDA excluding non-cash items | 158,591 | 113,235 | 36,466 | 33,300 | (4,531) | 337,061 | 42,164 | |||||||||
EBITDA excluding non-cash items | 158,591 | 113,235 | 36,466 | 33,300 | (4,531) | 337,061 | 42,164 | |||||||||
Interest expense, net(3) | (33,635) | (22,238) | (25,449) | (4,653) | (6,963) | (92,938) | (28,850) | |||||||||
Adjustments to derivative instruments recorded in interest expense, net(3) | 13,156 | 6,787 | 14,090 | 756 | - | 34,789 | 15,772 | |||||||||
Amortization of deferred finance charges(3) | 831 | 1,705 | 709 | 752 | 1,224 | 5,221 | 737 | |||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | (2,167) | (2,362) | (9) | (5,146) | 5,516 | (4,168) | (9) | |||||||||
Maintenance capital expenditures | (13,239) | (3,741) | - | (3,273) | - | (20,253) | - | |||||||||
Free cash flow | 123,537 | 93,386 | 25,807 | 21,736 | (4,754) | 259,712 | 29,814 | |||||||||
For the Six Months Ended June 30, 2015 | ||||||||||||||||
($ in Thousands) (Unaudited) | IMTT (5) |
Atlantic |
Contracted |
Hawaii Gas | MIC Corporate |
Proportionately |
Contracted Power |
|||||||||
Net income (loss) | 41,728 | 1,691 | (10,054) | 15,285 | (201,767) | (153,117) | (10,969) | |||||||||
Interest expense, net(3) | 13,169 | 18,690 | 9,614 | 3,749 | 6,959 | 52,181 | 11,283 | |||||||||
Provision (benefit) for income taxes | 28,748 | 1,586 | 2,865 | 9,600 | (131,663) | (88,864) | 2,865 | |||||||||
Depreciation and amortization | 67,552 | 81,525 | 17,557 | 4,720 | - | 171,354 | 21,299 | |||||||||
Fees to Manager-related party(6) | - | - | - | - | 319,832 | 319,832 | - | |||||||||
Other non-cash expense (income), net(4) | 2,855 | 1,473 | (2,732) | (611) | 375 | 1,360 | (2,748) | |||||||||
EBITDA excluding non-cash items | 154,052 | 104,965 | 17,250 | 32,743 | (6,264) | 302,746 | 21,730 | |||||||||
EBITDA excluding non-cash items | 154,052 | 104,965 | 17,250 | 32,743 | (6,264) | 302,746 | 21,730 | |||||||||
Interest expense, net(3) | (13,169) | (18,690) | (9,614) | (3,749) | (6,959) | (52,181) | (11,283) | |||||||||
Adjustments to derivative instruments recorded in interest expense, net(3) | (6,334) | 2,581 | (3,165) | 131 | - | (6,787) | (3,412) | |||||||||
Amortization of deferred finance charges(3) | 1,529 | 1,614 | 38 | 241 | 1,134 | 4,556 | 48 | |||||||||
Interest rate swap breakage fees | (31,385) | - | - | - | - | (31,385) | - | |||||||||
Provision/benefit for income taxes, net of changes in deferred taxes | (104) | (633) | (2) | - | 291 | (448) | (2) | |||||||||
Maintenance capital expenditures | (8,514) | (6,181) | (51) | (2,759) | - | (17,505) | (51) | |||||||||
Free cash flow | 96,075 | 83,656 | 4,456 | 26,607 | (11,798) | 198,996 | 7,030 | |||||||||
___________________________ | |
(1) Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in its solar and wind power facilities. As of April 1, 2015, Contracted Power and Energy also includes 100% of BEC, a gas-fired power facility. |
|
(2) 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. |
|
(3) Interest expense, net, includes adjustment to derivative instruments and non-cash amortization of deferred financing fees. Interest expense also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas for the six months ended June 30, 2016 and a non-cash write-off of deferred financing costs related to the May 2015 refinancing at IMTT for the quarter and six months ended June 30, 2015. |
|
(4) Other non-cash expense (income), net, primarily includes non-cash pension expense, amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. |
|
(5) On March 31, 2016, IMTT acquired the remaining 33.3% interest in its Quebec terminal that it did not previously own. IMTT was previously providing management services to this terminal and no operational changes are expected. Prior to the acquisition, IMTT consolidated the results of the Quebec terminal in its financial statements and adjusted for the portion that it did not own through noncontrolling interests. Since the IMTT Acquisition in July 2014 and prior to the acquisition of the noncontrolling interest, MIC reported IMTT’s EBITDA excluding non-cash items and Free Cash Flow including the 33.3% portion of the Quebec terminal. The contribution from the minority interest was not significant. Therefore, there were no changes to our historical EBITDA excluding non-cash items, Free Cash Flow or results generally as a function of acquiring this noncontrolling interest. |
|
(6) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 monthly volume weighted average share price of $71.84. |