Date of Report (Date of earliest event reported): October 30, 2018
(Exact name of Registrant as specified in its charter)
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Delaware | 001-32384 | 43-2052503 | ||
(State or other jurisdiction
of incorporation) |
Commission File Number | (IRS Employer Identification No.) |
125 West 55
th
Street,
New York, New York 10019
(Address of Principal Executive Offices) (Zip Code)
(212) 231-1000
(Registrants telephone number, including area code)
N.A.
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (240.12b-2 of this chapter).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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.
On October 30, 2018, Macquarie Infrastructure Corporation (the Company) received a Limited Waiver (the Waiver) from Macquarie Infrastructure Management (USA) Inc. (the Manager) in connection with the Third Amended and Restated Management Services Agreement (the MSA), dated May 21, 2015, among the Company, MIC Ohana Corporation, a wholly owned subsidiary of the Company, and the Manager. Each capitalized term used but not defined herein has the meaning given to it in the MSA.
Pursuant to the Waiver, the Manager has waived its right to receive Base Management Fees with respect to the portion of Net Investment Value that is in excess of 0.08333% of the Net Investment Value per calendar month. In addition, the Manager has waived its right, for purposes of calculating Base Management Fees, to include in the definition of Net Investment Value (i) borrowings of the Company and its Managed Subsidiaries and (ii) the value of Future Investments of the Company and its subsidiaries. These waivers apply only with respect to payment of Base Management Fees, and not to the remainder of the MSA including with respect to the effect of a Delisting Event or the calculation of the Termination Fee.
The Waiver will be effective for Base Management Fee calculations under the MSA beginning November 1, 2018 until the earlier to occur of (i) the termination of the MSA or (ii) one year after the Manager provides written notice of the revocation of the Waiver.
The foregoing summary of the Waiver does not purport to be complete and is qualified in its entirety by the full text of the Waiver, which is filed as Exhibit 10.1 to this Current Report on Form 8-K.
Attached as Exhibit 99.1 hereto is a press release issued on October 31, 2018 by the Company regarding its financial results for the quarter ended September 30, 2018.
The information furnished pursuant to this Item 2.02, including Exhibit 99.1, is deemed to be furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act:), is not otherwise subject to the liabilities of that Section and is not incorporated by reference into any filing under Securities Act of 1933, as amended, or the Exchange Act.
On October 31, 2018, the Company issued a press announcing the receipt of the Waiver and the increased role of the Compensation Committee with respect to the pay and performance decisions regarding the Chief Executive Officer and Chief Financial Officer.
The information furnished pursuant to this Item 7.01, including Exhibit 99.2, is deemed to be furnished and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act:), is not otherwise subject to the liabilities of that Section and is not incorporated by reference into any filing under Securities Act of 1933, as amended, or the Exchange Act.
(d) Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Dated: October 31, 2018 | ||
MACQUARIE INFRASTRUCTURE CORPORATION | ||
By:
/s/ Christopher Frost
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Exhibit 10.1
October 30, 2018
Macquarie Infrastructure Corporation
MIC Ohana Corporation
125 West 55 th Street
New York, New York 10019
Attention: Mr. Norman Brown, Lead Independent Director
Re: | Limited Waiver under the MSA |
Mr. Brown:
Reference is made to the Third Amended and Restated Management Services Agreement (the “ MSA ”), by and among Macquarie Infrastructure Corporation, a Delaware corporation (the “ Company ”), MIC Ohana Corporation, a Delaware corporation (a “ Managed Subsidiary ”), and Macquarie Infrastructure Management (USA) Inc., a Delaware corporation (the “ Manager ”), dated as of May 21, 2015. The Manager desires to waive its right to receive certain payments under the MSA to the extent set forth below. Each capitalized term used but not defined herein has the meaning given to it in the MSA.
1. | Solely for purposes of Section 7.2 of the MSA, in clauses (i), (ii), and (iii) of the definition of “Base Management Fee” in Article I of the MSA, the Manager hereby waives its right to receive a “Base Management Fee” with respect to such portion of Net Investment Value which is in excess of 0.08333% of the Net Investment Value per calendar month. For purposes of clarity, the effect of this Limited Waiver is such that clauses, (i), (ii), and (iii) will be interpreted to read as follows for the duration of this Limited Waiver: |
(i) where the Net Investment Value is less than or equal to USD500 million, 0.08333% per calendar month of such Net Investment Value;
(ii) where the Net Investment Value is greater than USD500 million, but less than or equal to USD1,500, 0.08333% per calendar month of such Net Investment Value;
(iii) where the Net Investment Value is greater than USD1,500 million, 0.08333% per calendar month of such Net Investment Value;
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2. | Solely for purposes of Section 7.2 of the MSA, in the definition of “Net Investment Value” in Article I of the MSA, the Manager hereby waives its right to include the amounts described in sub-sections (b) and (c) of the definition of “Net Investment Value”. For purposes of clarity, the effect of this Limited Waiver is such that the definition will be interpreted to read as follows for the duration of this Limited Waiver: |
“ Net Investment Value ” means:
(a) the Market Value of the shares of Company Common Stock; plus
(b) [waived pursuant to the above]; plus
(c) [waived pursuant to the above]; less
(d) the aggregate amount held by the Company and its Managed Subsidiaries in cash or cash equivalents (but not including cash or cash equivalents held specifically for the benefit of any Subsidiary of a Managed Subsidiary).
3. | For the avoidance of doubt, for purposes of the remainder of the MSA, including Article X of the MSA, and including with respect to the effect of a Delisting Event, the calculation of the Termination Fee or the determination of “substantially similar terms as set forth in this Agreement,” this Limited Waiver shall not apply in any respect and any such calculation or determination shall be made without reference to the waivers set forth in this Limited Waiver. |
This Limited Waiver shall be effective for calculations of the Base Management Fee under Section 7.2 of the MSA for the period beginning November 1, 2018, and shall continue until the earlier to occur of: (i) the date of the termination of the MSA in accordance with its terms or (ii) the date that is one year after the Manager provides written notice to the Company and Managed Subsidiary, at the Manager’s sole discretion, of the Manager’s revocation of this Limited Waiver.
For the avoidance of doubt, except to the extent a provision is specifically waived by this Limited Waiver, the MSA remains unchanged and in full force and effect.
[Signature Page Follows]
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Sincerely, | ||||
MACQUARIE INFRASTRUCTURE MANAGEMENT (USA) INC. | ||||
By: | /s/ Graeme Conway | |||
Name: | Graeme Conway | |||
Title: | President |
cc: Christopher Frost, Chief Executive Officer, Macquarie Infrastructure Corporation
ACKNOWLEDGED BY:
MACQUARIE INFRASTRUCTURE CORPORATION
By: | /s/ Christopher Frost | |
Name: Christopher Frost | ||
Title: Chief Executive Officer |
MIC OHANA CORPORATION
By: | /s/ Christopher Frost | |
Name: Christopher Frost | ||
Title: President |
[Signature Page to Limited Waiver]
Exhibit 99.1
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125 West 55
th
Street
New York, NY10019 United States |
Telephone
Facsimile Internet |
+1 212 231 1825
+1 212 231 1828 www.macquarie.com/mic |
Financial Performance for the Quarter in Line with Expectations:
| Net income of $21.4 million |
| Adjusted Proportionately Combined EBITDA excluding non-cash items of $175.5 million |
| Cash provided by operating activities of $147.1 million |
| Adjusted Free Cash Flow of $127.5 million |
| Full-year 2018 guidance for Adjusted Proportionately Combined EBITDA excluding non-cash items, dividends reaffirmed |
| Manager waives certain fees under Management Services Agreement |
Significant Momentum on Strategic Initiatives, Including:
| 400,000 barrels of storage capacity currently undergoing repurposing at IMTT expected to be re-contracted during November |
| Three additional repositioning projects at IMTT worth $80.0 million approved |
| Sale of Bayonne Energy Center (BEC) closed on October 12, 2018 - net proceeds used to reduce debt balances |
| Sale process for majority of renewable power generation assets launched - 2Q19 closing targeted |
| Agreement on sale of design-build mechanical contractor, Critchfield Pacific, Inc. (CPI), reached - 4Q18 closing anticipated |
NEW YORK, October 31, 2018 Macquarie Infrastructure Corporation (NYSE: MIC) reported financial and operational results for the third quarter of 2018 that were in line with expectations.
Net income decreased 40.9% to $21.4 million from $36.2 million in the third quarter of 2017 (the prior comparable period) primarily due to a write-down of its investment in CPI, increased costs related to acquisitions and higher interest expense, partially offset by lower taxes and a reduction in management fees. For the nine months ended September 30, 2018, net income increased 10.1% to $104.5 million versus the comparable period in 2017.
Adjusted Proportionately Combined EBITDA excluding non-cash items decreased by 5.1% to $175.5 million versus the prior comparable period reflecting primarily a forecast reduction in earnings at IMTT. For the nine months ended September 30, 2018, Adjusted Proportionately Combined EBITDA excluding non-cash items decreased by 3.0% to $525.0 million versus the comparable period in 2017.
Cash generated by operating activities decreased versus the prior comparable period to $147.1 million, with reduced earnings and higher interest expense and taxes partially offset by favorable movements in working capital.
Adjusted Free Cash Flow, which excludes certain one-time items such as transaction related costs, was $127.5 million, down 11.7% from $144.4 million in the prior comparable period as a result of increased interest expense, maintenance capital expenditures and taxes. For the nine months ended September 30, 2018, Adjusted Free Cash Flow decreased by 9.8% to $390.0 million versus the comparable period in 2017.
The MIC board of directors authorized a cash dividend of $1.00 per share, or $4.00 annualized, for the third quarter of 2018. The dividend will be payable on November 15, 2018 to shareholders of record on November 12, 2018. The Company reaffirmed its previous guidance for a distribution of $1.00 per share in each quarter of 2018.
The Company announced that Macquarie Infrastructure Management (USA) Inc., the external manager of MIC, has elected to waive certain fees to which it is entitled under a Management Services Agreement with MIC. The Manager has elected to waive base management fees in excess of 1% of MICs equity market capitalization, less cash on its balance sheet, and any fees on holding company debt.
The waivers reduce the annualized base management fees payable to the Manager by approximately $10.0 million compared with the fees payable for the third quarter of 2018. The Manager is expected to continue to reinvest its ongoing base management fees in new primary shares of the Company. The waivers are effective November 1, 2018 and, although they can be revoked, MIC believes that the Manager currently has no intention of doing so. The Manager is required to provide one year notice of revocation. The waivers have no impact on calculation of any performance fee to which the Manager may be entitled in the future.
Christopher Frost, MICs chief executive officer, said of the Companys results for the quarter: Our operating companies continued to perform as anticipated and we advanced a significant number of initiatives related to our strategic priorities. We are particularly pleased with the considerable progress being made on both the repurposing of storage capacity and repositioning of IMTT as well as the continued rationalization of our portfolio through sales of non-core operations. In addition, the proceeds from the timely completion of the sale of Bayonne Energy Center (BEC) have strengthened our balance sheet and provided us with considerable financial flexibility to support the ongoing growth of the enterprise.
MICs financial and operational performance also supported the authorization of a dividend of $1.00 per share for the third quarter consistent with our guidance. Assuming no material deterioration in the health of the economy, and the continued stable performance of our businesses, we remain confident in the sustainability of our dividend, added Frost.
| IMTT generated Adjusted Proportionately Combined EBITDA excluding non-cash items of $69.3 million in the third quarter, down 12.2% versus the prior comparable quarter, primarily due an anticipated decline in capacity utilization and slightly lower average storage rates driven by rate decreases for gasoline and distillates in New York Harbor, compared with 2017. Bulk liquid storage utilization declined to an average of 82.1% in the quarter, consistent with prior guidance for a mid-80s percent average utilization rate in 2018, compared with 92.7% in the third quarter of 2017. |
Storage utilization at IMTT is expected to remain in the low 80s percent range through year-end 2018 before recovering to a low 90s percent range by early 2020, subject to market conditions. The contribution to Adjusted Proportionately Combined EBITDA excluding non-cash items from the anticipated recovery in utilization is expected to be partially offset by decreases in storage rates, particularly those for gasoline and distillates in New York Harbor, over the same period. Through the nine months ended September 30, 2018, Adjusted Proportionately Combined EBITDA excluding non-cash items generated by IMTT decreased to $221.5 million, down 9.4% versus the comparable period in 2017, as a result of lower earnings stemming from contract non-renewals and lower deferred revenue.
| Atlantic Aviation generated Adjusted Proportionately Combined EBITDA excluding non-cash items of $65.0 million in the third quarter, up 2.3% versus the prior comparable quarter, driven by contributions from acquisitions of fixed base operations and increased hangar rental income. The modest year over year increase reflects the absence of a number of events that were beneficial to Atlantic Aviations results in 2017 as well as airport-led runway maintenance and flight/landing restrictions at several of airports on which the business operates in 2018. Through the nine months ended September 30, 2018, Adjusted Proportionately Combined EBITDA excluding non-cash items generated by Atlantic Aviation increased to $196.2 million, up 5.6% compared with the same period in 2017. |
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| Contracted Power generated Adjusted Proportionately Combined EBITDA excluding non-cash items of $37.4 million in the third quarter, up 14.0% versus the prior comparable quarter, as a result of contributions related to the expansion of the BEC power generation facility (BEC II) and improved operating conditions for the Companys portfolio of wind and solar power generation assets. Through the nine months ended September 30, 2018, Adjusted Proportionately Combined EBITDA excluding non-cash items generated by Contracted Power increased to $91.5 million, up 18.7% compared with the same period in 2017. |
| MIC Hawaii generated EBITDA of $(5.1) million in the third quarter including $17.1 million of write-downs related to CPI and $12.0 million excluding those write-downs. The segment results reflect higher expenses at CPI and lower non-utility margins at Hawaii Gas partially offset by increased utility margins at Hawaii Gas as a result of a rate increase authorized under an interim Decision and Order from the Hawaii Public Utilities Commission in June. Through the nine months ended September 30, 2018, EBITDA generated by MIC Hawaii was $21.2 million and $38.3 million including and excluding the impact of the write-downs, respectively. |
MIC has entered into an agreement to sell CPI for a nominal amount in a transaction that is expected to close in the fourth quarter of 2018.
| The Companys Corporate and Other segment includes primarily fees payable to the MICs Manager, professional fees and costs associated with being a public company. The segment generated Adjusted Proportionately Combined EBITDA excluding non-cash items of $(6.9) million, compared with $(6.1) million in the prior comparable quarter, primarily as a result of higher professional fees. Through the nine months ended September 30, 2018, Adjusted Proportionately Combined EBITDA excluding non-cash items generated by the Corporate and Other segment was flat with the same period in 2017. |
| Successful closing of the sale of BEC on October 12, 2018 |
| Receipt of $657.4 million in cash, transfer of $243.5 million of BEC debt to purchaser |
| Net proceeds after transaction related expenses used to repay the majority of outstanding balances on all revolving credit facilities |
| Other than $150.0 million paid down at IMTT, revolving credit facilities may be redrawn to fund growth capital agenda |
| Sale and debt repayment substantially improves balance sheet strength and financial flexibility |
| Repurposing up to 3.0 million barrels of storage capacity on the Lower Mississippi River |
| Converting capacity away heavy and residual oil to gasoline and distillates, chemicals and vegetable and/or tropical oils |
| Approximately 1.3 million barrels of storage capacity being repurposed in 2018 |
| 600,000 repurposed barrels expected to be in service prior to year-end |
| Expect to deploy approximately $15.0 million in 2018 on projects that will add new storage capacity and/or improve terminal capability |
| Expected to invest approximately $80.0 million in the additional capacity, dock and new truck rack capability |
º | Pending a final investment decision by Methanex on the development of additional methanol production capability (expected mid-2019), IMTT will construct 714,000 barrels of storage capacity at its Geismar Chemical Logistics facility for Methanex |
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º | Committed to construction of an additional dock at its terminal in Geismar, LA to be in service in late 2019 supporting existing operations and potential expansion opportunities |
º | Committed to the construction of an automated, multi-user, six bay truck loading facility for petroleum and biodiesel products at its terminal in Bayonne, NJ to be in service in late 2019 |
| MIC expects to deploy approximately $200.0 million in 2018 on growth projects and bolt-on acquisitions and has deployed, or committed to deploy, approximately $130.0 million to date: |
º | acquisition of a fixed base operation by Atlantic Aviation |
º | completion of additional thermal power generating capacity at BEC |
º | development of additional capacity and capability at IMTT |
| MIC has exited certain smaller, non-core businesses in 2018 and has launched a process to sell the majority of its operating wind and solar facilities |
º | Sale and redeployment of proceeds from wind and solar facilities expected to maximize value relative to expanding portfolio through acquisition |
º | Company expects to retain its solar facility in Hawaii and to maintain existing relationships with developers of renewable power projects |
º | Sale process expected to conclude in the second quarter in 2019 |
| Including BEC, MIC has exited businesses and terminated projects that have generated more than $700 million in cash proceeds and deconsolidated $243.5 million of debt |
º | Transactions consistent with strategic priority of rationalizing portfolio, strengthening balance sheet and increasing financial flexibility |
MIC adjusted its guidance for the generation of Adjusted Proportionately Combined EBITDA excluding non-cash items in 2018 following the July 29 announcement of the sale of BEC and the expected early fourth quarter closing of the sale. Segment level Adjusted Proportionately Combined EBITDA excluding non-cash items guidance has been further refined to account for sales of other businesses and the receipt of the Companys share of development profits related to a renewable power project.
MICs guidance for full-year Adjusted Proportionately Combined EBITDA excluding non-cash items from each of its IMTT, Atlantic Aviation and Corporate/Other segments is unchanged from the second quarter. MIC now expects the Adjusted Proportionately Combined EBITDA excluding non-cash items contribution from Contracted Power for the full year 2018 to increase to between $85.0 and $95.0 million from between $80.0 million and $90.0 million.
MIC Hawaii is expected to generate EBITDA of between $38.0 and $48.0 million including the impact of the write-down of the Companys investment in CPI. Excluding the impact of the write-down, EBITDA is expected to be in a range of between $55.0 and $60.0 million.
MIC continues to expect that its businesses will generate aggregate Adjusted Proportionately Combined EBITDA excluding non-cash items for the full year 2018 of between $670.0 and $705.0 million.
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IMTT: | $ | 285 $295 million | ||
Atlantic Aviation: | $ | 265 $275 million | ||
Contracted Power: | $ | 85 $95 million | ||
MIC Hawaii, including negative cont. from CPI: | $ | 55 $60 million | ||
Corporate/Other: | $ | (20) $(20) million |
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Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
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2018 | 2017 | $ | % | 2018 | 2017 | $ | % | |||||||||||||||||||||||||
($ In Thousands, Except Share and Per Share Data) (Unaudited) | ||||||||||||||||||||||||||||||||
GAAP Metrics
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Net income | $ | 21,376 | $ | 36,173 | (14,797 | ) | (40.9 | ) | $ | 104,450 | $ | 94,836 | 9,614 | 10.1 | ||||||||||||||||||
Weighted average number of shares outstanding: basic | 85,378,088 | 83,644,806 | 1,733,282 | 2.1 | 85,095,956 | 82,743,285 | 2,352,671 | 2.8 | ||||||||||||||||||||||||
Net income per share attributable to MIC | $ | 0.25 | $ | 0.48 | (0.23 | ) | (47.9 | ) | $ | 1.61 | $ | 1.23 | 0.38 | 30.9 | ||||||||||||||||||
Cash provided by operating activities (1) | 147,051 | 149,723 | (2,672 | ) | (1.8 | ) | 413,053 | 398,360 | 14,693 | 3.7 | ||||||||||||||||||||||
MIC Non-GAAP Metrics
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EBITDA excluding non-cash items (2) | $ | 159,796 | $ | 182,684 | (22,888 | ) | (12.5 | ) | $ | 509,650 | $ | 533,923 | (24,273 | ) | (4.5 | ) | ||||||||||||||||
Shared service implementation costs (3) | | 1,402 | (1,402 | ) | (100.0 | ) | | 6,847 | (6,847 | ) | (100.0 | ) | ||||||||||||||||||||
CPI investment adjustment (3) | 17,083 | | 17,083 | NM | 17,083 | | 17,083 | NM | ||||||||||||||||||||||||
Investment and acquisition/disposition costs (3) | 1,878 | 3,023 | (1,145 | ) | (37.9 | ) | 7,473 | 7,873 | (400 | ) | (5.1 | ) | ||||||||||||||||||||
Adjusted EBITDA excluding
non-cash items (3) |
$ | 178,757 | $ | 187,109 | (8,352 | ) | (4.5 | ) | $ | 534,206 | $ | 548,643 | (14,437 | ) | (2.6 | ) | ||||||||||||||||
Cash interest (4) | $ | (32,456 | ) | $ | (27,151 | ) | (5,305 | ) | (19.5 | ) | $ | (94,058 | ) | $ | (79,435 | ) | (14,623 | ) | (18.4 | ) | ||||||||||||
Cash taxes | (3,076 | ) | (2,154 | ) | (922 | ) | (42.8 | ) | (10,659 | ) | (8,493 | ) | (2,166 | ) | (25.5 | ) | ||||||||||||||||
Maintenance capital expenditures | (13,372 | ) | (12,106 | ) | (1,266 | ) | (10.5 | ) | (32,724 | ) | (23,062 | ) | (9,662 | ) | (41.9 | ) | ||||||||||||||||
Noncontrolling interest (5) | (2,394 | ) | (1,308 | ) | (1,086 | ) | (83.0 | ) | (6,773 | ) | (5,223 | ) | (1,550 | ) | (29.7 | ) | ||||||||||||||||
Adjusted Free Cash Flow (3) | $ | 127,459 | $ | 144,390 | (16,931 | ) | (11.7 | ) | $ | 389,992 | $ | 432,430 | (42,438 | ) | (9.8 | ) |
NM Not meaningful.
(1) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
(2) | EBITDA excluding non-cash items is calculated as net income before interest expense, taxes, depreciation and amortization expense, management fees, pension expense and other non-cash (income) expense recorded in the consolidated statement of operations. See below for reconciliation of net income (loss) to EBITDA excluding non-cash items. |
(3) | Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes costs relating to certain investment and acquisition/disposition activities during 2018 and 2017. Adjusted EBITDA excluding non-cash item and Adjusted Free Cash Flow excludes the write-down of our investment in CPI for 2018, and excludes implementation costs relating to our shared services center for 2017. |
(4) | Cash interest is calculated as interest expense, net, excluding the impact of non-cash adjustments for unrealized (gains) losses from derivative instruments, amortization of deferred financing costs and the amortization of debt discount recorded in the consolidated statement of operations. |
(5) | Noncontrolling interest adjustment represents the portion of Free Cash Flow not attributable to MICs ownership interest. |
When: MIC has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, November 1, 2018 during which management will review and comment on the third quarter 2018 results.
How: To listen to the conference call 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 Companys website at. Allow extra time prior to the call to visit the site and download the software needed to listen to the webcast.
Supplemental Materials: MIC will prepare materials in support of its conference call. The materials will be available for downloading from the Companys website prior to the call.
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Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on November 1, 2018 through midnight on November 7, 2018, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 3055347. An online archive of the webcast will be available on the Companys website for one year following the call.
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; entities comprising an energy services, production and distribution segment, MIC Hawaii; and entities comprising a Contracted Power segment. For additional information, please visit the MIC website at www.macquarie.com/mic . MIC-G
In addition to MICs results under U.S. GAAP, the Company uses certain non-GAAP measures to assess the performance and prospects of its businesses. In particular, MIC uses EBITDA excluding non-cash items, Free Cash Flow and certain proportionately combined financial metrics. Proportionately combined financial metrics, including Free Cash Flow, reflect MICs proportionate interest in its wind and solar facilities.
MIC measures EBITDA excluding non-cash items as a reflection of its businesses ability to effectively manage the volume of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses. The Company believes investors use EBITDA excluding non-cash items primarily as a measure to assess the operating performance of its businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from MICs, particularly where acquisitions and other non-operating factors are involved. 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, adjustments for other non-cash items and pension expense 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.
Given MICs varied ownership levels in its CP and MIC Hawaii segments, together with obligations to report the results of these businesses on a consolidated basis, GAAP measures such as net income (loss) do not fully reflect all of the items management considers in assessing the amount of cash generated based on its ownership interest in its businesses. The Company notes that the proportionately combined metrics used 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 MICs financial performance and not in lieu of financial results reported under GAAP.
The Companys businesses can be characterized as owners of high-value, long-lived assets capable of generating substantial Free Cash Flow. MIC defines Free Cash Flow as cash from operating activities the most comparable GAAP measure which includes cash interest, tax payments and pension contributions, less maintenance capital expenditures, which includes principal repayments on capital lease obligations used to fund maintenance capital expenditures, and excludes changes in working capital.
Management uses Free Cash Flow as a measure of its ability to provide investors with an attractive risk-adjusted return by sustaining and potentially increasing MICs quarterly cash dividend and funding a portion of the Companys growth. GAAP metrics such as net income (loss) do not provide MIC management with the same level of visibility to into the performance and prospects of the business as a result of: (i) the capital intensive nature of MICs businesses and the generation of non-cash depreciation and amortization; (ii) shares issued to the Companys external manager under the Management Services Agreement, (iii) the Companys ability to defer all or a portion of current federal income taxes; (iv) non-cash unrealized gains or losses on derivative instruments; (v) amortization of tolling liabilities; (vi) gains (losses) on disposal of assets, and (vii) pension expense. Pension expenses primarily consist of interest expense, expected return on plan
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assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are reflected as a reduction to Free Cash Flow and are not included in pension expense. Management believes that external consumers of its financial statements, including investors and research analysts, use Free Cash Flow both to assess the Companys performance and as an indicator of its success in generating an attractive risk-adjusted return.
In its Quarterly Report on Form 10-Q, the Company has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate. Management believes that both EBITDA excluding non-cash items and Free Cash Flow support a more complete and accurate understanding of the financial and operating performance of its businesses than would otherwise be achieved using GAAP results alone.
Free Cash Flow does not take into consideration required payments on indebtedness and other fixed obligations or other cash items that are excluded from MICs definition of Free Cash Flow. Management 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 MICs financial performance and not in lieu of its financial results reported under GAAP.
See tables below for a reconciliation of EBITDA excluding non-cash items and EBITDA excluding non-cash items, to Net Income (loss) and a reconciliation of Free Cash Flow to cash from operating activities.
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, the Company has adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain MICs businesses at current levels of operations, capability, profitability or cash flow, while growth capital expenditures primarily provide new or enhanced levels of operations, capability, profitability or cash flow. Management considers a number of factors in determining 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 capital expenditure is classified as either maintenance or growth.
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 release are subject to a number of risks and uncertainties, some of which are beyond MICs 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 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, cybersecurity risks, work interruptions or other labor stoppages; risks associated with acquisitions or dispositions, litigation risks; risks related to its shared services initiative; 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.
MICs 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
7
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. MIC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of MIC 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 MIC.
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Investors
Jay A. Davis Investor Relations MIC 212-231-1825 |
Media
Melissa McNamara Corporate Communications MIC 212-231-1667 |
8
|
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|
||||||
September 30,
2018 |
December 31,
2017 |
|||||||
(Unaudited) | ||||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents | $ | 50,162 | $ | 47,121 | ||||
Restricted cash | 41,238 | 24,963 | ||||||
Accounts receivable, less allowance for doubtful accounts of $1,114 and $895, respectively | 130,777 | 158,152 | ||||||
Inventories | 30,807 | 36,955 | ||||||
Prepaid expenses | 9,329 | 14,685 | ||||||
Fair value of derivative instruments | 17,510 | 11,965 | ||||||
Other current assets | 13,040 | 13,804 | ||||||
Assets held for sale (1) | 971,934 | | ||||||
Total current assets | 1,264,797 | 307,645 | ||||||
Property, equipment, land and leasehold improvements, net | 3,753,291 | 4,659,614 | ||||||
Investment in unconsolidated business | 9,296 | 9,526 | ||||||
Goodwill | 2,043,800 | 2,068,668 | ||||||
Intangible assets, net | 813,348 | 914,098 | ||||||
Fair value of derivative instruments | 26,958 | 24,455 | ||||||
Other noncurrent assets | 26,980 | 24,945 | ||||||
Total assets | $ | 7,938,470 | $ | 8,008,951 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY
|
||||||||
Current liabilities:
|
||||||||
Due to Manager-related party | $ | 4,474 | $ | 5,577 | ||||
Accounts payable | 54,628 | 60,585 | ||||||
Accrued expenses | 83,424 | 89,496 | ||||||
Current portion of long-term debt | 392,903 | 50,835 | ||||||
Fair value of derivative instruments | 534 | 1,710 | ||||||
Other current liabilities | 52,089 | 47,762 | ||||||
Liabilities held for sale (1) | 299,659 | | ||||||
Total current liabilities | 887,711 | 255,965 | ||||||
Long-term debt, net of current portion | 3,009,008 | 3,530,311 | ||||||
Deferred income taxes | 656,708 | 632,070 | ||||||
Fair value of derivative instruments | 1,174 | 4,668 | ||||||
Tolling agreements noncurrent | | 52,595 | ||||||
Other noncurrent liabilities | 187,957 | 182,639 | ||||||
Total liabilities | 4,742,558 | 4,658,248 | ||||||
Commitments and contingencies | | |
9
|
|
|
||||||
September 30,
2018 |
December 31,
2017 |
|||||||
(Unaudited) | ||||||||
Stockholders equity
(2)
:
|
||||||||
Common stock ($0.001 par value; 500,000,000 authorized; 85,550,576 shares issued and outstanding at September 30, 2018 and 84,733,957 shares issued and outstanding at December 31, 2017) | $ | 86 | $ | 85 | ||||
Additional paid in capital | 1,585,328 | 1,840,033 | ||||||
Accumulated other comprehensive loss | (32,085 | ) | (29,993 | ) | ||||
Retained earnings | 1,480,471 | 1,343,567 | ||||||
Total stockholders equity | 3,033,800 | 3,153,692 | ||||||
Noncontrolling interests | 162,112 | 197,011 | ||||||
Total equity | 3,195,912 | 3,350,703 | ||||||
Total liabilities and equity | $ | 7,938,470 | $ | 8,008,951 |
(1) | See Note 2, Basis of Presentation, for further discussion on assets and liabilities held for sale. |
(2) | The Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.001 per share. At September 30, 2018 and December 31, 2017, no preferred stock were issued or outstanding. The Company had 100 shares of special stock issued and outstanding to its Manager at September 30, 2018 and December 31, 2017. |
10
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|
||||||||||||
Quarter Ended
September 30, |
Nine Months Ended
September 30, |
|||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenue
|
||||||||||||||||
Service revenue | $ | 361,031 | $ | 358,220 | $ | 1,139,637 | $ | 1,067,069 | ||||||||
Product revenue | 112,249 | 94,841 | 313,279 | 276,439 | ||||||||||||
Total revenue | 473,280 | 453,061 | 1,452,916 | 1,343,508 | ||||||||||||
Costs and expenses
|
||||||||||||||||
Cost of services | 166,694 | 153,218 | 533,889 | 455,038 | ||||||||||||
Cost of product sales | 47,823 | 35,669 | 148,372 | 123,143 | ||||||||||||
Selling, general and administrative | 86,487 | 84,898 | 262,371 | 244,817 | ||||||||||||
Fees to Manager-related party | 12,333 | 17,954 | 36,113 | 54,610 | ||||||||||||
Goodwill impairment | 3,215 | | 3,215 | | ||||||||||||
Depreciation | 56,924 | 58,009 | 179,368 | 172,753 | ||||||||||||
Amortization of intangibles | 20,030 | 17,329 | 55,470 | 50,920 | ||||||||||||
Total operating expenses | 393,506 | 367,077 | 1,218,798 | 1,101,281 | ||||||||||||
Operating income | 79,774 | 85,984 | 234,118 | 242,227 | ||||||||||||
Other income (expense)
|
||||||||||||||||
Interest income | 113 | 54 | 304 | 129 | ||||||||||||
Interest expense (1) | (32,616 | ) | (29,291 | ) | (81,693 | ) | (90,129 | ) | ||||||||
Other (expense) income, net | (18,011 | ) | 4,973 | (11,721 | ) | 7,893 | ||||||||||
Net income before income taxes | 29,260 | 61,720 | 141,008 | 160,120 | ||||||||||||
Provision for income taxes | (7,884 | ) | (25,547 | ) | (36,558 | ) | (65,284 | ) | ||||||||
Net income | $ | 21,376 | $ | 36,173 | $ | 104,450 | $ | 94,836 | ||||||||
Less: net loss attributable to noncontrolling interests | (328 | ) | (3,922 | ) | (32,454 | ) | (7,294 | ) | ||||||||
Net income attributable to MIC | $ | 21,704 | $ | 40,095 | $ | 136,904 | $ | 102,130 | ||||||||
Basic income per share attributable to MIC | $ | 0.25 | $ | 0.48 | $ | 1.61 | $ | 1.23 | ||||||||
Weighted average number of shares outstanding: basic | 85,378,088 | 83,644,806 | 85,095,956 | 82,743,285 | ||||||||||||
Diluted income per share attributable to MIC | $ | 0.25 | $ | 0.48 | $ | 1.61 | $ | 1.23 | ||||||||
Weighted average number of shares outstanding: diluted | 85,398,566 | 87,916,538 | 85,109,213 | 82,752,800 | ||||||||||||
Cash dividends declared per share | $ | 1.00 | $ | 1.42 | $ | 3.00 | $ | 4.12 |
(1) | Interest expense includes gains on derivative instruments of $4.8 million and $25.8 million for the quarter and nine months ended September 30, 2018, respectively. For the quarter and nine months ended September 30, 2017, interest expense includes losses on derivative instruments of $162,000 and $6.9 million, respectively. |
11
|
|
|
||||||
Nine Months Ended
September 30, |
||||||||
2018 | 2017 (1) | |||||||
Operating activities
|
||||||||
Net income | $ | 104,450 | $ | 94,836 | ||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Non-cash goodwill impairment | 3,215 | | ||||||
Depreciation and amortization of property and equipment | 179,368 | 172,753 | ||||||
Amortization of intangible assets | 55,470 | 50,920 | ||||||
Amortization of debt financing costs | 7,430 | 6,464 | ||||||
Amortization of debt discount | 2,710 | 2,377 | ||||||
Adjustments to derivative instruments | (19,782 | ) | 3,414 | |||||
Fees to Manager-related party | 36,113 | 54,610 | ||||||
Deferred taxes | 25,899 | 56,791 | ||||||
Pension expense | 6,284 | 6,481 | ||||||
Other non-cash expense (income), net (2) | 14,359 | (2,651 | ) | |||||
Changes in other assets and liabilities, net of acquisitions/dispositions:
|
||||||||
Accounts receivable | 6,200 | (18,938 | ) | |||||
Inventories | (2,003 | ) | (4,563 | ) | ||||
Prepaid expenses and other current assets | 2,605 | (7,040 | ) | |||||
Due to Manager-related party | 155 | (178 | ) | |||||
Accounts payable and accrued expenses | 4,896 | (4,444 | ) | |||||
Income taxes payable | 654 | (1,223 | ) | |||||
Other, net | (14,970 | ) | (11,249 | ) | ||||
Net cash provided by operating activities | 413,053 | 398,360 | ||||||
Investing activities
|
||||||||
Acquisitions of businesses and investments, net of cash acquired | (12,515 | ) | (208,377 | ) | ||||
Purchases of property and equipment | (159,037 | ) | (234,833 | ) | ||||
Loan to project developer | (17,800 | ) | (18,675 | ) | ||||
Loan repayment from project developer | 16,561 | 6,604 | ||||||
Proceeds from sale of business, net of cash divested | 41,038 | | ||||||
Other, net | 467 | 179 | ||||||
Net cash used in investing activities | (131,286 | ) | (455,102 | ) |
12
|
|
|
||||||
Nine Months Ended
September 30, |
||||||||
2018 | 2017 (1) | |||||||
Financing activities
|
||||||||
Proceeds from long-term debt | $ | 275,500 | $ | 585,500 | ||||
Payment of long-term debt | (223,529 | ) | (200,722 | ) | ||||
Proceeds from the issuance of shares | | 5,699 | ||||||
Dividends paid to common stockholders | (292,715 | ) | (332,867 | ) | ||||
Contributions received from noncontrolling interests | 567 | 102 | ||||||
Distributions paid to noncontrolling interests | (3,028 | ) | (2,962 | ) | ||||
Offering and equity raise costs paid | (35 | ) | (355 | ) | ||||
Debt financing costs paid | (2,874 | ) | (447 | ) | ||||
Payment of capital lease obligations | (87 | ) | (366 | ) | ||||
Net cash (used in) provided by financing activities | (246,201 | ) | 53,582 | |||||
Effect of exchange rate changes on cash and cash equivalents | (442 | ) | 449 | |||||
Net change in cash, cash equivalents and restricted cash | 35,124 | (2,711 | ) | |||||
Cash, cash equivalents and restricted cash, beginning of period | 72,084 | 61,257 | ||||||
Cash, cash equivalents and restricted cash, end of period | $ | 107,208 | $ | 58,546 | ||||
Supplemental disclosures of cash flow information
|
||||||||
Non-cash investing and financing activities:
|
||||||||
Accrued equity offering costs | $ | 83 | $ | 97 | ||||
Accrued financing costs | $ | | $ | 21 | ||||
Accrued purchases of property and equipment | $ | 23,801 | $ | 33,184 | ||||
Issuance of shares to Manager | $ | 37,372 | $ | 54,927 | ||||
Issuance of shares to independent directors | $ | 750 | $ | 681 | ||||
Issuance of shares for acquisition of business | $ | | $ | 125,000 | ||||
Conversion of convertible senior notes to shares | $ | 6 | $ | 17 | ||||
Distributions payable to noncontrolling interests | $ | 5 | $ | 32 | ||||
Taxes paid, net | $ | 10,991 | $ | 9,810 | ||||
Interest paid | $ | 91,200 | $ | 82,108 |
(1) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
(2) | Other non-cash expense (income), net, includes the write-down of the Companys investment in the design-build mechanical contractor business for the nine months ended September 30, 2018. |
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated condensed balance sheets that sum to the total of the same amounts presented in the consolidated condensed statements of cash flows:
|
|
|
||||||
As of September 30, | ||||||||
2018 | 2017 | |||||||
Cash and cash equivalents | $ | 50,162 | $ | 35,737 | ||||
Restricted cash current | 41,238 | 22,809 | ||||||
Restricted cash held for sale (3) | 15,808 | | ||||||
Total of cash, cash equivalents and restricted cash shown in the consolidated condensed statement of cash flows | $ | 107,208 | $ | 58,546 |
(3) | Represents restricted cash related to BEC, which were classified as held for sale at September 30, 2018. See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018, for further discussion. |
13
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|
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|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | $ | % | 2018 | 2017 | $ | % | |||||||||||||||||||||||||
($ In Thousands, Except Share and Per Share Data) (Unaudited) | ||||||||||||||||||||||||||||||||
Revenue
|
||||||||||||||||||||||||||||||||
Service revenue | $ | 361,031 | $ | 358,220 | 2,811 | 0.8 | $ | 1,139,637 | $ | 1,067,069 | 72,568 | 6.8 | ||||||||||||||||||||
Product revenue | 112,249 | 94,841 | 17,408 | 18.4 | 313,279 | 276,439 | 36,840 | 13.3 | ||||||||||||||||||||||||
Total revenue | 473,280 | 453,061 | 20,219 | 4.5 | 1,452,916 | 1,343,508 | 109,408 | 8.1 | ||||||||||||||||||||||||
Costs and expenses
|
||||||||||||||||||||||||||||||||
Cost of services | 166,694 | 153,218 | (13,476 | ) | (8.8 | ) | 533,889 | 455,038 | (78,851 | ) | (17.3 | ) | ||||||||||||||||||||
Cost of product sales | 47,823 | 35,669 | (12,154 | ) | (34.1 | ) | 148,372 | 123,143 | (25,229 | ) | (20.5 | ) | ||||||||||||||||||||
Selling, general and administrative | 86,487 | 84,898 | (1,589 | ) | (1.9 | ) | 262,371 | 244,817 | (17,554 | ) | (7.2 | ) | ||||||||||||||||||||
Fees to Manager-related party | 12,333 | 17,954 | 5,621 | 31.3 | 36,113 | 54,610 | 18,497 | 33.9 | ||||||||||||||||||||||||
Goodwill impairment | 3,215 | | (3,215 | ) | NM | 3,215 | | (3,215 | ) | NM | ||||||||||||||||||||||
Depreciation | 56,924 | 58,009 | 1,085 | 1.9 | 179,368 | 172,753 | (6,615 | ) | (3.8 | ) | ||||||||||||||||||||||
Amortization of intangibles | 20,030 | 17,329 | (2,701 | ) | (15.6 | ) | 55,470 | 50,920 | (4,550 | ) | (8.9 | ) | ||||||||||||||||||||
Total operating expenses | 393,506 | 367,077 | (26,429 | ) | (7.2 | ) | 1,218,798 | 1,101,281 | (117,517 | ) | (10.7 | ) | ||||||||||||||||||||
Operating income | 79,774 | 85,984 | (6,210 | ) | (7.2 | ) | 234,118 | 242,227 | (8,109 | ) | (3.3 | ) | ||||||||||||||||||||
Other income (expense)
|
||||||||||||||||||||||||||||||||
Interest income | 113 | 54 | 59 | 109.3 | 304 | 129 | 175 | 135.7 | ||||||||||||||||||||||||
Interest expense (1) | (32,616 | ) | (29,291 | ) | (3,325 | ) | (11.4 | ) | (81,693 | ) | (90,129 | ) | 8,436 | 9.4 | ||||||||||||||||||
Other (expense) income,
net |
(18,011 | ) | 4,973 | (22,984 | ) | NM | (11,721 | ) | 7,893 | (19,614 | ) | NM | ||||||||||||||||||||
Net income before income taxes | 29,260 | 61,720 | (32,460 | ) | (52.6 | ) | 141,008 | 160,120 | (19,112 | ) | (11.9 | ) | ||||||||||||||||||||
Provision for income taxes | (7,884 | ) | (25,547 | ) | 17,663 | 69.1 | (36,558 | ) | (65,284 | ) | 28,726 | 44.0 | ||||||||||||||||||||
Net income | $ | 21,376 | $ | 36,173 | (14,797 | ) | (40.9 | ) | $ | 104,450 | $ | 94,836 | 9,614 | 10.1 | ||||||||||||||||||
Less: net loss attributable to noncontrolling interests | (328 | ) | (3,922 | ) | (3,594 | ) | (91.6 | ) | (32,454 | ) | (7,294 | ) | 25,160 | NM | ||||||||||||||||||
Net income attributable to MIC | $ | 21,704 | $ | 40,095 | (18,391 | ) | (45.9 | ) | $ | 136,904 | $ | 102,130 | 34,774 | 34.0 | ||||||||||||||||||
Basic income per share attributable to MIC | $ | 0.25 | $ | 0.48 | (0.23 | ) | (47.9 | ) | $ | 1.61 | $ | 1.23 | 0.38 | 30.9 | ||||||||||||||||||
Weighted average number of shares outstanding: basic | 85,378,088 | 83,644,806 | 1,733,282 | 2.1 | 85,095,956 | 82,743,285 | 2,352,671 | 2.8 |
NM Not meaningful
(1) | Interest expense includes gains on derivative instruments of $4.8 million and $25.8 million for the quarter and nine months ended September 30, 2018, respectively. For the quarter and nine months ended September 30, 2017, interest expense includes losses on derivative instruments of $162,000 and $6.9 million, respectively. |
14
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|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | $ | % | 2018 | 2017 | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Net income | $ | 21,376 | $ | 36,173 | $ | 104,450 | $ | 94,836 | ||||||||||||||||||||||||
Interest expense, net (1) | 32,503 | 29,237 | 81,389 | 90,000 | ||||||||||||||||||||||||||||
Provision for income taxes | 7,884 | 25,547 | 36,558 | 65,284 | ||||||||||||||||||||||||||||
Goodwill impairment | 3,215 | | 3,215 | | ||||||||||||||||||||||||||||
Depreciation | 56,924 | 58,009 | 179,368 | 172,753 | ||||||||||||||||||||||||||||
Amortization of intangibles | 20,030 | 17,329 | 55,470 | 50,920 | ||||||||||||||||||||||||||||
Fees to Manager-related
party |
12,333 | 17,954 | 36,113 | 54,610 | ||||||||||||||||||||||||||||
Pension expense (2) | 2,094 | 2,160 | 6,284 | 6,481 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (3) | 3,437 | (3,725 | ) | 6,803 | (961 | ) | ||||||||||||||||||||||||||
EBITDA excluding non-cash
items |
$ | 159,796 | $ | 182,684 | (22,888 | ) | (12.5 | ) | $ | 509,650 | $ | 533,923 | (24,273 | ) | (4.5 | ) | ||||||||||||||||
EBITDA excluding non-cash
items |
$ | 159,796 | $ | 182,684 | $ | 509,650 | $ | 533,923 | ||||||||||||||||||||||||
Interest expense, net (1) | (32,503 | ) | (29,237 | ) | (81,389 | ) | (90,000 | ) | ||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense (1) | (3,054 | ) | (959 | ) | (22,809 | ) | 1,724 | |||||||||||||||||||||||||
Amortization of debt financing costs (1) | 2,191 | 2,163 | 7,430 | 6,464 | ||||||||||||||||||||||||||||
Amortization of debt
discount (1) |
910 | 882 | 2,710 | 2,377 | ||||||||||||||||||||||||||||
Provision for current income
taxes |
(3,076 | ) | (2,154 | ) | (10,659 | ) | (8,493 | ) | ||||||||||||||||||||||||
Changes in working capital (4) | 22,787 | (3,656 | ) | 8,120 | (47,635 | ) | ||||||||||||||||||||||||||
Cash provided by operating activities | 147,051 | 149,723 | 413,053 | 398,360 | ||||||||||||||||||||||||||||
Changes in working capital (4) | (22,787 | ) | 3,656 | (8,120 | ) | 47,635 | ||||||||||||||||||||||||||
Maintenance capital
expenditures |
(13,372 | ) | (12,106 | ) | (32,724 | ) | (23,062 | ) | ||||||||||||||||||||||||
Free cash flow | $ | 110,892 | $ | 141,273 | (30,381 | ) | (21.5 | ) | $ | 372,209 | $ | 422,933 | (50,724 | ) | (12.0 | ) |
(1) | Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023. |
(2) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
(3) | Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to the disposal of assets. Other non-cash expense (income), net, also includes the write-down of our investment in CPI for the quarter and nine months ended September 30, 2018. See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. |
(4) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
15
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||||||||||||||||||||||||
Quarter Ended
September 30, |
Change Favorable/
(Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | $ | % | 2018 | 2017 | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Free Cash Flow Consolidated
basis |
$ | 110,892 | $ | 141,273 | (30,381 | ) | (21.5 | ) | $ | 372,209 | $ | 422,933 | (50,724 | ) | (12.0 | ) | ||||||||||||||||
100% of Contracted Power Free Cash Flow included in consolidated Free Cash Flow | (30,865 | ) | (25,970 | ) | (71,365 | ) | (56,513 | ) | ||||||||||||||||||||||||
MICs share of Contracted Power Free Cash Flow | 28,474 | 24,667 | 64,600 | 51,300 | ||||||||||||||||||||||||||||
100% of MIC Hawaii Free Cash Flow included in consolidated Free Cash Flow | 11,342 | (8,137 | ) | (6,634 | ) | (32,368 | ) | |||||||||||||||||||||||||
MICs share of MIC Hawaii Free Cash Flow | (11,345 | ) | 8,132 | 6,626 | 32,358 | |||||||||||||||||||||||||||
Free Cash Flow Proportionately Combined basis | $ | 108,498 | $ | 139,965 | (31,467 | ) | (22.5 | ) | $ | 365,436 | $ | 417,710 | (52,274 | ) | (12.5 | ) |
16
IMTT
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change Favorable/
(Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Revenue | 118,229 | 134,167 | (15,938 | ) | (11.9 | ) | 386,981 | 410,128 | (23,147 | ) | (5.6 | ) | ||||||||||||||||||||
Cost of services | 43,864 | 48,982 | 5,118 | 10.4 | 148,005 | 148,052 | 47 | 0.0 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 7,565 | 9,104 | 1,539 | 16.9 | 24,685 | 25,627 | 942 | 3.7 | ||||||||||||||||||||||||
Depreciation and amortization | 32,683 | 31,511 | (1,172 | ) | (3.7 | ) | 98,702 | 93,826 | (4,876 | ) | (5.2 | ) | ||||||||||||||||||||
Operating income | 34,117 | 44,570 | (10,453 | ) | (23.5 | ) | 115,589 | 142,623 | (27,034 | ) | (19.0 | ) | ||||||||||||||||||||
Interest expense, net (1) | (11,677 | ) | (10,187 | ) | (1,490 | ) | (14.6 | ) | (30,349 | ) | (30,707 | ) | 358 | 1.2 | ||||||||||||||||||
Other income, net | 414 | 794 | (380 | ) | (47.9 | ) | 864 | 1,954 | (1,090 | ) | (55.8 | ) | ||||||||||||||||||||
Provision for income taxes | (6,422 | ) | (14,422 | ) | 8,000 | 55.5 | (24,195 | ) | (46,686 | ) | 22,491 | 48.2 | ||||||||||||||||||||
Net income | 16,432 | 20,755 | (4,323 | ) | (20.8 | ) | 61,909 | 67,184 | (5,275 | ) | (7.9 | ) | ||||||||||||||||||||
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
|
||||||||||||||||||||||||||||||||
Net income | 16,432 | 20,755 | 61,909 | 67,184 | ||||||||||||||||||||||||||||
Interest expense, net (1) | 11,677 | 10,187 | 30,349 | 30,707 | ||||||||||||||||||||||||||||
Provision for income taxes | 6,422 | 14,422 | 24,195 | 46,686 | ||||||||||||||||||||||||||||
Depreciation and amortization | 32,683 | 31,511 | 98,702 | 93,826 | ||||||||||||||||||||||||||||
Pension expense (2) | 1,914 | 1,883 | 5,737 | 5,649 | ||||||||||||||||||||||||||||
Other non-cash expense, net | 207 | 178 | 611 | 315 | ||||||||||||||||||||||||||||
EBITDA excluding non-cash
items |
69,335 | 78,936 | (9,601 | ) | (12.2 | ) | 221,503 | 244,367 | (22,864 | ) | (9.4 | ) | ||||||||||||||||||||
EBITDA excluding non-cash
items |
69,335 | 78,936 | 221,503 | 244,367 | ||||||||||||||||||||||||||||
Interest expense, net (1) | (11,677 | ) | (10,187 | ) | (30,349 | ) | (30,707 | ) | ||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense (1) | (870 | ) | (524 | ) | (6,263 | ) | (257 | ) | ||||||||||||||||||||||||
Amortization of debt financing costs (1) | 411 | 413 | 1,234 | 1,236 | ||||||||||||||||||||||||||||
Benefit (provision) for current income taxes | 2,593 | 344 | (6,059 | ) | (3,069 | ) | ||||||||||||||||||||||||||
Changes in working capital | (721 | ) | 3,732 | 9,913 | (12,413 | ) | ||||||||||||||||||||||||||
Cash provided by operating activities | 59,071 | 72,714 | 189,979 | 199,157 | ||||||||||||||||||||||||||||
Changes in working capital | 721 | (3,732 | ) | (9,913 | ) | 12,413 | ||||||||||||||||||||||||||
Maintenance capital
expenditures |
(8,863 | ) | (8,116 | ) | (21,335 | ) | (13,563 | ) | ||||||||||||||||||||||||
Free cash flow | 50,929 | 60,866 | (9,937 | ) | (16.3 | ) | 158,731 | 198,007 | (39,276 | ) | (19.8 | ) |
(1) | Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. |
(2) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
17
Atlantic Aviation
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Revenue | 234,908 | 211,457 | 23,451 | 11.1 | 715,041 | 621,149 | 93,892 | 15.1 | ||||||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below) | 113,077 | 92,106 | (20,971 | ) | (22.8 | ) | 345,764 | 272,985 | (72,779 | ) | (26.7 | ) | ||||||||||||||||||||
Gross margin | 121,831 | 119,351 | 2,480 | 2.1 | 369,277 | 348,164 | 21,113 | 6.1 | ||||||||||||||||||||||||
Selling, general and administrative expenses | 57,146 | 57,026 | (120 | ) | (0.2 | ) | 173,802 | 163,512 | (10,290 | ) | (6.3 | ) | ||||||||||||||||||||
Depreciation and amortization | 25,582 | 25,286 | (296 | ) | (1.2 | ) | 78,020 | 73,894 | (4,126 | ) | (5.6 | ) | ||||||||||||||||||||
Operating income | 39,103 | 37,039 | 2,064 | 5.6 | 117,455 | 110,758 | 6,697 | 6.0 | ||||||||||||||||||||||||
Interest expense, net (1) | (5,290 | ) | (4,295 | ) | (995 | ) | (23.2 | ) | (9,601 | ) | (13,648 | ) | 4,047 | 29.7 | ||||||||||||||||||
Other expense, net | (20 | ) | (14 | ) | (6 | ) | (42.9 | ) | (519 | ) | (119 | ) | (400 | ) | NM | |||||||||||||||||
Provision for income taxes | (9,058 | ) | (11,139 | ) | 2,081 | 18.7 | (28,769 | ) | (36,766 | ) | 7,997 | 21.8 | ||||||||||||||||||||
Net income | 24,735 | 21,591 | 3,144 | 14.6 | 78,566 | 60,225 | 18,341 | 30.5 | ||||||||||||||||||||||||
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
|
||||||||||||||||||||||||||||||||
Net income | 24,735 | 21,591 | 78,566 | 60,225 | ||||||||||||||||||||||||||||
Interest expense, net (1) | 5,290 | 4,295 | 9,601 | 13,648 | ||||||||||||||||||||||||||||
Provision for income taxes | 9,058 | 11,139 | 28,769 | 36,766 | ||||||||||||||||||||||||||||
Depreciation and amortization | 25,582 | 25,286 | 78,020 | 73,894 | ||||||||||||||||||||||||||||
Pension expense (2) | 5 | 5 | 16 | 15 | ||||||||||||||||||||||||||||
Other non-cash expense, net | 323 | 1,212 | 1,232 | 1,252 | ||||||||||||||||||||||||||||
EBITDA excluding non-cash
items |
64,993 | 63,528 | 1,465 | 2.3 | 196,204 | 185,800 | 10,404 | 5.6 | ||||||||||||||||||||||||
EBITDA excluding non-cash
items |
64,993 | 63,528 | 196,204 | 185,800 | ||||||||||||||||||||||||||||
Interest expense, net (1) | (5,290 | ) | (4,295 | ) | (9,601 | ) | (13,648 | ) | ||||||||||||||||||||||||
Convertible senior notes interest (3) | (2,013 | ) | (2,012 | ) | (6,038 | ) | (5,769 | ) | ||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense (1) | (354 | ) | 464 | (5,798 | ) | 3,150 | ||||||||||||||||||||||||||
Amortization of debt financing costs (1) | 280 | 284 | 842 | 819 | ||||||||||||||||||||||||||||
Provision for current income
taxes |
(5,729 | ) | (1,208 | ) | (19,469 | ) | (5,810 | ) | ||||||||||||||||||||||||
Changes in working capital | 6,313 | (1,335 | ) | 16,904 | (6,667 | ) | ||||||||||||||||||||||||||
Cash provided by operating activities | 58,200 | 55,426 | 173,044 | 157,875 | ||||||||||||||||||||||||||||
Changes in working capital | (6,313 | ) | 1,335 | (16,904 | ) | 6,667 | ||||||||||||||||||||||||||
Maintenance capital expenditures | (2,191 | ) | (2,165 | ) | (5,300 | ) | (5,071 | ) | ||||||||||||||||||||||||
Free cash flow | 49,696 | 54,596 | (4,900 | ) | (9.0 | ) | 150,840 | 159,471 | (8,631 | ) | (5.4 | ) |
NM Not meaningful
(1) | Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. |
(2) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
(3) | Represents the cash interest expense reclassified from MIC Corporate related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviations credit facility in October 2016. |
18
Contracted Power
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Product revenue | 52,450 | 42,445 | 10,005 | 23.6 | 129,140 | 110,681 | 18,459 | 16.7 | ||||||||||||||||||||||||
Cost of product sales | 8,744 | 5,171 | (3,573 | ) | (69.1 | ) | 20,443 | 15,528 | (4,915 | ) | (31.7 | ) | ||||||||||||||||||||
Selling, general and administrative expenses | 8,204 | 6,909 | (1,295 | ) | (18.7 | ) | 23,226 | 18,318 | (4,908 | ) | (26.8 | ) | ||||||||||||||||||||
Depreciation and amortization | 8,026 | 14,830 | 6,804 | 45.9 | 38,072 | 45,031 | 6,959 | 15.5 | ||||||||||||||||||||||||
Operating income | 27,476 | 15,535 | 11,941 | 76.9 | 47,399 | 31,804 | 15,595 | 49.0 | ||||||||||||||||||||||||
Interest expense, net (1) | (4,944 | ) | (6,281 | ) | 1,337 | 21.3 | (10,661 | ) | (20,431 | ) | 9,770 | 47.8 | ||||||||||||||||||||
Other income, net | 3,448 | 4,334 | (886 | ) | (20.4 | ) | 11,174 | 6,440 | 4,734 | 73.5 | ||||||||||||||||||||||
Provision for income taxes | (7,852 | ) | (6,337 | ) | (1,515 | ) | (23.9 | ) | (12,456 | ) | (8,209 | ) | (4,247 | ) | (51.7 | ) | ||||||||||||||||
Net income | 18,128 | 7,251 | 10,877 | 150.0 | 35,456 | 9,604 | 25,852 | NM | ||||||||||||||||||||||||
Less: net loss attributable to noncontrolling interest | (260 | ) | (3,890 | ) | (3,630 | ) | (93.3 | ) | (32,319 | ) | (7,223 | ) | 25,096 | NM | ||||||||||||||||||
Net income attributable to MIC | 18,388 | 11,141 | 7,247 | 65.0 | 67,775 | 16,827 | 50,948 | NM | ||||||||||||||||||||||||
Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
|
||||||||||||||||||||||||||||||||
Net income | 18,128 | 7,251 | 35,456 | 9,604 | ||||||||||||||||||||||||||||
Interest expense, net (1) | 4,944 | 6,281 | 10,661 | 20,431 | ||||||||||||||||||||||||||||
Provision for income taxes | 7,852 | 6,337 | 12,456 | 8,209 | ||||||||||||||||||||||||||||
Depreciation and amortization | 8,026 | 14,830 | 38,072 | 45,031 | ||||||||||||||||||||||||||||
Other non-cash income, net (2) | (1,574 | ) | (1,914 | ) | (5,152 | ) | (6,170 | ) | ||||||||||||||||||||||||
EBITDA excluding non-cash
items |
37,376 | 32,785 | 4,591 | 14.0 | 91,493 | 77,105 | 14,388 | 18.7 | ||||||||||||||||||||||||
EBITDA excluding non-cash
items |
37,376 | 32,785 | 91,493 | 77,105 | ||||||||||||||||||||||||||||
Interest expense, net (1) | (4,944 | ) | (6,281 | ) | (10,661 | ) | (20,431 | ) | ||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense (1) | (1,863 | ) | (922 | ) | (10,011 | ) | (1,282 | ) | ||||||||||||||||||||||||
Amortization of debt financing
costs (1) |
380 | 379 | 1,138 | 1,137 | ||||||||||||||||||||||||||||
(Provision) benefit for current income taxes | (84 | ) | 9 | (154 | ) | 6 | ||||||||||||||||||||||||||
Changes in working capital (3) | (5,615 | ) | (565 | ) | (17,390 | ) | (8,771 | ) | ||||||||||||||||||||||||
Cash provided by operating activities | 25,250 | 25,405 | 54,415 | 47,764 | ||||||||||||||||||||||||||||
Changes in working capital (3) | 5,615 | 565 | 17,390 | 8,771 | ||||||||||||||||||||||||||||
Maintenance capital expenditures | | | (440 | ) | (22 | ) | ||||||||||||||||||||||||||
Free cash flow | 30,865 | 25,970 | 4,895 | 18.8 | 71,365 | 56,513 | 14,852 | 26.3 |
NM Not meaningful
(1) | Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. |
(2) | Other non-cash income, net, primarily includes amortization of tolling liabilities. See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. |
(3) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
19
MIC Hawaii
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended
September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Product revenue | 59,799 | 52,396 | 7,403 | 14.1 | 184,139 | 165,758 | 18,381 | 11.1 | ||||||||||||||||||||||||
Service revenue | 9,122 | 13,826 | (4,704 | ) | (34.0 | ) | 41,306 | 39,476 | 1,830 | 4.6 | ||||||||||||||||||||||
Total revenue | 68,921 | 66,222 | 2,699 | 4.1 | 225,445 | 205,234 | 20,211 | 9.8 | ||||||||||||||||||||||||
Cost of product sales (exclusive of depreciation and amortization shown separately below) | 39,079 | 30,498 | (8,581 | ) | (28.1 | ) | 127,929 | 107,615 | (20,314 | ) | (18.9 | ) | ||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below) | 9,753 | 12,131 | 2,378 | 19.6 | 40,120 | 34,015 | (6,105 | ) | (17.9 | ) | ||||||||||||||||||||||
Cost of revenue total | 48,832 | 42,629 | (6,203 | ) | (14.6 | ) | 168,049 | 141,630 | (26,419 | ) | (18.7 | ) | ||||||||||||||||||||
Gross margin | 20,089 | 23,593 | (3,504 | ) | (14.9 | ) | 57,396 | 63,604 | (6,208 | ) | (9.8 | ) | ||||||||||||||||||||
Selling, general and administrative expenses | 7,650 | 6,874 | (776 | ) | (11.3 | ) | 22,853 | 19,729 | (3,124 | ) | (15.8 | ) | ||||||||||||||||||||
Goodwill impairment | 3,215 | | (3,215 | ) | NM | 3,215 | | (3,215 | ) | NM | ||||||||||||||||||||||
Depreciation and amortization | 10,489 | 3,711 | (6,778 | ) | (182.6 | ) | 19,540 | 10,922 | (8,618 | ) | (78.9 | ) | ||||||||||||||||||||
Operating (loss) income | (1,265 | ) | 13,008 | (14,273 | ) | (109.7 | ) | 11,788 | 32,953 | (21,165 | ) | (64.2 | ) | |||||||||||||||||||
Interest expense, net (1) | (2,069 | ) | (1,877 | ) | (192 | ) | (10.2 | ) | (5,246 | ) | (5,795 | ) | 549 | 9.5 | ||||||||||||||||||
Other expense, net | (21,923 | ) | (141 | ) | (21,782 | ) | NM | (23,236 | ) | (382 | ) | (22,854 | ) | NM | ||||||||||||||||||
Benefit (provision) for income taxes | 7,299 | (4,830 | ) | 12,129 | NM | 4,350 | (10,772 | ) | 15,122 | 140.4 | ||||||||||||||||||||||
Net (loss) income | (17,958 | ) | 6,160 | (24,118 | ) | NM | (12,344 | ) | 16,004 | (28,348 | ) | (177.1 | ) | |||||||||||||||||||
Less: net loss attributable to noncontrolling interests | (68 | ) | (32 | ) | 36 | 112.5 | (135 | ) | (71 | ) | 64 | 90.1 | ||||||||||||||||||||
Net (loss) income attributable to MIC | (17,890 | ) | 6,192 | (24,082 | ) | NM | (12,209 | ) | 16,075 | (28,284 | ) | (176.0 | ) | |||||||||||||||||||
Reconciliation of net (loss) income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
|
||||||||||||||||||||||||||||||||
Net (loss) income | (17,958 | ) | 6,160 | (12,344 | ) | 16,004 | ||||||||||||||||||||||||||
Interest expense, net (1) | 2,069 | 1,877 | 5,246 | 5,795 | ||||||||||||||||||||||||||||
(Benefit) provision for income taxes | (7,299 | ) | 4,830 | (4,350 | ) | 10,772 | ||||||||||||||||||||||||||
Goodwill impairment | 3,215 | | 3,215 | | ||||||||||||||||||||||||||||
Depreciation and amortization | 10,489 | 3,711 | 19,540 | 10,922 | ||||||||||||||||||||||||||||
Pension expense (2) | 128 | 272 | 383 | 817 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (3) | 4,303 | (3,360 | ) | 9,548 | 3,108 | |||||||||||||||||||||||||||
EBITDA excluding non-cash items | (5,053 | ) | 13,490 | (18,543 | ) | (137.5 | ) | 21,238 | 47,418 | (26,180 | ) | (55.2 | ) | |||||||||||||||||||
EBITDA excluding non-cash items | (5,053 | ) | 13,490 | 21,238 | 47,418 | |||||||||||||||||||||||||||
Interest expense, net (1) | (2,069 | ) | (1,877 | ) | (5,246 | ) | (5,795 | ) | ||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense (1) | 33 | 23 | (737 | ) | 113 | |||||||||||||||||||||||||||
Amortization of debt financing costs (1) | 97 | 99 | 289 | 303 | ||||||||||||||||||||||||||||
Provision for current income taxes | (2,032 | ) | (1,773 | ) | (3,261 | ) | (5,265 | ) | ||||||||||||||||||||||||
Changes in working capital (4) | 22,570 | (2,554 | ) | 16,420 | (13,093 | ) | ||||||||||||||||||||||||||
Cash provided by operating activities | 13,546 | 7,408 | 28,703 | 23,681 | ||||||||||||||||||||||||||||
Changes in working capital (4) | (22,570 | ) | 2,554 | (16,420 | ) | 13,093 | ||||||||||||||||||||||||||
Maintenance capital expenditures | (2,318 | ) | (1,825 | ) | (5,649 | ) | (4,406 | ) | ||||||||||||||||||||||||
Free cash flow | (11,342 | ) | 8,137 | (19,479 | ) | NM | 6,634 | 32,368 | (25,734 | ) | (79.5 | ) |
NM Not meaningful
(1) | Interest expense, net, includes adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees. |
(2) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
20
MIC Hawaii (continued)
(3) | Other non-cash expense (income), net, primarily includes non-cash adjustments related to unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to the disposal of assets. Other non-cash expense (income), net, also includes the write-down of our investment in CPI for the quarter and nine months ended September 30, 2018. See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. |
(4) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash . See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
21
Corporate and Other
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Quarter Ended
September 30, |
Change
Favorable/ (Unfavorable) |
Nine Months Ended September 30, |
Change
Favorable/ (Unfavorable) |
|||||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
$ | $ | $ | % | $ | $ | $ | % | |||||||||||||||||||||||||
($ In Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||
Fees to Manager-related party | 12,333 | 17,954 | 5,621 | 31.3 | 36,113 | 54,610 | 18,497 | 33.9 | ||||||||||||||||||||||||
Selling, general and administrative expenses (1) | 7,150 | 6,214 | (936 | ) | (15.1 | ) | 21,496 | 21,301 | (195 | ) | (0.9 | ) | ||||||||||||||||||||
Depreciation | 174 | | (174 | ) | NM | 504 | | (504 | ) | NM | ||||||||||||||||||||||
Operating loss | (19,657 | ) | (24,168 | ) | 4,511 | 18.7 | (58,113 | ) | (75,911 | ) | 17,798 | 23.4 | ||||||||||||||||||||
Interest expense, net (2) | (8,523 | ) | (6,597 | ) | (1,926 | ) | (29.2 | ) | (25,532 | ) | (19,419 | ) | (6,113 | ) | (31.5 | ) | ||||||||||||||||
Other income (expense), net | 70 | | 70 | NM | (4 | ) | | (4 | ) | NM | ||||||||||||||||||||||
Benefit for income taxes | 8,149 | 11,181 | (3,032 | ) | (27.1 | ) | 24,512 | 37,149 | (12,637 | ) | (34.0 | ) | ||||||||||||||||||||
Net loss | (19,961 | ) | (19,584 | ) | (377 | ) | (1.9 | ) | (59,137 | ) | (58,181 | ) | (956 | ) | (1.6 | ) | ||||||||||||||||
Reconciliation of net loss to EBITDA excluding non-cash items and a reconciliation of cash used in operating activities to Free Cash Flow:
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Net loss | (19,961 | ) | (19,584 | ) | (59,137 | ) | (58,181 | ) | ||||||||||||||||||||||||
Interest expense, net (2) | 8,523 | 6,597 | 25,532 | 19,419 | ||||||||||||||||||||||||||||
Benefit for income taxes | (8,149 | ) | (11,181 | ) | (24,512 | ) | (37,149 | ) | ||||||||||||||||||||||||
Depreciation | 174 | | 504 | | ||||||||||||||||||||||||||||
Fees to Manager-related party | 12,333 | 17,954 | 36,113 | 54,610 | ||||||||||||||||||||||||||||
Pension expense (3) | 47 | | 148 | | ||||||||||||||||||||||||||||
Other non-cash expense, net | 178 | 159 | 564 | 534 | ||||||||||||||||||||||||||||
EBITDA excluding non-cash items | (6,855 | ) | (6,055 | ) | (800 | ) | (13.2 | ) | (20,788 | ) | (20,767 | ) | (21 | ) | (0.1 | ) | ||||||||||||||||
EBITDA excluding non-cash items | (6,855 | ) | (6,055 | ) | (20,788 | ) | (20,767 | ) | ||||||||||||||||||||||||
Interest expense, net (2) | (8,523 | ) | (6,597 | ) | (25,532 | ) | (19,419 | ) | ||||||||||||||||||||||||
Convertible senior notes interest (4) | 2,013 | 2,012 | 6,038 | 5,769 | ||||||||||||||||||||||||||||
Amortization of debt financing costs (2) | 1,023 | 988 | 3,927 | 2,969 | ||||||||||||||||||||||||||||
Amortization of debt discount (2) | 910 | 882 | 2,710 | 2,377 | ||||||||||||||||||||||||||||
Benefit for current income taxes | 2,176 | 474 | 18,284 | 5,645 | ||||||||||||||||||||||||||||
Changes in working capital | 240 | (2,934 | ) | (17,727 | ) | (6,691 | ) | |||||||||||||||||||||||||
Cash used in operating activities | (9,016 | ) | (11,230 | ) | (33,088 | ) | (30,117 | ) | ||||||||||||||||||||||||
Changes in working capital | (240 | ) | 2,934 | 17,727 | 6,691 | |||||||||||||||||||||||||||
Free cash flow | (9,256 | ) | (8,296 | ) | (960 | ) | (11.6 | ) | (15,361 | ) | (23,426 | ) | 8,065 | 34.4 |
NM Not meaningful
(1) | For the quarter and nine months ended September 30, 2018, selling, general and administrative expenses included $1.9 million and $7.5 million, respectively, of costs incurred in connection with the evaluation of various investment and acquisition/disposition opportunities, compared with $3.0 million and $7.9 million, respectively, for the quarter and nine months ended September 30, 2017. For the quarter and nine months ended September 30, 2017, selling, general and administrative expenses also included $1.4 million and $6.8 million, respectively, of costs related to the implementation of a shared service center. |
(2) | Interest expense, net, included non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023. |
(3) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
(4) | Represents the cash interest expense reclassified to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviations credit facility in October 2016. |
22
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For the Quarter Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||
IMTT | Atlantic Aviation | Contracted Power (1) | MIC Hawaii (1) | MIC Corporate | Proportionately Combined (2) |
Contracted
Power 100% |
MIC Hawaii 100% | |||||||||||||||||||||||||||||
($ in Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | 16,432 | 24,735 | 17,252 | (17,958 | ) | (19,961 | ) | 20,500 | 18,128 | (17,958 | ) | |||||||||||||||||||||||||
Interest expense, net (3) | 11,677 | 5,290 | 4,373 | 2,068 | 8,523 | 31,931 | 4,944 | 2,069 | ||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 6,422 | 9,058 | 7,852 | (7,299 | ) | (8,149 | ) | 7,884 | 7,852 | (7,299 | ) | |||||||||||||||||||||||||
Goodwill impairment | | | | 3,215 | | 3,215 | | 3,215 | ||||||||||||||||||||||||||||
Depreciation and amortization | 32,683 | 25,582 | 6,186 | 10,485 | 174 | 75,110 | 8,026 | 10,489 | ||||||||||||||||||||||||||||
Fees to Manager-related party | | | | | 12,333 | 12,333 | | | ||||||||||||||||||||||||||||
Pension expense (4) | 1,914 | 5 | | 128 | 47 | 2,094 | | 128 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (5) | 207 | 323 | (1,522 | ) | 4,303 | 178 | 3,489 | (1,574 | ) | 4,303 | ||||||||||||||||||||||||||
EBITDA excluding non-cash items | 69,335 | 64,993 | 34,141 | (5,058 | ) | (6,855 | ) | 156,556 | 37,376 | (5,053 | ) | |||||||||||||||||||||||||
EBITDA excluding non-cash items | 69,335 | 64,993 | 34,141 | (5,058 | ) | (6,855 | ) | 156,556 | 37,376 | (5,053 | ) | |||||||||||||||||||||||||
Interest expense, net (3) | (11,677 | ) | (5,290 | ) | (4,373 | ) | (2,068 | ) | (8,523 | ) | (31,931 | ) | (4,944 | ) | (2,069 | ) | ||||||||||||||||||||
Convertible senior notes interest (6) | | (2,013 | ) | | | 2,013 | | | | |||||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense, net (3) | (870 | ) | (354 | ) | (1,571 | ) | 34 | | (2,761 | ) | (1,863 | ) | 33 | |||||||||||||||||||||||
Amortization of debt financing costs (3) | 411 | 280 | 361 | 97 | 1,023 | 2,172 | 380 | 97 | ||||||||||||||||||||||||||||
Amortization of debt discount (3) | | | | | 910 | 910 | | | ||||||||||||||||||||||||||||
Benefit (provision) for current income taxes | 2,593 | (5,729 | ) | (84 | ) | (2,032 | ) | 2,176 | (3,076 | ) | (84 | ) | (2,032 | ) | ||||||||||||||||||||||
Changes in working capital | (721 | ) | 6,313 | (5,450 | ) | 22,570 | 240 | 22,952 | (5,615 | ) | 22,570 | |||||||||||||||||||||||||
Cash provided by (used in) operating activities | 59,071 | 58,200 | 23,024 | 13,543 | (9,016 | ) | 144,822 | 25,250 | 13,546 | |||||||||||||||||||||||||||
Changes in working capital | 721 | (6,313 | ) | 5,450 | (22,570 | ) | (240 | ) | (22,952 | ) | 5,615 | (22,570 | ) | |||||||||||||||||||||||
Maintenance capital expenditures | (8,863 | ) | (2,191 | ) | | (2,318 | ) | | (13,372 | ) | | (2,318 | ) | |||||||||||||||||||||||
Proportionately Combined Free Cash flow | 50,929 | 49,696 | 28,474 | (11,345 | ) | (9,256 | ) | 108,498 | 30,865 | (11,342 | ) |
23
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For the Quarter Ended September 30, 2017 | ||||||||||||||||||||||||||||||||||||
IMTT | Atlantic Aviation | Contracted Power (1) | MIC Hawaii (1) | MIC Corporate | Proportionately Combined (2) |
Contracted
Power 100% |
MIC Hawaii 100% | |||||||||||||||||||||||||||||
($ in Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | 20,755 | 21,591 | 7,705 | 6,161 | (19,584 | ) | 36,628 | 7,251 | 6,160 | |||||||||||||||||||||||||||
Interest expense, net (3) | 10,187 | 4,295 | 5,598 | 1,875 | 6,597 | 28,552 | 6,281 | 1,877 | ||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 14,422 | 11,139 | 6,337 | 4,830 | (11,181 | ) | 25,547 | 6,337 | 4,830 | |||||||||||||||||||||||||||
Depreciation and amortization | 31,511 | 25,286 | 12,949 | 3,706 | | 73,452 | 14,830 | 3,711 | ||||||||||||||||||||||||||||
Fees to Manager-related party | | | | | 17,954 | 17,954 | | | ||||||||||||||||||||||||||||
Pension expense (4) | 1,883 | 5 | | 272 | | 2,160 | | 272 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (5) | 178 | 1,212 | (1,913 | ) | (3,361 | ) | 159 | (3,725 | ) | (1,914 | ) | (3,360 | ) | |||||||||||||||||||||||
EBITDA excluding non-cash items | 78,936 | 63,528 | 30,676 | 13,483 | (6,055 | ) | 180,568 | 32,785 | 13,490 | |||||||||||||||||||||||||||
EBITDA excluding non-cash items | 78,936 | 63,528 | 30,676 | 13,483 | (6,055 | ) | 180,568 | 32,785 | 13,490 | |||||||||||||||||||||||||||
Interest expense, net (3) | (10,187 | ) | (4,295 | ) | (5,598 | ) | (1,875 | ) | (6,597 | ) | (28,552 | ) | (6,281 | ) | (1,877 | ) | ||||||||||||||||||||
Convertible senior notes interest (6) | | (2,012 | ) | | | 2,012 | | | | |||||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense, net (3) | (524 | ) | 464 | (786 | ) | 23 | | (823 | ) | (922 | ) | 23 | ||||||||||||||||||||||||
Amortization of debt financing costs (3) | 413 | 284 | 365 | 99 | 988 | 2,149 | 379 | 99 | ||||||||||||||||||||||||||||
Amortization of debt discount (3) | | | | | 882 | 882 | | | ||||||||||||||||||||||||||||
Benefit (provision) for current income taxes | 344 | (1,208 | ) | 10 | (1,773 | ) | 474 | (2,153 | ) | 9 | (1,773 | ) | ||||||||||||||||||||||||
Changes in working capital (7) | 3,732 | (1,335 | ) | (995 | ) | (2,553 | ) | (2,934 | ) | (4,085 | ) | (565 | ) | (2,554 | ) | |||||||||||||||||||||
Cash provided by (used in) operating activities | 72,714 | 55,426 | 23,672 | 7,404 | (11,230 | ) | 147,986 | 25,405 | 7,408 | |||||||||||||||||||||||||||
Changes in working capital (7) | (3,732 | ) | 1,335 | 995 | 2,553 | 2,934 | 4,085 | 565 | 2,554 | |||||||||||||||||||||||||||
Maintenance capital expenditures | (8,116 | ) | (2,165 | ) | | (1,825 | ) | | (12,106 | ) | | (1,825 | ) | |||||||||||||||||||||||
Proportionately Combined Free Cash Flow | 60,866 | 54,596 | 24,667 | 8,132 | (8,296 | ) | 139,965 | 25,970 | 8,137 |
24
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For the Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||
IMTT | Atlantic Aviation | Contracted Power (1) | MIC Hawaii (1) | MIC Corporate | Proportionately Combined (2) |
Contracted
Power 100% |
MIC Hawaii 100% | |||||||||||||||||||||||||||||
($ in Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | 61,909 | 78,566 | 32,467 | (12,346 | ) | (59,137 | ) | 101,459 | 35,456 | (12,344 | ) | |||||||||||||||||||||||||
Interest expense, net (3) | 30,349 | 9,601 | 9,619 | 5,246 | 25,532 | 80,347 | 10,661 | 5,246 | ||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 24,195 | 28,769 | 12,456 | (4,350 | ) | (24,512 | ) | 36,558 | 12,456 | (4,350 | ) | |||||||||||||||||||||||||
Goodwill impairment | | | | 3,215 | | 3,215 | | 3,215 | ||||||||||||||||||||||||||||
Depreciation and amortization | 98,702 | 78,020 | 32,892 | 19,529 | 504 | 229,647 | 38,072 | 19,540 | ||||||||||||||||||||||||||||
Fees to Manager-related party | | | | | 36,113 | 36,113 | | | ||||||||||||||||||||||||||||
Pension expense (4) | 5,737 | 16 | | 383 | 148 | 6,284 | | 383 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (5) | 611 | 1,232 | (5,157 | ) | 9,548 | 564 | 6,798 | (5,152 | ) | 9,548 | ||||||||||||||||||||||||||
EBITDA excluding non-cash items | 221,503 | 196,204 | 82,277 | 21,225 | (20,788 | ) | 500,421 | 91,493 | 21,238 | |||||||||||||||||||||||||||
EBITDA excluding non-cash items | 221,503 | 196,204 | 82,277 | 21,225 | (20,788 | ) | 500,421 | 91,493 | 21,238 | |||||||||||||||||||||||||||
Interest expense, net (3) | (30,349 | ) | (9,601 | ) | (9,619 | ) | (5,246 | ) | (25,532 | ) | (80,347 | ) | (10,661 | ) | (5,246 | ) | ||||||||||||||||||||
Convertible senior notes interest (6) | | (6,038 | ) | | | 6,038 | | | | |||||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense, net (3) | (6,263 | ) | (5,798 | ) | (8,665 | ) | (732 | ) | | (21,458 | ) | (10,011 | ) | (737 | ) | |||||||||||||||||||||
Amortization of debt financing costs (3) | 1,234 | 842 | 1,091 | 289 | 3,927 | 7,383 | 1,138 | 289 | ||||||||||||||||||||||||||||
Amortization of debt discount (3) | | | | | 2,710 | 2,710 | | | ||||||||||||||||||||||||||||
(Provision) benefit for current income taxes | (6,059 | ) | (19,469 | ) | (154 | ) | (3,261 | ) | 18,284 | (10,659 | ) | (154 | ) | (3,261 | ) | |||||||||||||||||||||
Changes in working capital | 9,913 | 16,904 | (16,823 | ) | 16,421 | (17,727 | ) | 8,688 | (17,390 | ) | 16,420 | |||||||||||||||||||||||||
Cash provided by (used in) operating activities | 189,979 | 173,044 | 48,107 | 28,696 | (33,088 | ) | 406,738 | 54,415 | 28,703 | |||||||||||||||||||||||||||
Changes in working capital | (9,913 | ) | (16,904 | ) | 16,823 | (16,421 | ) | 17,727 | (8,688 | ) | 17,390 | (16,420 | ) | |||||||||||||||||||||||
Maintenance capital expenditures | (21,335 | ) | (5,300 | ) | (330 | ) | (5,649 | ) | | (32,614 | ) | (440 | ) | (5,649 | ) | |||||||||||||||||||||
Proportionately Combined Free Cash Flow | 158,731 | 150,840 | 64,600 | 6,626 | (15,361 | ) | 365,436 | 71,365 | 6,634 |
25
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For the Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||||||
IMTT | Atlantic Aviation | Contracted Power (1) | MIC Hawaii (1) | MIC Corporate | Proportionately Combined (2) |
Contracted
Power 100% |
MIC Hawaii 100% | |||||||||||||||||||||||||||||
($ in Thousands) (Unaudited) | ||||||||||||||||||||||||||||||||||||
Net income (loss) | 67,184 | 60,225 | 9,858 | 16,009 | (58,181 | ) | 95,095 | 9,604 | 16,004 | |||||||||||||||||||||||||||
Interest expense, net (3) | 30,707 | 13,648 | 18,177 | 5,789 | 19,419 | 87,740 | 20,431 | 5,795 | ||||||||||||||||||||||||||||
Provision (benefit) for income taxes | 46,686 | 36,766 | 8,209 | 10,772 | (37,149 | ) | 65,284 | 8,209 | 10,772 | |||||||||||||||||||||||||||
Depreciation and amortization | 93,826 | 73,894 | 39,390 | 10,908 | | 218,018 | 45,031 | 10,922 | ||||||||||||||||||||||||||||
Fees to Manager-related party | | | | | 54,610 | 54,610 | | | ||||||||||||||||||||||||||||
Pension expense (4) | 5,649 | 15 | | 817 | | 6,481 | | 817 | ||||||||||||||||||||||||||||
Other non-cash expense (income), net (5) | 315 | 1,252 | (6,148 | ) | 3,108 | 534 | (939 | ) | (6,170 | ) | 3,108 | |||||||||||||||||||||||||
EBITDA excluding non-cash items | 244,367 | 185,800 | 69,486 | 47,403 | (20,767 | ) | 526,289 | 77,105 | 47,418 | |||||||||||||||||||||||||||
EBITDA excluding non-cash items | 244,367 | 185,800 | 69,486 | 47,403 | (20,767 | ) | 526,289 | 77,105 | 47,418 | |||||||||||||||||||||||||||
Interest expense, net (3) | (30,707 | ) | (13,648 | ) | (18,177 | ) | (5,789 | ) | (19,419 | ) | (87,740 | ) | (20,431 | ) | (5,795 | ) | ||||||||||||||||||||
Convertible senior notes interest (6) | | (5,769 | ) | | | 5,769 | | | | |||||||||||||||||||||||||||
Adjustments to derivative instruments recorded in interest expense, net (3) | (257 | ) | 3,150 | (1,088 | ) | 112 | | 1,917 | (1,282 | ) | 113 | |||||||||||||||||||||||||
Amortization of debt financing costs (3) | 1,236 | 819 | 1,094 | 303 | 2,969 | 6,421 | 1,137 | 303 | ||||||||||||||||||||||||||||
Amortization of debt discount (3) | | | | | 2,377 | 2,377 | | | ||||||||||||||||||||||||||||
(Provision) benefit for current income taxes | (3,069 | ) | (5,810 | ) | 7 | (5,265 | ) | 5,645 | (8,492 | ) | 6 | (5,265 | ) | |||||||||||||||||||||||
Changes in working capital (7) | (12,413 | ) | (6,667 | ) | (9,089 | ) | (13,072 | ) | (6,691 | ) | (47,932 | ) | (8,771 | ) | (13,093 | ) | ||||||||||||||||||||
Cash provided by (used in) operating activities | 199,157 | 157,875 | 42,233 | 23,692 | (30,117 | ) | 392,840 | 47,764 | 23,681 | |||||||||||||||||||||||||||
Changes in working capital (7) | 12,413 | 6,667 | 9,089 | 13,072 | 6,691 | 47,932 | 8,771 | 13,093 | ||||||||||||||||||||||||||||
Maintenance capital expenditures | (13,563 | ) | (5,071 | ) | (22 | ) | (4,406 | ) | | (23,062 | ) | (22 | ) | (4,406 | ) | |||||||||||||||||||||
Proportionately Combined Free Cash Flow | 198,007 | 159,471 | 51,300 | 32,358 | (23,426 | ) | 417,710 | 56,513 | 32,368 |
(1) | Represents MICs proportionately combined interests in the businesses comprising these reportable segments. |
(2) | The sum of the amounts attributable to MIC in proportion to its ownership. |
(3) | Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023. |
(4) | Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. |
(5) | Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to the disposal of assets. Other non-cash expense (income), net, also includes the write-down of our investment in CPI for the quarter and nine months ended September 30, 2018. See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. |
(6) | Represents the cash interest expense reclassified from MIC Corporate to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviations credit facility in October 2016. |
(7) | Conformed to current period presentation for the adoption of ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, 2018. |
26
Exhibit 99.2
Media Release
MIC MANAGER WAIVES CERTAIN FEES UNDER MANAGEMENT
SERVICES AGREEMENT, ENHANCES ALIGNMENT OF
EXECUTIVE COMPENSATION
· Manager waives fees in excess of 1% of equity market capitalization, reduces fees by approximately $10.0 million per year
· Manager requires minimum share ownership by CEO and CFO, Compensation Committee to have additional input on executive performance and pay
NEW YORK, October 31, 2018 - Macquarie Infrastructure Corporation (NYSE: MIC) announced that its external manager, Macquarie Infrastructure Management (USA) Inc. (MIMUSA or Manager), will waive portions of the base management fees to which it is entitled under the Management Services Agreement between the two entities. The waiver is effective from November 1, 2018.
The Manager has also implemented changes to the compensation plans for MIC’s chief executive officer and chief financial officer, both of whom are seconded to MIC by the Manager. The changes include the implementation of minimum shareholding requirements and additional input on the part of the Company’s Compensation Committee to better align the incentives of the executives with those of shareholders more broadly.
“The independent members of the MIC Board of Directors support the decision by the Manager to waive certain base management fees,” said Norman Brown, MIC’s lead independent director. “With these changes, together with the addition to the MIC board of our current CEO and two new independent directors, we continue to address concerns raised by stakeholders earlier this year. Furthermore, these changes greatly improve the alignment of interest between the Manager, our senior executives and our shareholders.”
Management Services Agreement
MIMUSA has waived two components of the base management fee formula and significantly reduced the base management fees payable by MIC. Specifically, the Manager will cap the base management fee at 1.0% of MIC’s equity market capitalization. The Manager will also waive any fees to which it may be entitled as a result of the Company maintaining holding company level debt. The waivers result in a reduction in the fees paid to the Manager of approximately $10.0 million per year based on MIC’s market value and capital structure at the end of the third quarter.
MIC expects MIMUSA to continue to reinvest any base management fees to which it may be entitled in new primary shares of the Company. The waiver has no impact on the existing performance fee structure.
Although MIMUSA reserves the right to revoke the fee waiver and revert to the prior terms of the agreement subject to providing the Company with not less than a one year notice, MIC believes MIMUSA has no current intent to do so. A revocation of the waiver would not trigger a recapture of previously waived fees.
Executive Compensation
The Company and the Manager are also enacting several changes to executive compensation to better align incentives and provide greater oversight from the independent members of the MIC Board of Directors. MIC’s chief executive officer and chief financial officer will be subject to minimum shareholding requirements. In addition, the Company’s Compensation Committee will have a larger role in the setting of performance targets and pay.
MIC’s chief executive officer will be required to purchase and maintain a position in shares of MIC equal to not less than six times base compensation. MIC’s chief financial officer will be required to purchase and maintain a position of not less than two times base compensation. The current executives have until the end of January in 2022 to accumulate their respective positions.
The Compensation Committee of the MIC Board of Directors, comprising solely independent members of the Board, will participate to a greater extent in an annual process with the Manager of setting performance objectives, evaluating actual performance, and providing input to the Manager on annual compensation decisions.
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, entities comprising an energy services, production and distribution segment, MIC Hawaii, and entities comprising a Contracted Power segment. For additional information, please visit the MIC website at www.macquarie.com/mic. MIC-G
MIC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of MIC 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 MIC.
For further information, please contact:
Investors Jay A. Davis Investor Relations MIC +1 212-231-1825
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Media Melissa McNamara Corporate Communications MIC +1 212-231-1667 |