UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)
x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2018

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period from            to            

Commission File Number: 001-32384

 

MACQUARIE INFRASTRUCTURE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware		43-2052503
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

125 West 55 ^th Street
New York, New York 10019

(Address of Principal Executive Offices) (Zip Code)

(212) 231-1000

(Registrant’s Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report): N/A

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer x		Accelerated Filer o
Non-accelerated Filer o		Smaller Reporting Company o		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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

There were 85,640,118 shares of common stock, with $0.001 par value, outstanding at October 30, 2018.

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MACQUARIE INFRASTRUCTURE CORPORATION
 
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		Page
PART I. FINANCIAL INFORMATION
Management’s Discussion and Analysis of Financial Condition and Results of Operations			1
Quantitative and Qualitative Disclosures About Market Risk			32
Controls and Procedures			33
Consolidated Condensed Balance Sheets as of September 30, 2018 (Unaudited) and December 31, 2017			34
Consolidated Condensed Statements of Operations for the Quarters and Nine Months Ended September 30, 2018 and 2017 (Unaudited)			36
Consolidated Condensed Statements of Comprehensive Income for the Quarters and Nine Months Ended September 30, 2018 and 2017 (Unaudited)			37
Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 (Unaudited)			38
Notes to Consolidated Condensed Financial Statements (Unaudited)			40
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			65
Item 1A. Risk Factors			65
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			66
Item 3. Defaults Upon Senior Securities			66
Item 4. Mine Safety Disclosures			66
Item 5. Other Information			66
Item 6. Exhibits			66

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.

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Cautionary Note Regarding Forward-Looking Statements

In addition to historical information, this quarterly report on Form 10-Q (Quarterly Report) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements may appear throughout this Quarterly Report, including without limitation, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section. We use words such as “believe”, “intend”, “expect”, “anticipate”, “plan”, “may”, “will”, “should”, “estimate”, “potential”, “project” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the risks identified in our Annual Report on the Form 10-K for the year ended December 31, 2017, and in other reports we file from time to time with the Securities and Exchange Commission (SEC).

Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. Our forward-looking statements speak only as of the date of this Quarterly Report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events or otherwise.

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See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —  Results of Operations — Consolidated — Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics ” for further information on our calculation of EBITDA excluding non-cash items, Free Cash Flow and our proportionately combined metrics and for reconciliations of non-GAAP measures to the most comparable GAAP measures.

At IMTT, we focus on providing bulk liquid storage, handling and other services to customers who place a premium on ease of access and operational flexibility. The substantial majority of IMTT’s revenue is generated pursuant to “take-or-pay” contracts providing access to storage tank capacity and ancillary services over a revenue weighted average remaining contract life of 2.0 years.

At Atlantic Aviation, our focus is on attracting and maintaining relationships with GA aircraft owners and pilots and encouraging them to purchase fuel and other services from our fixed based operations (FBOs). Atlantic Aviation’s gross margin is positively correlated with the number of GA flight movements in the U.S. and the business’ ability to service a portion of the aircraft involved in those operations.

The businesses that comprise our Contracted Power segment generate revenue by producing and selling electric power pursuant primarily to long-dated power purchase agreements (PPAs).

MIC Hawaii comprises Hawaii Gas and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii. The businesses of MIC Hawaii generate revenue primarily from the provision of gas services to commercial, residential and governmental customers; the generation of power and the design and construction of building mechanical systems.

Dividends

Since January 1, 2017, MIC has paid or declared the following dividends:

Declared

Period Covered

$ per Share

Record Date

Payable Date

October 30, 2018

Third quarter 2018

$

1.00

November 12, 2018

November 15, 2018

July 31, 2018

Second quarter 2018

1.00

August 13, 2018

August 16, 2018

May 1, 2018

First quarter 2018

1.00

May 14, 2018

May 17, 2018

February 19, 2018

Fourth quarter 2017

1.44

March 5, 2018

March 8, 2018

October 30, 2017

Third quarter 2017

1.42

November 13, 2017

November 16, 2017

August 1, 2017

Second quarter 2017

1.38

August 14, 2017

August 17, 2017

May 2, 2017

First quarter 2017

1.32

May 15, 2017

May 18, 2017

February 17, 2017

Fourth quarter 2016

1.31

March 3, 2017

March 8, 2017

We currently intend to maintain, and where possible, increase our quarterly cash dividend to our shareholders. The MIC Board has authorized a quarterly cash dividend of $1.00 per share for the quarter ended September 30, 2018. MIC has been structured to provide investors with an opportunity to generate an attractive “total return” and we intend to distribute the majority of the cash generated from operations by our businesses as a quarterly dividend.

Our board of directors regularly reviews our dividend policy and payout ratio. In determining whether to adjust the amount of our quarterly dividend, our board will take into account such matters as the state of the capital markets and general business and economic conditions, the Company’s financial condition, results of operations, indebtedness levels, capital requirements, capital opportunities and any contractual, legal and regulatory restrictions on the payment of dividends by the Company to its stockholders or by its subsidiaries to the Company, and any other factors that it deems relevant, subject to maintaining a prudent level of reserves and without creating undue volatility in the amount of such dividends where possible. Moreover, the Company’s senior secured credit facility and the debt commitments at our businesses contain restrictions that may limit the Company’s ability to pay dividends. Although historically we have declared cash dividends on our shares, any or all of these or other factors could result in the modification of our dividend policy, or the reduction, modification or elimination of our dividend in the future.

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Recent Developments

BEC Sale

On July 27, 2018, we entered into an agreement to sell 100% of Bayonne Energy Center (BEC) to NHIP II Bayonne Holdings LLC. On October 12, 2018, we concluded the sale of BEC and received cash of $657.4 million, net of the assumption of the outstanding debt balance of $243.5 million by the buyer and subject to post-closing working capital adjustments resulting in a preliminary pre-tax gain of approximately $5.0 million. Any such adjustments could result in an adjustment to the expected gain. Any adjustment is not expected to be significant. We incurred approximately $10.0 million in professional fees in relation to this transaction of which approximately $3.0 million have been recorded through September 30, 2018. We have guaranteed our subsidiary’s payment and certain post-closing indemnity obligations under the purchase agreement.

During the nine months ended September 30, 2018, BEC contributed approximately $42.0 million of EBITDA excluding non-cash items to the results of the Contracted Power segment. This excludes the warranty settlement from its turbine manufacturer. See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Results of Operations — Contracted Power ” for further discussions.

We have used the proceeds from the sale of BEC and cash on hand to pay down the majority of the outstanding balances on our and our businesses’ revolving credit facilities. The repayment of our revolving credit facilities has strengthened our balance sheet and increased our financial flexibility. We may redraw these facilities in the future, other than $150.0 million of debt we repaid at IMTT that we do not expect to redraw, to fund a portion of our planned growth capital deployments. For further discussions on use of BEC proceeds, see “ Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resource — Financing Activities ”.

Strategic Review

We continue to review strategic options available to us, including with respect to certain other, smaller businesses in our portfolio in an effort to rationalize our portfolio and enhance the infrastructure characteristics of our businesses. Consistent with this, we commenced a sale process for Critchfield Pacific Inc. (CPI), the design build mechanical contractor that comprises part of our MIC Hawaii segment. Subsequent to quarter end, we reached an agreement to sell the business for a nominal sum in a transaction that we expect will close before the end of the year.

Prior to the execution of the sales agreement, we wrote-down the value of our investment in CPI to reflect its underperformance. During the nine months ended September 30, 2018, CPI had made negative contributions to EBITDA excluding non-cash items. This write-down of approximately $30.0 million consists of fixed asset and intangible assets of approximately $9.0 million, as well as a reserve for certain contract related amounts in other current liabilities and other expenses.

In October 2018, we commenced a sale process involving the majority of the assets in our portfolio of wind and solar facilities. We believe a sale of these assets and the redeployment of the proceeds will maximize value relative to attempting to continue to expand the portfolio through acquisitions. We expect to retain two of our solar facilities and to maintain our two existing relationships with developers of renewable power opportunities. The sale process is expected to be concluded in the second quarter of 2019.

Manager Waiver of Base Management Fees

Effective November 1, 2018, our Manager has elected to waive two portions of the base management fee to which it is entitled under the terms of the Managements Services Agreement between us. In effect, this waiver caps the base management fee at 1% of our equity market capitalization and eliminates fees on any debt we have or may incur at our holding company. 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. The waivers result in a reduction in the fees paid to the Manager of approximately $10.0 million per year based on the Company’s market value and capital structure at the end of the third quarter.

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New Independent Board Members

On September 5, 2018, we expanded our Board of Directors from seven to nine members and elected two new independent directors, Amanda Brock, the chief operating officer of Solaris Water Midstream, and Maria Jelescu Dreyfus, the chief executive officer of Ardinall Investment Management. In addition, Christopher Frost, our chief executive officer, was elected to the board upon the retirement as a director of our former chief executive officer, James Hooke.

Results of Operations

Consolidated

Our consolidated results reflect a decrease in the contribution from IMTT primarily as a result of the non-renewal of certain contracts for bulk liquid storage and handling services and the absence of deferred revenue recognized in 2017 in connection with the termination of a construction project. These were partially offset by contributions from an acquisition of a portfolio of storage terminals completed in the third quarter of 2017.

Our consolidated results also reflect increased contributions from our Atlantic Aviation and Contracted Power businesses. Atlantic Aviation benefited from contributions from acquisitions, together with the operational leverage inherent in the business, partially offset by decreases in GA flight activity at certain of the airports on which the business operates. The improved contribution from Contracted Power was the result of the BEC plant expansion coming on line and improved wind and solar resources.

MIC Hawaii’s contribution declined primarily as a result of the underperformance of CPI, and the write-down of our investment in that business, together with cost increases at Hawaii Gas. These were partially offset by incremental revenue and EBITDA excluding non-cash items generated by Hawaii Gas in the third quarter as a result of interim rate relief granted by the Hawaii Public Utilities Commission (HPUC) in a general rate case on behalf of the regulated portion of the business at the end of June. The Final Decision and Order could potentially include an unfavorable rate adjustment which may have a retroactive impact on revenues since the Interim Decision and Order.

Results for the third quarter of 2018 also reflect the absence of implementation costs incurred in 2017 related to our shared services facility, but reflects the associated benefit of reductions in procurement costs in 2018. The absence of these expenses was partially offset by the cost of advisory and other services in connection with addressing shareholder matters in 2018.

Capital deployed into acquisitions by each of IMTT and Atlantic Aviation in 2017, as well as growth investments generally, contributed to revenue and EBITDA exluding non-cash items to our overall results in the quarter and nine months ended September 30, 2018.

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Results of Operations: Consolidated  – (continued)

Our consolidated results of operations are as follows:

		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.

Revenue

Consolidated revenues increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily as a result of, (i) an increase in the wholesale cost of jet fuel sold at Atlantic Aviation; (ii) an increase in the volume and the wholesale cost of propane and synthetic natural gas sold at Hawaii Gas; (iii) increased capacity and power production by our Contracted Power businesses; and, (iv) contributions from acquisitions. The increase in revenue for the nine months ended September 30, 2018 was partially offset by the absence of deferred revenue recognized in 2017 in connection with the termination of a construction project at IMTT.

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Results of Operations: Consolidated  – (continued)

Cost of Services and Product Sales

Consolidated cost of services and product sales increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to, (i) an increase in the wholesale cost of jet fuel at Atlantic Aviation; (ii) an increase in the wholesale cost of propane and synthetic natural gas and lower margins at MIC Hawaii; and, (iii) incremental costs associated with various acquisitions and developments. The changes in consolidated cost of services and product sales also reflect unrealized gains and losses on commodity hedges, principally propane, at Hawaii Gas (see “Results of Operations —  MIC Hawaii ” below).

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to, (i) incremental costs associated with acquired and developed businesses; and (ii) approximately $3.0 million of costs incurred for advisory services in connection with addressing shareholder matters. The increases in selling, general and administrative expenses were partially offset by the absence of costs incurred during 2017 in connection with the implementation of our shared services center and lower costs during the third quarter of 2018 in connection with the evaluation of various investment and acquisition/disposition opportunities.

Fees to Manager

Our Manager is entitled to a monthly base management fee based primarily on our market capitalization and potentially a quarterly performance fee based on total stockholder returns relative to a U.S. utilities index. For the quarter and nine months ended September 30, 2018, we incurred base management fees of $12.3 million and $36.1 million, respectively, compared with $17.9 million and $54.6 million for the quarter and nine months ended September 30, 2017, respectively. No performance fees were incurred in any of the above periods. The unpaid portion of base management fees and performance fees, if any, at the end of each reporting period is included in the line item Due to Manager-related party in our consolidated condensed balance sheets.

In all of the periods shown below, our Manager elected to reinvest any fees to which it was entitled in additional shares. In accordance with the Third Amended and Restated Management Services Agreement, our Manager has currently elected to reinvest future base management fees and performance fees, if any, in new primary shares.

Period		Base Management Fee Amount ($ in Thousands)				Performance Fee Amount ($ in Thousands)				Shares Issued
2018 Activities:
Third quarter 2018		$	12,333			$	—				269,286	(1)
Second quarter 2018			10,852				—				277,053
First quarter 2018			12,928				—				265,002
2017 Activities:
Fourth quarter 2017		$	16,778			$	—				248,162
Third quarter 2017			17,954				—				240,674
Second quarter 2017			18,433				—				233,394
First quarter 2017			18,223				—				232,398

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Results of Operations: Consolidated  – (continued)

Goodwill Impairment

During the quarter ended September 30, 2018, we wrote-off the goodwill balance related to CPI.

Depreciation

Depreciation expense decreased for the quarter ended September 30, 2018 compared with the quarter ended September 30, 2017 primarily due to the fact that BEC’s assets were no longer depreciated once it was classified as held for sale. The decrease was partially offset by the write-down of fixed assets at CPI and the increase in depreciation expense related to acquisitions and assets placed in service.

Depreciation expense increased for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017 primarily due to write-down of fixed assets at CPI and the increase in depreciation expense related to acquisitions and assets placed in service. These increases were partially offset by the decrease in depreciation expense due to the fact that BEC’s assets were no longer depreciated once it was classified as held for sale.

Amortization of Intangibles

Amortization of intangibles increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to write-off of intangible assets at CPI. The increase was partially offset by the decrease in amortization of intangibles due to the fact that BEC’s assets were no longer amortized once it was classified as held for sale.

Interest Expense and Gains (Losses) on Derivative Instruments

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, compared with losses on derivative instruments of $162,000 and $6.9 million for the quarter and nine months ended September 30, 2017, respectively. Gains and losses on derivatives recorded in interest expense are attributable to the change in fair value of interest rate hedging instruments. Excluding the derivative adjustments, cash interest expense was $32.5 million and $94.1 million for the quarter and nine months ended September 30, 2018, respectively, compared with $27.1 million and $79.4 million for the quarter and nine months ended September 30, 2017, respectively. The increase in cash interest expense reflects primarily a higher average debt balance and an increase in the weighted average interest rate. See discussions of interest expense for each of our operating businesses below.

Other (Expense) Income, net

Other (expense) income, net, changed from other income, net, to other expense, net, primarily due to the write-down in our investment in CPI during the quarter ended September 30, 2018. This is partially offset by a warranty settlement from a manufacturer of BEC turbines in the third quarter of 2018 and higher development fees paid to our Contracted Power business by a developer of renewable power projects during the nine months ended September 30, 2018.

Income Taxes

We file a consolidated federal income tax return that includes the financial results of IMTT, Atlantic Aviation, BEC, MIC Hawaii and our allocable share of the taxable income (loss) from our wind and solar facilities. The wind and solar facilities in which we own less than 100% of the equity interest are held in limited liability companies and treated as partnerships for tax purposes. Pursuant to a tax sharing agreement, the businesses included in our consolidated federal income tax return pay MIC an amount equal to the federal income tax each would have paid on a standalone basis as if they were not part of the consolidated federal income tax return. In addition, our businesses file income tax returns and may pay taxes in the state and local jurisdictions in which they operate.

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Results of Operations: Consolidated  – (continued)

For the year ending December 31, 2018, we expect our current year federal taxable income to be approximately $320.0 million, including the expected taxable gain on the sale of BEC. We further expect this liability to be fully offset by net operating loss (NOL) carryforwards. Our initially reported NOL balance at December 31, 2017 was $347.3 million. As a result of the regulations issued by the Internal Revenue Service in August 2018, our federal NOL balance as of December 31, 2017 was revised upward to $373.9 million and we believe we will be able to fully utilize this amount.

We expect to utilize the majority of our federal prior year NOLs in 2018 and therefore, we are likely required to make material federal income tax payments in 2019. The amount of any federal income tax otherwise payable in 2019 is expected to be substantially reduced by tax benefits associated with planned capital deployment of approximately $300.0 million. Conversely, gains from potential sales of assets concluded in 2019 would increase our federal income tax payable.

In addition, we expect our businesses collectively to pay state/provincial income taxes of approximately $22.0 million in 2018, including the expected taxes due on the sale of BEC. In calculating our consolidated state income tax provision, we have provided a valuation allowance for certain state income tax NOLs, the use of which is uncertain.

The Tax Cuts and Jobs Act

On December 22, 2017, the Tax Cuts and Jobs Act was signed into law and includes provisions that will have an impact on our federal taxable income. The most significant of these are 100% bonus depreciation on qualifying assets (which is scheduled to decrease ratably to 0% between 2023 and 2027) and a reduction in the federal corporate tax rate from 35% to 21%.

The Tax Cuts and Jobs Act also limits the deductibility of net interest expense to 30% of “adjusted taxable income”. We do not expect this limitation to have a material impact to our financial results through 2021.

Noncontrolling Interest

The increased loss attributable to noncontrolling interest for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017 was driven primarily by the change in tax rates imposed on certain entities within the Contracted Power segment by the Tax Cuts and Jobs Act.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics

In addition to our results under U.S. GAAP, we use certain non-GAAP measures to assess the performance and prospects of our businesses. In particular, we use EBITDA excluding non-cash items, Free Cash Flow and certain proportionately combined financial metrics. Proportionately combined financial metrics reflect our proportionate interest in our wind and solar facilities.

We measure EBITDA excluding non-cash items as it reflects our 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. We believe investors use EBITDA excluding non-cash items primarily as a measure of the operating performance of MIC’s businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from ours, particularly where acquisitions and other non-operating factors are involved. We define 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.

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Results of Operations: Consolidated  – (continued)

Given our varied ownership levels in our Contracted Power and MIC Hawaii segments, together with our 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 we consider in assessing the amount of cash generated based on our proportionate interest in our wind and solar facilities. We note 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 and not in lieu of our financial results reported under GAAP.

Our businesses are characteristically owners of high-value, long-lived assets capable of generating substantial Free Cash Flow. We define 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.

We use Free Cash Flow as a measure of our ability to provide investors with an attractive risk-adjusted total return by sustaining and potentially increasing our quarterly cash dividend and funding a portion of our growth. GAAP metrics such as net income (loss) do not provide us with the same level of visibility into the performance and prospects of the business as a result of: (i) the capital intensive nature of our businesses and the generation of non-cash depreciation and amortization; (ii) shares issued to our external Manager under the Management Services Agreement; (iii) our 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 expenses. Pension expenses primarily consist of interest cost, expected return on plan 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. We believe that external consumers of our financial statements, including investors and research analysts, use Free Cash Flow both to assess MIC’s performance and as an indicator of its success in generating an attractive risk-adjusted total return.

In this Quarterly Report on Form 10-Q, we have disclosed Free Cash Flow on a consolidated basis and for each of our operating segments and MIC Corporate. We believe 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 our 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 our definition of Free Cash Flow. We note 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 and not in lieu of our financial results reported under GAAP.

Classification of Maintenance Capital Expenditures and Growth Capital Expenditures

We categorize capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, we have adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain our 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 flows. We consider a number of factors in determining whether a specific capital expenditure will be classified as maintenance or growth.

We do not bifurcate specific capital expenditures into maintenance and growth components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.

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Results of Operations: Consolidated  – (continued)

A reconciliation of net income to EBITDA excluding non-cash items and a reconciliation from cash provided by operating activities to Free Cash Flow, on a consolidated basis, is provided below. Similar reconciliations for each of our operating businesses and MIC Corporate follow.

		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	)

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Results of Operations: Consolidated  – (continued)

Reconciliation from Consolidated Free Cash Flow to Proportionately Combined Free Cash Flow

See “Results of Operations —  Consolidated ” above for a reconciliation of Free Cash Flow —  Consolidated basis to cash provided by operating activities, the most comparable GAAP measure. The following table is a reconciliation from Free Cash Flow on a consolidated basis to Free Cash Flow on a proportionately combined basis (our proportionate interest in our wind and solar facilities). See “Results of Operations” below for a reconciliation of Free Cash Flow for each of our segments to cash provided by (used in) operating activities for such segment.

		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	)
MIC’s 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	)
MIC’s 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	)

Results of Operations: IMTT

The financial performance of IMTT is in large part a function of the amount of bulk liquid storage capacity under lease and the storage rates achieved on those leases. IMTT recorded financial results for the quarter and nine months ended September 30, 2018 that reflect a previously forecast decline in storage capacity utilization and lower average storage rates, partially offset by contributions from an acquisition in 2017.

The portion of IMTT’s storage capacity under lease declined to an average of 82.1% for the quarter ended September 30, 2018 compared with 92.7% in the prior comparable quarter and 86.1% in the quarter ended June 30, 2018. Average storage rates declined primarily as a result of lower rates achieved on renewal of gasoline and distillates contracts in New York Harbor. IMTT expects the lower storage rates for gasoline and distillates in New York Harbor to continue to impact its financial results through 2019, although this impact is expected to be partially offset by increases in storage utilization and an increase in demand for storage related to the implementation of the International Maritime Organization’s IMO Marpol Annex VI (IMO 2020) regulations limiting the sulphur content of bunker fuel beginning January 1, 2020.

IMTT is currently both involved in and evaluating a number of initiatives related to repurposing existing storage capacity and repositioning the overall business:

Repurposing

IMTT anticipates cleaning and modifying tanks on the Lower Mississippi River totaling up to approximately 3.0 million barrels of capacity, along with related infrastructure, from heavy and residual oil storage to storage of products with potentially better growth prospects such as clean petroleum, chemical and agricultural oils. Approximately 1.3 million barrels of storage capacity is being repurposed currently and approximately 600,000 of these barrels are expected to be returned to service by year end. Through the third quarter, approximately 900,000 of the 1.3 million barrels had been re-contracted (including contracts with future start dates) with the remainder expected to be re-contracted in November 2018.

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Results of Operations: IMTT  – (continued)

The cost of repurposing the 1.3 million barrels of storage capacity is estimated at approximately $12.0 million in 2018, of which approximately $7.0 million will be characterized as maintenance capital expenditures. Through the end of the third quarter of 2018, IMTT had deployed $6.9 million of the $12.0 million. The repurposing of additional barrels is expected to be completed by the end of 2020.

Repositioning

Repositioning includes projects designed to leverage IMTT’s existing geographic footprint through increases in capacity or capability designed to meet customer demand and/or further diversify the mix of products handled. For example, in the second quarter of 2018, IMTT announced that it had entered into an agreement to construct an additional 200,000 barrels of capacity for a chemicals manufacturer.

Other repositioning projects under consideration or in process include enhancing terminal connectivity by investing in truck, pipeline, marine and rail infrastructure. In the third quarter, IMTT commenced the development of an automated, multi-product, six bay truck rack to improve its intermodal distribution capabilities in the New York Harbor market and is expected to be in service in late 2019.

In the fourth quarter, IMTT completed negotiations on an agreement with Methanex that will see the business construct 714,000 barrels of chemical storage capacity and associated infrastructure at its Geismar Chemical Logistics facility. The project is subject to a final investment decision by Methanex on the construction of a third methanol manufacturing plant in Geismar (Geismar 3) alongside its two existing facilities. A final investment decision is expected in mid-2019.

IMTT also entered into agreements to construct an additional dock at its Geismar facility that will support the existing business, the Methanex project and future expansion opportunities. The dock is expected to be operational by the end of 2019.

IMTT’s aggregate investment in the three new projects is estimated to be $80.0 million.

The successful implementation of the repurposing and repositioning initiatives is, over time, expected to, (i) improve utilization and rates, (ii) increase exposure to products with better growth prospects, (iii) generate a larger proportion of IMTT’s revenue from longer-dated contracts and, (iv) reduce exposure to heavy and residual oil storage demand.

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Results of Operations: IMTT  – (continued)

		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	)

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Results of Operations: IMTT  – (continued)

Revenue

IMTT generates the majority of its revenue from contracts comprising a fixed monthly charge for access to or use of a specified amount of capacity, infrastructure or land. The monthly charge typically increases annually with inflation. We refer to revenue generated from such contracts or fixed charges as firm commitments. At September 30, 2018, firm commitments had a revenue weighted average remaining contract life of 2.0 years, although some customers storing certain petroleum products are renewing contracts for shorter durations. Revenue from firm commitments comprised 84.8% and 80.3% of total revenue for the quarter and trailing twelve months ended September 30, 2018, respectively.

For the quarter and nine months ended September 30, 2018, total revenue decreased compared with the quarter and nine months ended September 30, 2017 primarily due to the decline in utilization and lower average storage rates on contract renewals, reduced environmental response revenue as a result of the sale of IMTT’s subsidiary OMI Environmental Solutions (OMI) in April 2018 and lower deferred revenue recognized in connection with the termination of a construction project in 2017. The decrease in revenue was partially offset by contributions from an acquisition of a portfolio of terminals completed in the third quarter of 2017.

Cost of Services and Selling, General and Administrative Expenses

Cost of services and selling, general and administrative expenses combined decreased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to the absence of costs related to OMI. The cost decreases were partially offset by incremental costs related to the terminals acquired in 2017.

Cost of services is expected to increase during the fourth quarter of 2018, and subsequently, as a result of an expected increase in property taxes assessed on the terminal at St. Rose.

Depreciation and Amortization

Depreciation and amortization expense increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to an acquisition of terminals in 2017.

Interest Expense, Net

Interest expense includes gains on derivative instruments of $1.2 million and $6.8 million for the quarter and nine months ended September 30, 2018, respectively, compared with gains on derivative instruments of $124,000 and losses on derivative instruments of $1.5 million for the quarter and nine months ended September 30, 2017, respectively. Excluding the derivative adjustments, cash interest expense was $12.2 million and $35.4 million for the quarter and nine months ended September 30, 2018, respectively, compared with $10.3 million and $29.7 million for the quarter and nine months ended September 30, 2017, respectively. The increase in cash interest expense reflects a higher average debt balance and a higher weighted average interest rate.

The interest rate on IMTT’s tax-exempt Gulf Opportunity Zone Bonds (GO Zone Bonds) increased by 0.7% in 2018 as a result of the reduction in the corporate tax rate from 35% to 21% under the Tax Cuts and Jobs Act.

Income Taxes

The taxable income generated by IMTT is reported on our consolidated federal income tax return. The business files standalone state/provincial income tax returns in the jurisdictions in which it operates. For the year ending December 31, 2018, the business expects to pay state/provincial income taxes of approximately $5.0 million. The Benefit (provision) for current income taxes of $6.1 million for the nine months ended September 30, 2018 in the above table includes $4.9 million of state/provincial income tax expense and $1.2 million of federal income tax expense. Any current federal income tax payable is expected to be offset in consolidation with the application of MIC holding company level NOLs.

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Results of Operations: IMTT  – (continued)

The majority of the difference between IMTT’s book and federal taxable income relates to depreciation of terminal fixed assets. For book purposes, these fixed assets are depreciated primarily over 5 to 30 years using the straight-line method of depreciation. For federal income tax purposes, these same fixed assets are depreciated primarily over 5 to 15 years using accelerated methods. In addition, most terminal fixed assets qualify for federal bonus tax depreciation. A significant portion of terminal fixed assets in Louisiana that were constructed in the period after Hurricane Katrina in 2005 were financed with GO Zone Bonds. GO Zone Bond financed assets are depreciated, for tax purposes, primarily over 9 to 20 years using the straight-line method. Most of the states in which the business operates do not allow the use of bonus tax depreciation. Louisiana allows the use of bonus depreciation except for assets financed with GO Zone Bonds.

Maintenance Capital Expenditures

During the nine months ended September 30, 2018, IMTT incurred maintenance capital expenditures of $21.3 million on both an accrual basis and cash basis, compared with $13.6 million and $16.4 million on an accrual basis and cash basis, respectively, for the nine months ended September 30, 2017. The increase in 2018 compared with 2017 was primarily a result of expenditures related to the repurposing of storage capacity and the timing of tank and dock inspections and repairs.

Maintenance capital expenditures for the nine months ended September 30, 2018 includes $4.0 million associated with repurposing existing tanks. For the full year, IMTT anticipates spending approximately $12.0 million on repurposing existing tanks with approximately $7.0 million of that being characterized as maintenance capital expenditures. The expenditures related to repurposing will be in addition to a forecast of approximately $25.0 million of recurring maintenance capital expenditures.

Results of Operations: Atlantic Aviation

The fundamental driver of the performance of Atlantic Aviation is the number of GA flight movements (take-offs and landings) in a given period. Based on data reported by the FAA, industry-wide domestic GA flight movements increased by 1.1% and 1.9% for the two month period including July and August and the eight months ended August 31, 2018, respectively, compared with the same periods in 2017. The number of GA flight movements tends to be correlated with general economic activity over the long-term. Factors that could impact GA flight movements either positively or negatively in the short-term include traffic constraints due to repairs and maintenance of runways, weather conditions or events, the timing of public and religious holidays and events, including major sporting events.

The total number of GA flight movements at airports on which Atlantic Aviation operates decreased by 2.0% and 0.1% during the two month period including July and August and the eight months ended August 31, 2018, respectively, compared with the same periods in 2017. The decrease was the result of a number of the aforementioned short-term factors, several of which had a positive impact on the prior comparable periods, together with decreased traffic at Santa Monica Municipal Airport in Santa Monica, CA as a result of the shortening of the runway. Atlantic Aviation believes that growth in GA flight movements will continue to be positively correlated with growth in economic activity and GDP. Flight movements at airports on which Atlantic Aviation operates, other than Santa Monica, decreased by 0.7% for the two month period including July and August and increased 1.1% the eight months ended August 31, 2018.

Atlantic Aviation seeks to extend FBO leases prior to their maturity in order to maintain visibility into the cash generating capacity of these assets over the long-term. Atlantic Aviation calculates a weighted average remaining lease life based on EBITDA excluding non-cash items in the prior calendar year adjusted for the impact of acquisitions/dispositions. The weighted average remaining lease life was 19.9 years at September 30, 2018 compared with 20.7 years at September 30, 2017.

TABLE OF CONTENTS

Results of Operations: Atlantic Aviation  – (continued)

		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

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Results of Operations: Atlantic Aviation  – (continued)

Atlantic Aviation generates the majority of its revenue from sales of jet fuel. Increases and decreases in the cost of jet fuel are generally passed through to consumers. Accordingly, revenue will fluctuate based on the cost of jet fuel to Atlantic Aviation and reported revenue may not reflect the business’ ability to effectively manage volume and gross margin. For example, an increase in revenue may be attributable to an increase in the cost of the jet fuel and not an increase in the volume sold or margin per gallon to the customer. Conversely, a decline in revenue may be attributable to a decrease in the cost of jet fuel and not a reduction in the volume sold or margin per gallon.

Gross margin, which we define as revenue less cost of services, excluding depreciation and amortization, is the effective “top line” for Atlantic Aviation as it is reflective of the business’ ability to drive growth in the volume of products and services sold and the margins earned on those sales over time. We believe that our investors view gross margin as reflective of our ability to manage volume and price throughout the commodity cycle. Gross margin can be reconciled to operating income —  the most comparable GAAP measure  — by subtracting selling, general and administrative expenses and depreciation and amortization in the table above.

Revenue and Gross Margin

The majority of the revenue generated and gross margin earned by Atlantic Aviation is the result of fueling GA aircraft at facilities located at the 70 U.S. airports on which the business operates. Atlantic Aviation seeks to maintain and, where appropriate, increase dollar-based margins on fuel sales.

Revenue and gross margin are driven, in part, by the volume of fuel sold and the dollar-based margin/fee per gallon on those sales. Revenue increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 as a result of increases in the wholesale cost of fuel and contributions from acquisitions. The increased wholesale cost of fuel was largely offset by a corresponding increase in cost of services, contributing to an increase in gross margin for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017. The improvement in gross margin primarily reflects an increased contribution from hangar rentals and ancillary fees, in addition to acquisitions.

Our discussion of same store results in the current and prior comparable periods reflects contributions from FBOs that have been in operation for the same full months in each period, and excludes the costs of acquiring, integrating or disposing of FBOs. On a same store basis, gross margin increased by 0.1% and 2.7% in the quarter and nine months ended September 30, 2018, respectively, compared with the quarter and nine months ended September 30, 2017 driven by an increased contribution from hangar rentals and ancillary fees.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were flat for the quarter ended September 30, 2018 compared with the quarter ended September 30, 2017. For the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017, selling general and administrative expenses increased primarily as a result of rent increases and higher labor costs, including those related to acquisitions.

Depreciation and Amortization

Depreciation and amortization expense increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily as a result of contributions from acquisitions and assets placed in service.

Operating Income

Operating income increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 due to the increase in gross margin, partially offset by the increase in selling, general and administrative expenses and the increase in depreciation and amortization.

TABLE OF CONTENTS

Results of Operations: Atlantic Aviation  – (continued)

Interest Expense, Net

Interest expense includes gains on derivative instruments of $1.5 million and $8.5 million for the quarter and nine months ended September 30, 2018, respectively, compared with losses on derivative instruments of $219,000 and $2.9 million for the quarter and nine months ended September 30, 2017, respectively. Excluding the derivative adjustments, cash interest expense was $7.4 million and $20.6 million for the quarter and nine months ended September 30, 2018, respectively, compared with $5.5 million and $15.4 million for the quarter and nine months ended September 30, 2017, respectively. The increase in cash interest expense reflects a higher average debt balance and a higher weighted average interest rate.

Cash interest expense for the quarter and nine months ended September 30, 2018 and 2017 includes the cash interest expense on the $402.5 million of the MIC Corporate 2.00% Convertible Senior Notes issued in October 2016 and due in October 2023. The proceeds from the note issuance were used principally to reduce the drawn balance of Atlantic Aviation’s revolving credit facility.

Income Taxes

The taxable income generated by Atlantic Aviation is included in our consolidated federal income tax return. The business files standalone state income tax returns in the majority of the states in which it operates. The tax expense in the table above includes both state taxes and the portion of the consolidated federal tax liability attributable to the business.

For the year ending December 31, 2018, Atlantic Aviation expects to pay state income taxes of approximately $8.0 million. The Provision for current income taxes of $19.5 million for the nine months ended September 30, 2018 in the above table includes $13.8 million of federal income tax expense and $5.7 million of state income tax expense. Any current federal income tax payable is expected to be offset in consolidation with the application of MIC holding company level NOLs.

Maintenance Capital Expenditures

For the nine months ended September 30, 2018, Atlantic Aviation incurred maintenance capital expenditures of $5.3 million and $5.5 million on an accrual basis and cash basis, respectively, compared with $5.1 million and $5.6 million on an accrual basis and cash basis, respectively, for the nine months ended September 30, 2017.

Results of Operations: Contracted Power

The performance of our Contracted Power segment is broadly a function of the availability of wind and solar resources and, through the third quarter of 2018, the demand for peaking power in New York City. Following the sale of BEC, our thermal power facility serving New York City, on October 12, 2018, Contracted Power comprises solely wind and solar facilities and any contribution that may result from our relationships with two renewable power project developers.

TABLE OF CONTENTS

Results of Operations: Contracted Power  – (continued)

		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

TABLE OF CONTENTS

Results of Operations: Contracted Power  – (continued)

Revenue

Revenue increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 due to the contribution from the BEC plant expansion and better wind and solar resources.

Cost of Product Sales

Cost of product sales increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 due to the completion of the BEC plant expansion in May 2018.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to the BEC plant expansion and higher development-related expenses. These increases were partially offset by lower insurance costs at BEC.

Depreciation and Amortization

Depreciation and amortization expense decreased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine ended September 30, 2017 primarily due to the fact that BEC’s assets were no longer depreciated or amortized once it was classified as held for sale.

Other Income, Net

Other income, net, decreased for the quarter ended September 30, 2018 compared with the quarter ended September 30, 2017 primarily due to development fees paid to the Contracted Power business by a developer of renewable power projects in 2017, partially offset by a warranty settlement from a manufacturer of BEC turbines in 2018.

Other income, net, increased for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017 primarily due to higher development fees paid to the Contracted Power business by a developer of renewable power projects and a warranty settlement from a manufacturer of BEC turbines in 2018.

Interest Expense, Net

Interest expense includes gains on derivative instruments of $1.8 million and $9.2 million for the quarter and nine months ended September 30, 2018, respectively, compared with losses on derivative instruments of $82,000 and $2.4 million for the quarter and nine months ended September 30, 2017, respectively. Excluding the derivative adjustments, cash interest expense was $6.4 million and $19.5 million for the quarter and nine months ended September 30, 2018, respectively, compared with $6.8 million and $20.6 million for the quarter and nine months ended September 30, 2017, respectively. The decrease in cash interest expense reflects primarily a lower average debt balance related to scheduled amortization on all facilities.

Income Taxes

Our wind and solar facilities are held in limited liability companies that are treated as pass through entities for tax purposes. As such, these entities do not pay federal or state income taxes on a standalone basis, but each owner pays federal and state income taxes on its allocable share of taxable income. For the year ending December 31, 2018, MIC expects its share of the federal taxable income from these facilities to be a loss of approximately $1.0 million. For 2017, MIC’s share of the federal taxable income from these facilities was a loss of approximately $13.0 million.

TABLE OF CONTENTS

Results of Operations: Contracted Power  – (continued)

The taxable income generated by BEC’s operations is included in our consolidated federal income tax return and is subject to New York state income tax as part of a combined return. For the year ending December 31, 2018, with the closing of the sale of BEC, the business expects to have a state income tax liability in New Jersey and New York totaling approximately $8.0 million.

Noncontrolling Interest

The increase in loss attributable to noncontrolling interest for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017 was driven primarily by the change in tax rates imposed on certain entities by the Tax Cuts and Jobs Act.

Results of Operations: MIC Hawaii

The decreased contribution from our MIC Hawaii businesses for the quarter and nine months ended September 30, 2018 reflects primarily continued poor performance at CPI and the related write-down of our investment as discussed in “ Recent Developments ” above. The decrease is partially offset by improved performance in the utility portion of our Hawaii Gas business. In October 2018, consistent with initiatives that will focus MIC on its core lines of business, we decided to sell CPI and expect to complete the sale before the end of 2018.

In August 2017, Hawaii Gas filed a general rate case with the HPUC. On June 27, 2018, the HPUC issued an Interim Decision and Order providing the regulated utility operations of Hawaii Gas with interim rate relief. New rates reflecting the decision went into effect on July 1, 2018 and are expected to result in an increase in regulated revenue over present rates of $8.9 million, or 8.4%, annually. The HPUC is expected to issue a Final Decision and Order subject to, among other things, the completion by Hawaii Gas of the Honouliuli Waste Water Treatment Plant Biogas Project. The project is currently estimated to be completed in the fourth quarter of 2018.

TABLE OF CONTENTS

Results of Operations: MIC Hawaii  – (continued)

		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

TABLE OF CONTENTS

Results of Operations: MIC Hawaii  – (continued)

MIC Hawaii comprises Hawaii Gas and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii. The businesses of MIC Hawaii generate revenue primarily from the provision of gas services to commercial, residential and governmental customers, the generation of power and the design and construction of building mechanical systems.

Hawaii Gas generates a significant portion of its revenue from the sale of gas. Accordingly, revenue can fluctuate based on the wholesale cost of gas to Hawaii Gas and may not reflect the business’ ability to effectively manage volume and gross margin. For example, an increase in revenue may be attributable to an increase in the wholesale cost of gas and not an increase in the volume sold or margin per therm. Conversely, a decline in revenue may be attributable to a decrease in the wholesale cost of gas and not a reduction in volume sold or margin per therm.

Gross margin, which we define as revenue less cost of product sales and services, excluding depreciation and amortization, is the effective “top line” for Hawaii Gas as it is reflective of the business’ ability to drive growth in the volume of products and services and the margins earned on those sales over time. We believe that investors utilize gross margin as it is reflective of our performance in managing volume and price throughout the commodity cycle. Gross margin is reconciled to operating income —  the most comparable GAAP measure  — by subtracting selling, general and administrative expenses and depreciation and amortization in the table above.

Revenue and Gross Margin

Revenue increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017. The increase was primarily attributable to increases in the volume of utility and nonutility gas sold and a higher average price per therm of utility gas sold by Hawaii Gas together with higher revenue from distributed generation assets, partially offset by lower revenue from CPI. On an underlying basis, adjusting for changes in customer inventory, the volume of gas sold increased by 1.8% and 4.8% in the quarter and nine months ended September 30, 2018, respectively, compared with the quarter and nine months ended September 30, 2017.

Gross margin decreased by $3.5 million and $6.2 million for the quarter and nine months ended September 30, 2018, respectively, compared with the quarter and nine months ended September 30, 2017. The decline was partially attributable to unfavorable movements in commodity hedges. The business recorded unrealized gains of $305,000 and unrealized losses of $3.0 million for the quarter and nine months ended September 30, 2018, respectively, compared with unrealized gains of $4.0 million and unrealized losses of $1.7 million for the quarter and nine months ended September 30, 2017, respectively, on the commodity hedges.

Excluding the impact of unrealized gains and losses on commodity hedges, gross margin was flat for the quarter ended September 30, 2018 compared with the quarter ended September 30, 2017, and decreased $4.9 million, or 7.5%, for the nine months ended September 30, 2018 compared with the nine months ended September 30, 2017. The decline for the nine months ended was September 30, 2018 attributable primarily to (i) lower margins at CPI due to increased costs on fixed revenue contracts attributable to higher labor costs, project delays and general construction cost escalation in Hawaii; and (ii) lower margins at Hawaii Gas’ non-utility business. Gross margin at Hawaii Gas for the quarter ended September 30, 2018 reflects the increase in interim rates for the utility business.

TABLE OF CONTENTS

Results of Operations: MIC Hawaii  – (continued)

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily driven by higher salaries and benefit costs.

Goodwill Impairment

During the quarter ended September 30, 2018, MIC Hawaii wrote-off the goodwill balance related to CPI.

Depreciation and Amortization

Depreciation and amortization expense increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to the write-offs of the intangible assets and fixed assets balances at CPI.

Operating (Loss) Income

Operating (loss) income decreased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 due to the increase in depreciation and amortization expenses, the decrease in gross margin, goodwill impairment and increase in selling, general and administrative expenses.

Interest Expense, Net

Interest expense includes gains on derivative instruments of $222,000 and $1.3 million for the quarter and nine months ended September 30, 2018, respectively, compared with gains on derivative instruments of $15,000 and losses on derivative instruments of $158,000 for the quarter and nine months ended September 30, 2017, respectively. Excluding the derivative adjustments, cash interest expense was $1.9 million and $5.7 million for the quarter and nine months ended September 30, 2018, respectively, compared with $1.8 million and $5.4 million for the quarter and nine months ended September 30, 2017, respectively. The increase in cash interest expense reflect primarily a higher average debt balance outstanding.

Other Expenses, Net

Other expense, net, increased for the quarter and nine months ended September 30, 2018 compared with the quarter and nine months ended September 30, 2017 primarily due to the write-down of our investment in CPI during the quarter ended September 30, 2018.

Income Taxes

The taxable income generated by the MIC Hawaii businesses is reported on our consolidated federal income tax return and is subject to Hawaii state income tax on a stand-alone basis. The tax expense in the table above includes both state tax and the portion of the consolidated federal tax liability attributable to the businesses. For the year ending December 31, 2018, the business expects to pay state income taxes of approximately $500,000. The Provision for current income taxes of $3.3 million for the nine months ended September 30, 2018 in the above table includes $3.2 million of federal income tax expense and $87,000 of state income tax expense. Any current federal income tax payable is expected to be offset in consolidation with the application of MIC holding company level NOLs.

Maintenance Capital Expenditures

For the nine months ended September 30, 2018, MIC Hawaii incurred maintenance capital expenditures of $5.6 million and $5.7 million on an accrual basis and cash basis, respectively, compared with $4.4 million and $4.7 million on an accrual basis and cash basis, respectively, for the nine months ended September 30, 2017.

TABLE OF CONTENTS

Results of Operations: Corporate and Other

Corporate and Other includes expenses paid by the holding company, including base management fees and performance fees, if any, professional fees and costs associated with being a public company.

		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:
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