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Macquarie (MIC) Q4 Earnings and Revenues Miss Estimates

Zacks Equity Research

Macquarie Infrastructure Company MIC reported disappointing results for fourth-quarter 2018, wherein its adjusted earnings and revenues lagged the Zacks Consensus Estimate.

The company’s adjusted earnings for the quarter came in at 45 cents per share, missing the consensus estimate of 54 cents by 16.7%. Also, the figure was lower than 59 cents per share reported in the year-ago quarter. Notably, higher operating costs along with rise in interest expenses were primarily responsible for the year-over-year decline.

Macquarie generated revenues of $437.8 million, up 0.4% year over year.  The top line was driven by solid operational growth in the Atlantic Aviation segment. Product revenues grew 8.8% while Service revenues fell 0.9%. However, revenues missed the Zacks Consensus Estimate of $453.4 million.

Macquarie Infrastructure Company Price, Consensus and EPS Surprise

Macquarie Infrastructure Company Price, Consensus and EPS Surprise | Macquarie Infrastructure Company Quote

For full-year 2018, the company’s adjusted earnings came in at $1.60 per share, down 68.8% on a year-over-year basis.

Macquarie reported revenues of $1,761.5 million for the year, up 5.6% from 2017.

Segment Details

Revenues from the International-Matex Tank Terminals (IMTT) segment came in at $123.8 million, down 11.1% year over year. It represented 28.3% of the company’s fourth-quarter revenues. The segment’s EBITDA declined 20.4% to $65.1 million due to persistent fall in capacity utilization levels.

The Atlantic Aviation segment generated revenues of $247.5 million, up 9.8% year over year and accounting for 56.5% of the company’s overall revenues. The segment’s EBITDA rose 11.4% to $68.5 million on the back of contributions from acquired fixed base operations as well as rise in hangar rental income and ancillary services fees.

Revenues in the MIC Hawaii segment were down 8.7% year over year to $66.3 million. It represented 15.1% of overall quarterly revenues. The segment’s EBITDA increased 21.3% from prior-year quarter.

Operating Costs

In the reported quarter, Macquarie’s cost of services and cost of product sales increased 5.3% and 40.7% year over year, respectively. Selling and administrative expenses also jumped 10.7%. Overall, operating expenses rose 7.1% to about $391.2 million.

Notable Developments

Macquarie is undertaking initiatives for the repurposing and repositioning of certain IMTT assets, to better align the unit according to shifts in global demand and trade flows. Notably, IMTT is working on developing new storage capacity and capabilities. As a matter of fact, this is likely to strengthen operations of two of the business' terminals on the Lower Mississippi River.

Liquidity & Cash Flow

As of Dec 31, 2018, the company had cash and cash equivalents of $588.6 million and long-term debt of about $2,652.7 million. Its adjusted free cash flow for the quarter fell 13.9% year over year to $439.5 million, hurt by increase in interest expenses, taxes, maintenance and capital expenditures.

Macquarie authorized cash dividend of $1.00 per share for the fourth quarter, payable Mar 7 to shareholders of record as on Mar 4.

Guidance

The company provided guidance for 2019 EBITDA and currently expects the same in the range of $610-$635 million.

Zacks Rank & Key Picks

Macquarie currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Carlisle Companies Incorporated CSL, Griffon Corporation GFF and United Technologies Corporation UTX. While Carlisle and Griffon sport a Zacks Rank #1 (Strong Buy), United Technologies carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carlisle delivered average earnings surprise of 15.00% in the trailing four quarters.

Griffon pulled off average positive earnings surprise of 90.28% in the trailing four quarters.

United delivered average earnings surprise of 14.87% in the trailing four quarters.

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