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MIC Reports 2016 Financial Results In Line With Guidance, Increases Dividend

NEW YORK, Feb. 21, 2017 /PRNewswire/ -- Macquarie Infrastructure Corporation (MIC) today reported its financial results for fourth quarter and full year 2016.

"The performance of our businesses in the fourth quarter and the full year 2016 resulted in the generation of a better than expected amount of Adjusted Free Cash Flow," said James Hooke, chief executive officer of MIC.

MIC reported full year 2016 net income of $154.9 million, compared with a net loss of $113.8 million in 2015. Included in the full year figure was net income of $71.1 million in the fourth quarter of 2016 compared with $31.9 million in the prior comparable period. The Company also reported generation of cash from operating activities of $123.3 million and $560.3 million in the quarter and full-year periods ended December 31, 2016, respectively, compared with $126.2 million and $381.2 million in the comparable periods in 2015.

MIC's businesses produced $118.6 million and $510.2 million of Adjusted Free Cash Flow in the fourth quarter and full year periods in 2016, respectively, up from $94.0 million and from $445.5 million in the comparable periods in 2015. The nominal increase in the full year amount of 14.5% was partially offset by a 3.7% increase in MIC's weighted average number of shares outstanding in 2016 versus 2015 resulting in a 10.5% real increase including the impact of the incremental share issuance.

Performance highlights for the reported periods included:

  • Atlantic Aviation: volume growth driven by market share gains, increased flight activity and contributions from acquisitions and investments
  • IMTT: high utilization rates, stable storage pricing
  • Contracted Power: improved solar and wind resources
  • MIC Hawaii: successful acquisitions, increased gas sales
  • Implementation of shared services center with cost savings expected in 2017 and beyond

"We were also pleased that the continued improvement in our underlying business performance, particularly the growth in cash generation, allowed us to meaningfully increase our quarterly cash dividend," said Hooke.

The MIC board of directors authorized a cash dividend of $1.31 per share, or $5.24 annualized, for the fourth quarter of 2016. The dividend will be payable March 8, 2017 to shareholders of record on March 3, 2017. The payment represents a 13.9% increase over the dividend paid for the fourth quarter of 2015. Inclusive of the $1.31, MIC will have distributed approximately 80.0% of its 2016 Adjusted Free Cash Flow to shareholders.

On February 3, 2017, MIC provided the market with initial guidance regarding the expected performance of its businesses in 2017 and 2018. "We expect that MIC's operations will continue to perform well and generate increases in Free Cash Flow of between 10% and 15% per year," Hooke said. "Based on the anticipated performance improvement, we are also initiating guidance for growth in our cash dividend of 10% in 2017."

MIC expects effective deployment of capital to drive approximately one third of its anticipated annual growth in Free Cash Flow. The Company exceeded its targeted level for capital deployment into growth projects and bolt-on acquisitions in 2016. "Having successfully deployed over $335.0 million during the year, up from an average of $250.0 million historically, we are positioned to potentially exceed our growth capital deployment target of $350.0 million in 2017," Hooke said.

Capital deployment highlights for 2016 included:

  • Acquisitions of Fixed Base Operations assets
  • Acquisition or development of 87 MW of solar facilities in Utah and Hawaii
  • Acquisition of a design/build mechanical contractor in Hawaii
  • Acquisition of a jet fuel storage and handling development company
  • Investment in a US renewable power facility developer

MIC reported a backlog of approved growth projects of $300.0 million at year-end, and expects to deploy capital on projects including:

  • The substantial majority of construction works at BEC II, MIC's development of a 130 MW addition to its power facility in Bayonne, NJ
  • Ramp development and hangar construction at various Atlantic Aviation sites
  • Storage tank and new dock construction at IMTT

Consistent with past performance, MIC also expects to complete bolt-on acquisitions that, together with growth projects, would result in the deployment of in excess of $350.0 million during the coming year.

"We are excited by the growth prospects we see emerging as a result of both the potential for tax reform as well as the focus on infrastructure redevelopment here in the U.S. We have the financial and human capital to deploy in the construction or acquisition of quality, cash generative opportunities in each of our four businesses and look forward to making the most of these trends for the benefit of our shareholders," said Hooke.

Summary Financial Information



Quarter Ended
December 31,


Change Favorable/
(Unfavorable)


Year Ended
December 31,


Change Favorable/
(Unfavorable)



2016


2015


$


%


2016


2015


$


%



($ In Thousands, Except Share and Per Share Data) (Unaudited)

GAAP Metrics

































Net income (loss)


$

71,131



$

31,883




39,248




123.1



$

154,869



$

(113,807)




268,676




NM


Weighted average number of

     shares outstanding: basic



81,853,027




79,877,873




1,975,154




2.5




80,892,654




77,997,826




2,894,828




3.7


Net income (loss) per share
     attributable to MIC


$

0.89



$

0.41




0.48




117.1



$

1.93



$

(1.39)




3.32




NM


Cash provided by operating

     activities



123,332




126,237




(2,905)




(2.3)




560,320




381,156




179,164




47.0


MIC Non-GAAP Metrics:

































EBITDA excluding non-cash

     items, adjusted(1)


$

166,006



$

153,911




12,095




7.9



$

695,588



$

633,101




62,487




9.9


Cash interest(2)



(25,922)




(27,816)




1,894




6.8




(107,930)




(112,440)




4,510




4.0


Cash taxes(3)



(2,027)




66




(2,093)




NM




(7,310)




(532)




(6,778)




NM


Cash pension contribution



(3,500)







(3,500)




NM




(3,500)







(3,500)




NM


Maintenance capital
     expenditures



(13,478)




(30,333)




16,855




55.6




(58,203)




(68,596)




10,393




15.2


Noncontrolling interest(4)



(2,446)




(1,873)




(573)




(30.6)




(8,400)




(5,984)




(2,416)




(40.4)


Adjusted Free Cash Flow(5)


$

118,633



$

93,955




24,678




26.3



$

510,245



$

445,549




64,696




14.5


 

 


NM — Not meaningful




(1)

EBITDA excluding non-cash items, adjusted, is calculated as net income (loss) before interest expense, net, taxes, depreciation and amortization expense, management fees, pension expense and other non-cash (income) expense recorded in the consolidated statement of operations. See below for reconciliation of net income (loss) to EBITDA excluding non-cash items. For the quarter and year ended December 31, 2015, EBITDA excluding non-cash items, adjusted, excludes $60,000 and $9.3 million, respectively, of transaction costs related to the Bayonne Energy Center (BEC) acquisition.


(2)

Cash interest is calculated as interest expense, net, excluding the impact of non-cash adjustments for unrealized (gains) losses from derivative instruments, amortization of deferred financing costs and the amortization of debt discount recorded in the consolidated statement of operations. Cash interest excludes the payment of interest rate swap breakage fees of $17.8 million for the quarter and year ended December 31, 2016 and $50.6 million for the year ended December 31, 2015. For the quarter and year ended December 31, 2016, cash interest also excludes $8.6 million of interest rate cap premiums paid.


(3)

Cash taxes for the quarter and year ended December 31, 2015 excludes $6.9 million of tax refund received in the fourth quarter of 2015 relating to the election of bonus depreciation for 2014.


(4)

Noncontrolling interest adjustment represents the portion of Adjusted Free Cash Flow not attributable to MIC's ownership interest.


(5)

Adjusted Free Cash Flow is calculated as cash from operating activities, which includes EBITDA excluding non-cash items, adjusted, less cash paid for interest, taxes, pension contribution, less maintenance capital expenditures, which includes principal repayment of capital lease obligations used to fund maintenance capital expenditures, excludes the changes in working capital and adjusted for noncontrolling interest. See below for a reconciliation from cash from operating activities to Adjusted Free Cash Flow. MIC regards Adjusted Free Cash Flow as a performance measure and does not intend it to represent cash from operating activities, the most directly comparable GAAP measure, or serve as a measure of liquidity and notes that it is not necessarily comparable to similarly titled measures reported by other companies.

 

 

Conference Call and Webcast

When:  Management has scheduled a conference call for 8:00 a.m. Eastern Time on Wednesday, February 22, 2017 during which it will review and comment on MIC's results for the fourth quarter and full year 2016.

How:  To listen to the conference call please dial +1(650) 521-5252 or +1(877) 852-2928 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company's website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.

Slides:  The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company's website prior to the conference call.

Replay:  For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on February 22, 2017 through midnight on February 28, 2017, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 48638082. An online archive of the webcast will be available on the Company's website for one year following the call.

About MIC

MIC owns and operates a diversified group of businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, entities comprising an energy services, production and distribution segment, MIC Hawaii, and entities comprising a Contracted Power segment. For additional information, please visit the MIC website at www.macquarie.com/mic. MIC-G

Use of Non-GAAP Measures

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

In addition to MIC's results under U.S. GAAP, the Company uses certain non-GAAP measures to assess the performance and prospects of its businesses. In particular, MIC uses EBITDA excluding non-cash items, Free Cash Flow, Adjusted Free Cash Flow and certain proportionately combined financial metrics. Proportionately combined financial metrics, including Adjusted Free Cash Flow, reflect MIC Corporate and the Company's ownership interest in each of its businesses.

MIC measures EBITDA excluding non-cash items as it reflects its businesses' ability to effectively manage the volume of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses. The Company believes investors use EBITDA excluding non-cash items primarily as a measure of the operating performance of its businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from MIC's, particularly where acquisitions and other non-operating factors are involved. MIC defines EBITDA excluding non-cash items as net income (loss) or earnings — the most comparable GAAP measure — before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses, adjustments for other non-cash items and pension expense reflected in the statements of operations. EBITDA excluding non-cash items also excludes base management fees and performance fees, if any, whether paid in cash or stock.

Given MIC's varied ownership levels in some of its businesses, principally in the CP segment, together with obligations to report the results of these businesses on a consolidated basis, GAAP measures such as net income (loss) do not fully reflect all of the items management considers in assessing the amount of cash generated based on its ownership interest in its businesses. The Company notes that the proportionately combined metrics used may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Therefore, proportionately combined metrics should be used as a supplemental measure to help understand MIC's financial performance and not in lieu of financial results reported under GAAP.

The Company's businesses can be characterized as owners of high-value, long-lived assets capable of generating Free Cash Flow. MIC defines Free Cash Flow as cash from operating activities — the most comparable GAAP measure — which includes cash paid for interest, taxes and pension contributions, less maintenance capital expenditures, which includes principal repayments on capital lease obligations used to fund maintenance capital expenditures, and excludes changes in working capital.

Management uses Free Cash Flow as a measure of its ability to provide investors with an attractive risk-adjusted return by sustaining and potentially increasing MIC's quarterly cash dividend and funding a portion of the Company's growth. GAAP metrics such as net income (loss) do not provide MIC management with the same level of visibility into the performance and prospects of the business as a result of: (i) the capital intensive nature of MIC's businesses and the generation of non-cash depreciation and amortization; (ii) shares issued to the Company's external Manager under the Management Services Agreement, (iii) the Company's 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 and gains (losses) on disposal of assets, and (vi) pension expense. 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. Management believes that external consumers of its financial statements, including investors and research analysts, use Free Cash Flow both to assess the Company's performance and as an indicator of its success in generating an attractive risk-adjusted return.

In its Annual Report on Form 10-K, the Company has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate. Management believes that both Free Cash Flow and EBITDA excluding non-cash items support a more complete and accurate understanding of the financial and operating performance of its businesses than would otherwise be achieved using GAAP results alone.

Free Cash Flow/Adjusted Free Cash Flow do not take into consideration required payments on indebtedness and other fixed obligations or other cash items that are excluded from MIC's definition of Free Cash Flow. Examples of other cash items that may be excluded in the calculation of Adjusted Free Cash Flow include, but are not limited to, interest rate swap breakage costs, certain transaction-related expenses and reorganization costs. Management notes that Free Cash Flow and Adjusted Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Both Free Cash Flow and Adjusted Free Cash Flow should be used as a supplemental measure to help understand MIC's financial performance and not in lieu of its financial results reported under GAAP.

See tables below for a reconciliation of EBITDA excluding non-cash items to net income (loss) —most comparable GAAP measure — and a reconciliation of Free Cash Flow and Adjusted Free Cash Flow to cash from operating activities — most comparable GAAP measure.

Classification of Maintenance Capital Expenditures and Growth Capital Expenditures

MIC categorizes capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, the Company has adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain MIC's businesses at current levels of operations, capability, profitability or cash flow, while growth capital expenditures primarily provide new or enhanced levels of operations, capability, profitability or cash flow. Management considers a number of factors in determining whether a specific capital expenditure will be classified as maintenance or growth.

In some cases, specific capital expenditures contain characteristics of both maintenance and growth capital expenditures. MIC does not bifurcate specific capital expenditures into growth and maintenance components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.

Forward-Looking Statements

This press release contains forward-looking statements. MIC may, in some cases, use words such as "project", "believe", "anticipate", "plan", "expect", "estimate", "intend", "should", "would", "could", "potentially", or "may" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this release are subject to a number of risks and uncertainties, some of which are beyond MIC's control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; risks associated with development, investment and expansion in the power industry; its regulatory environment establishing rate structures and monitoring quality of service; demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks; fuel and gas and other commodity costs; its ability to recover increases in costs from customers, cybersecurity risks, work interruptions or other labor stoppages; risks related to its shared services initiative; reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

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

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

 

MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED BALANCE SHEETS

 ($ in Thousands, Except Share Data)












 As of December 31,




2016


2015 









ASSETS








Current assets:








Cash and cash equivalents


$

44,767


$

22,394


Restricted cash



16,420



18,946


Accounts receivable, less allowance for doubtful accounts








of $1,434 and $1,690, respectively



124,846



95,597


Inventories



31,461



29,489


Prepaid expenses



14,561



21,690


Fair value of derivative instruments



5,514



-


Other current assets



7,099



28,453


Total current assets



244,668



216,569


Property, equipment, land and leasehold improvements, net



4,346,536



4,116,163


Investment in unconsolidated business 



8,835



8,274


Goodwill



2,024,409



2,017,211


Intangible assets, net



888,971



934,892


Fair value of derivative instruments



30,781



1,810


Other noncurrent assets



15,053



13,885


Total assets


$

7,559,253


$

7,308,804










LIABILITIES AND STOCKHOLDERS' EQUITY








Current liabilities:








Due to Manager - related party


$

6,594


$

73,317


Accounts payable



69,566



56,688


Accrued expenses



83,734



78,527


Current portion of long-term debt



40,016



40,099


Fair value of derivative instruments



9,297



19,628


Other current liabilities



41,802



40,531


Total current liabilities



251,009



308,790


Long-term debt, net of current portion



3,039,966



2,746,525


Deferred income taxes



896,116



816,836


Fair value of derivative instruments



5,966



15,698


Tolling agreements - noncurrent



60,373



68,150


Other noncurrent liabilities



158,289



150,363


Total liabilities



4,411,719



4,106,362


Commitments and contingencies



-



-


Stockholders' equity:








Common stock ($0.001 par value; 500,000,000 authorized; 82,047,526 shares issued and
     outstanding at December 31, 2016 and 80,006,744 shares issued and outstanding at
     December 31, 2015)


$

82


$

80


Additional paid in capital



2,089,407



2,317,421


Accumulated other comprehensive loss



(28,960)



(23,295)


Retained earnings



892,365



735,984


Total stockholders' equity



2,952,894



3,030,190


Noncontrolling interests



194,640



172,252


Total equity



3,147,534



3,202,442


Total liabilities and equity


$

7,559,253


$

7,308,804


 

 

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

 ($ in Thousands, Except Share and Per Share Data)














Year Ended December 31,




2016



2015



2014

Revenue










Service revenue


$

1,288,562


$

1,288,501


$

1,064,682

Product revenue



363,169



350,749



284,400

Financing and equipment lease income


-



-



1,836

Total revenues



1,651,731



1,639,250



1,350,918

Costs and expenses










Cost of services



524,423



551,029



546,609

Cost of product sales



142,731



168,954



192,881

Selling, general and administrative


303,033



304,862



265,254

Fees to Manager - related party



68,486



354,959



168,182

Depreciation



226,492



215,243



98,442

Amortization of intangibles



65,425



101,435



42,695

Loss from customer contract termination


-



-



-

Total operating expenses 



1,330,590



1,696,482



1,314,063

Operating income (loss)



321,141



(57,232)



36,855

Other income (expense)










Interest income



132



55



112

Interest expense(1)



(116,933)



(123,079)



(73,196)

Equity in earnings and amortization charges of investee


-



-



26,391

Gain from acquisition/divestiture of businesses(2)


-



-



1,027,054

Other income (expense), net



21,786



1,288



(2,307)

Net income (loss) before income taxes



226,126



(178,968)



1,014,909

(Provision) benefit for income taxes(3)



(71,257)



65,161



24,374

Net income (loss)


$

154,869


$

(113,807)


$

1,039,283

Less: net loss attributable to noncontrolling interests


(1,512)



(5,270)



(2,745)

Net income (loss) attributable to MIC


$

156,381


$

(108,537)


$

1,042,028











Basic income (loss) per share attributable to MIC

$

1.93


$

(1.39)


$

16.54

Weighted average number of shares outstanding: basic 


80,892,654



77,997,826



62,990,312











Diluted income (loss) per share attributable to MIC 

$

1.85


$

(1.39)


$

16.10

Weighted average number of shares outstanding: diluted


82,218,627



77,997,826



64,925,565

Cash dividends declared per share

$

5.05


$

4.46


$

3.8875











(1) Interest expense includes losses on derivative instruments of $5.0 million, $28.5 million and $19.5 million for the years ended December 31, 2016,
      2015 and 2014, respectively, of which net loss of $856,000 was reclassified from accumulated other comprehensive loss for the year ended
      December 31, 2014.

(2)  Includes the gain of $948.1 million from the acquisition of the remaining 50% interest in IMTT (IMTT Acquisition) from the remeasuring to fair
       value of the Company's previous 50% ownership interest and the gain of $78.9 million from the sale of the Company's interest in the district
       energy business.

(3) Includes $340,000 of benefit for income taxes from accumulated other comprehensive loss reclassifications for the year ended December 31, 2014.

 

 

MACQUARIE INFRASTRUCTURE CORPORATION













CONSOLIDATED STATEMENTS OF CASH FLOWS

($ in Thousands)















Year Ended December 31,




2016




2015




2014













Operating activities












Net income (loss)


$

154,869



$

(113,807)



$

1,039,283

Adjustments to reconcile net income (loss) to net cash provided by
   operating activities:











Depreciation and amortization of property and equipment



226,492




215,243




102,816

Amortization of intangible assets



65,425




101,435




42,695

Equity in earnings and amortization charges of investee



-




-




(26,391)

Equity distributions from investee



-




-




25,330

Gain from acquisition/divestiture of businesses



-




-




(1,027,181)

Amortization of debt financing costs



21,041




9,075




5,376

Amortization of debt discount



1,007




-




-

Adjustments to derivative instruments



(54,549)




(47,208)




(567)

Fees to Manager- related party



68,486




287,139




103,182

Equipment lease receivable, net



-




-




2,805

Deferred taxes



63,947




(58,734)




(27,942)

Pension expense



8,601




7,300




4,148

Other non-cash (income) expense, net



(1,370)




(1,047)




5,411

Changes in other assets and liabilities, net of acquisitions:












Restricted cash



525




722




35,858

Accounts receivable



(8,415)




5,418




1,645

Inventories



(2,343)




(84)




4,779

Prepaid expenses and other current assets



7,794




(6,964)




5,448

Due to Manager - related party



135




(33)




(11)

Accounts payable and accrued expenses



4,686




(8,002)




(12,446)

Income taxes payable



8,251




(5,926)




288

Pension contribution



(3,500)




-




(26,960)

Other, net



(762)




(3,371)




(5,951)

Net cash provided by operating activities



560,320




381,156




251,615













Investing activities












Acquisitions of businesses and investments, net of cash acquired



(69,168)




(266,895)




(1,222,266)

Proceeds from sale of business, net of cash divested



-




-




265,295

Return of investment in unconsolidated business



-




-




12,319

Purchases of property and equipment



(314,684)




(194,148)




(123,946)

Proceeds from insurance claim



11,068




-




-

Change in restricted cash



(84)




10,559




-

Other, net



(3,977)




1,668




(208)

Net cash used in investing activities



(376,845)




(448,816)




(1,068,806)













Financing activities












Proceeds from long-term debt


$

1,311,000



$

2,486,569



$

412,884

Payment of long-term debt



(1,476,228)




(2,554,552)




(548,431)

Proceeds from the issuance of shares



12,623




492,433




765,052

Dividends paid to common stockholders



(396,093)




(341,560)




(240,535)

Contributions received from noncontrolling interests



15,431




532




-

Purchase of noncontrolling interest



(9,909)




-




-

Distributions paid to noncontrolling interests



(4,630)




(2,546)




(62,538)

Offering and equity raise costs paid



(1,601)




(16,984)




(25,600)

Debt financing costs paid



(17,392)




(23,816)




(15,142)

Proceeds from the issuance of convertible senior notes



402,500




-




350,000

Change in restricted cash



5,587




5,166




(999)

Payment of capital lease obligations



(2,601)




(2,346)




(2,269)

Net cash (used in) provided by financing activities


(161,313)




42,896




632,422













Effect of exchange rate changes on cash and cash equivalents



211




(856)




(590)













Net change in cash and cash equivalents



22,373




(25,620)




(185,359)

Cash and cash equivalents, beginning of period



22,394




48,014




233,373

Cash and cash equivalents, end of period


$

44,767



$

22,394



$

48,014













Supplemental disclosures of cash flow information











Non-cash investing and financing activities:












Accrued financing costs


$

3



$

3



$

112

Accrued purchases of property and equipment


$

28,288



$

23,396



$

8,122

Acquisition of equipment through capital leases


$

-



$

398



$

3,744

Issuance of shares to Manager  


$

135,345



$

218,645



$

101,345

Issuance of shares to independent directors


$

750



$

750



$

750

Issuance of shares for acquisition of business


$

-



$

-



$

115,000

Conversion of convertible senior notes to shares


$

4



$

25



$

-

Conversion of LLC interests to common stock 


$

-



$

79



$

-

Conversion of LLC interests to additional paid in capital 


$

-



$

2,428,334



$

-

Conversion of construction loan to term loan


$

-



$

-



$

60,360

Distributions payable to noncontrolling interests


$

42



$

33



$

441

Taxes (refund) paid, net


$

(898)



$

6,654



$

19,704

Interest paid


$

108,737



$

109,450



$

69,256

 

 

MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS – MD&A



















































Quarter Ended
December 31,


Change 
Favorable/(Unfavorable)


Year Ended
December 31,



Change
Favorable/(Unfavorable)





2016



2015



$


%



2016



2015



$


%




($ In Thousands, Except Share and Per Share Data) (Unaudited)


Revenue
























Service revenue


$

346,125


$

314,863



31,262


9.9


$

1,288,562


$

1,288,501



61


0.0


Product revenue



91,116



86,491



4,625


5.3



363,169



350,749



12,420


3.5


Total revenues



437,241



401,354



35,887


8.9



1,651,731



1,639,250



12,481


0.8


























Costs and expenses
























Cost of services



152,591



130,842



(21,749)


(16.6)



524,423



551,029



26,606


4.8


Cost of product sales



34,808



43,545



8,737


20.1



142,731



168,954



26,223


15.5


Selling, general and administrative



80,851



79,244



(1,607)


(2.0)



303,033



304,862



1,829


0.6


Fees to Manager - related party



18,916



17,009



(1,907)


(11.2)



68,486



354,959



286,473


80.7


Depreciation



54,367



52,950



(1,417)


(2.7)



226,492



215,243



(11,249)


(5.2)


Amortization of intangibles



15,508



17,779



2,271


12.8



65,425



101,435



36,010


35.5


Loss from customer contract termination



-



-



-


#DIV/0!



-



-



-




Total operating expenses 



357,041



341,369



(15,672)


(4.6)



1,330,590



1,696,482



365,892


21.6


Operating income (loss)



80,200



59,985



20,215


33.7



321,141



(57,232)



(378,373)


 NM 


Other income (expense)
























Interest income (expense), net(1)



382



(14,434)



14,816


102.6



(116,801)



(123,024)



6,223


5.1


Other income (expense), net



1,397



(1,104)



2,501


 NM 



21,786



1,288



20,498


 NM 


Net income (loss) before income taxes



81,979



44,447



37,532


84.4



226,126



(178,968)



405,094


 NM 


(Provision) benefit for income taxes



(10,848)



(12,564)



1,716


13.7



(71,257)



65,161



(136,418)


 NM 


Net income (loss)


$

71,131


$

31,883



39,248


123.1


$

154,869


$

(113,807)



268,676


 NM 


Less: net loss attributable to noncontrolling interests



(1,677)



(1,040)



637


61.3



(1,512)



(5,270)



(3,758)


(71.3)


Net income (loss) attributable to MIC


$

72,808


$

32,923



39,885


121.1


$

156,381


$

(108,537)



264,918


 NM 


























Basic income (loss) per share attributable to MIC


$

0.89


$

0.41



0.48


117.1


$

1.93


$

(1.39)



3.32


 NM 


Weighted average number of shares outstanding: basic 



81,853,027



79,877,873



1,975,154


2.5



80,892,654



77,997,826



2,894,828


3.7


























NM - Not meaningful
























(1) Interest income (expense), net, includes gains on derivative instruments of $38.0 million and losses on derivative instruments of $5.0 million for the quarter and year ended December 31, 2016, respectively. For the quarter and year ended December 31, 2015,
      interest income (expense), net, includes gains on derivative instruments of $9.9 million and losses on derivative instruments of $28.5 million, respectively.




















































MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-
CASH ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE CASH FLOW



































































































Quarter Ended
December 31,


Change 
Favorable/(Unfavorable)


Year Ended
December 31,



Change
Favorable/(Unfavorable)





2016



2015



$


%



2016



2015



$


%




($ In Thousands) (Unaudited)


























Net income (loss)


$

71,131


$

31,883







$

154,869


$

(113,807)







Interest (income) expense, net(1)



(382)



14,434








116,801



123,024







Provision (benefit) for income taxes



10,848



12,564








71,257



(65,161)







Depreciation



54,367



52,950








226,492



215,243







Amortization of intangibles



15,508



17,779








65,425



101,435







Fees to Manager- related party(2)



18,916



17,009








68,486



354,959







Pension expense(3)



2,088



1,916








8,601



7,300







Other non-cash (income) expense, net(4)



(6,470)



5,316








(16,343)



792







EBITDA excluding non-cash items


$

166,006


$

153,851



12,155


7.9


$

695,588


$

623,785



71,803


11.5


























EBITDA excluding non-cash items


$

166,006


$

153,851







$

695,588


$

623,785







Interest income (expense), net(1)



382



(14,434)








(116,801)



(123,024)







Adjustments to derivative instruments recorded in interest expense(1)


(40,816)



(15,700)








(13,177)



1,509







Amortization of debt financing costs(1)



13,505



2,318








21,041



9,075







Amortization of debt discount(1)



1,007



-








1,007



-







Interest rate swap breakage fees 



(17,770)



-








(17,770)



(50,556)







Interest rate cap premium



(8,629)



-








(8,629)



-







Provision/benefit for income taxes, net of changes in deferred taxes(5)



(2,027)



7,025








(7,310)



6,427







Pension contribution



(3,500)



-








(3,500)



-







Changes in working capital(2)



15,174



(6,823)








9,871



(86,060)







Cash provided by operating activities



123,332



126,237








560,320



381,156







Changes in working capital(2)



(15,174)



6,823








(9,871)



86,060







Maintenance capital expenditures



(13,478)



(30,333)








(58,203)



(68,596)







Free cash flow  


$

94,680


$

102,727



(8,047)


(7.8)


$

492,246


$

398,620



93,626


23.5


















































(1)  Interest (income) expense, net, includes adjustment to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to convertible senior notes issued in October 2016. Interest (income)
       expense, net, also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas, the October 2016 refinancing at Atlantic Aviation and the May 2015 refinancing at IMTT.


(2)  Fees to Manager-related party includes base management fees and performance fees, if any. In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in
       July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 volume weighted average share price of $71.84.


(3)  Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are not included in pension expense, but rather reflected as a
        reduction to Free Cash Flow, as noted in the table above. 


(4)  Other non-cash (income) expense, net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges, adjustments to asset retirement obligations and non-cash gains (losses) related to disposal of assets.
       See"Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics"above for further discussion.

(5)  Includes $6.9 million of tax refund received in the fourth quarter of 2015 relating to the election of bonus depreciation for the year ended December 31, 2014.

 

 

 


MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO ADJUSTED
FREE CASH FLOW




















Change
Favorable/(Unfavorable)




Quarter Ended
December 31



Change 
Favorable/(Unfavorable)


Year Ended
 December 31,






2016



2015



$


%



2016



2015


$


%




($ In Thousands) (Unaudited)
























Free Cash Flow-Consolidated basis


$

94,680


$

102,727



(8,047)


(7.8)


$

492,246


$

398,620


93,626


23.5


100% of CP Free Cash Flow included in consolidated Free Cash Flow


(16,099)



(12,382)








(72,631)



(21,989)






MIC's share of CP Free Cash Flow



13,654



10,509








64,234



16,005






100% of MIC Hawaii Free Cash Flow included in consolidated Free Cash Flow


(5,879)



(8,390)








(36,311)



(44,118)






MIC's share of MIC Hawaii Free Cash Flow



5,878



8,390








36,308



44,118






Adjusted Free Cash Flow


$

92,234


$

100,854



(8,620)


(8.5)


$

483,846


$

392,636


91,210


23.2
















































 

 


MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH
ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW






















IMTT






















Quarter Ended
December 31,


Change
Favorable/ (Unfavorable)



Year Ended
December 31,


Change
Favorable/ (Unfavorable)





2016


2015




2016


2015






$


$


$


%



$


$


$


%





($ In Thousands) (Unaudited)






















Revenues


135,686


134,160


1,526


1.1



532,472


550,041


(17,569)


(3.2)



Cost of services


54,434


52,091


(2,343)


(4.5)



204,279


222,724


18,445


8.3



Selling, general and administrative expenses


8,365


8,994


629


7.0



32,687


33,903


1,216


3.6



Depreciation and amortization


30,773


32,217


1,444


4.5



134,385


132,002


(2,383)


(1.8)



Operating income


42,114


40,858


1,256


3.1



161,121


161,412


(291)


(0.2)



Interest income (expense), net(1)


2,710


(5,164)


7,874


152.5



(38,752)


(37,378)


(1,374)


(3.7)



Other income, net


1,562


262


1,300


 NM 



18,509


2,212


16,297


 NM 



Provision for income taxes


(19,019)


(14,719)


(4,300)


(29.2)



(57,736)


(51,520)


(6,216)


(12.1)



Net income(2)


27,367


21,237


6,130


28.9



83,142


74,726


8,416


11.3



Less: net income attributable to noncontrolling interests


-


56


56


100.0



59


586


527


89.9



Net income attributable to MIC(2)


27,367


21,181


6,186


29.2



83,083


74,140


8,943


12.1























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(2)


27,367


21,237







83,142


74,726







Interest (income) expense, net(1)


(2,710)


5,164







38,752


37,378







Provision for income taxes


19,019


14,719







57,736


51,520







Depreciation and amortization


30,773


32,217







134,385


132,002







Pension expense(3)


1,805


1,743







7,219


6,063







Other non-cash expense, net 


26


74







657


378







EBITDA excluding non-cash items


76,280


75,154


1,126


1.5



321,891


302,067


19,824


6.6























EBITDA excluding non-cash items


76,280


75,154







321,891


302,067







Interest income (expense), net(1)


2,710


(5,164)







(38,752)


(37,378)







Adjustments to derivative instruments recorded in interest expense(1)


(12,892)


(5,052)







(2,169)


(2,912)







Amortization of debt financing costs(1)


412


407







1,654


2,344







Interest rate swap breakage fees 


-


-







-


(31,385)

...