MIC Reports Continued Strength in Cash Generation, Progress against Strategic Priorities During Third Quarter
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NEW YORK--(BUSINESS WIRE)-- Macquarie Infrastructure Company (NYSE: MIC) reported financial performance in the third quarter that puts the Company on track to generate cash for the full-year 2009 in excess of that generated in 2008. The Company also reported progress against key strategic initiatives including disposition of its airport parking business and reduction of debt levels. Third quarter results include:
-- Gas production/distribution and district energy businesses generate
$10.2 million available to reduce holding company debt
-- Upswing in general aviation flight activity supports sequential
improvement in airport services quarterly results - airport services
pre-pays $12.0 million of primary debt facility principal during quarter
-- Net loss of $0.41 per share on non-cash losses on interest rate swap
contracts
-- Letter of intent executed regarding sale of airport parking business
"Our third quarter results clearly reflect the positive steps we have taken and continue to take in addressing our highest priority issues," said James Hooke, Chief Executive Officer of MIC. "We continue to see attractive amounts of cash being generated by our businesses and a significant reduction in net debt levels and the risk profile of MIC," he added.
Strong results for the Company's gas production and distribution business include the mid-year implementation of a rate increase by the utility segment of the business. A lower cost of propane products sold through the non-utility segment also contributed to the improved results.
MIC's gas production and distribution and district energy businesses generated a combined $10.2 million of estimated cash available before debt reduction in the third quarter. A total of $27.4 million of CADR has been generated by the businesses year to date. The cash will be applied to the reduction of MIC's holding company revolving credit facility balance at an appropriate time.
The $66.4 million holding company revolving credit facility is due on March 31, 2010. Assuming seasonally normal performance by the gas production and distribution and district energy businesses in the fourth quarter of 2009 and first quarter of 2010, MIC expects to have less than $30.0 million of net holding company debt at the March maturity date.
The Company is in discussions with its lenders to convert the revolver to a term loan and would then expect to fully repay the facility over the remainder of 2010. MIC continues to consider various other options for repayment of the facility including improving business performance, expense reductions, sale of assets sufficient to cover the remaining principal balance at maturity, or other sources of capital. The Company remains confident that it will be able to refinance or repay the outstanding borrowings under the facility by the current maturity date.
Results for the Company's airport services business improved with the increase in general aviation jet flight activity during the quarter. The improved performance contributed to the $13.2 million of cash that was used to prepay a portion of the business' term loan facility and related swap breakage fees. On November 4 the business made an additional $9.0 million debt pre-payment which reduced the proforma debt to EBITDA (leverage) ratio for the business at September 30 to 7.79 times versus a debt covenant of 8.25 times. The $9.0 million pre-payment also resulted in the business paying swap breakage fees of $0.9 million.
"An improved environment for general aviation flight movements suggests that the airport services business has stabilized and should remain in compliance with its debt covenants and continue to delever," said Hooke.
Efforts by the airport parking business have resulted in its engaging a financial advisor to actively solicit a sale of the business and the execution of a letter of intent. A letter of intent was signed during the quarter with a third party, which is conducting due diligence and with which the business is currently negotiating an asset purchase agreement. The business expects to close a sale transaction in 2010, which will likely occur in connection with a bankruptcy filing and consummation of a Chapter 11 plan. Proceeds generated as a result of the sale would be payable to lenders of the business and not to MIC. As previously indicated, MIC has no intention of committing additional capital to this business and its ongoing liabilities are expected to be no more than $5.3 million in guarantees of a single parking facility lease.
MIC has a 50% equity interest in one of the largest operators of bulk liquid storage terminals in the U.S. MIC's interest in the CADR generated by the business totaled $6.0 million for the quarter. The result was supported by a 9% increase in average storage rates and lower than forecast capital expenditures.
MIC reported a net loss of $18.3 million for the quarter. The loss primarily reflects a net non-cash derivative-related loss of $21.4 million (including MIC's proportional interest in swap contracts of bulk liquid storage terminal business). Through nine months of 2009 MIC reported a net loss of $100.3 million including a net $19.6 million of derivative-related losses, a $71.2 million write-down of goodwill and a $37.2 million stemming from the write-down of fixed assets and intangibles related to underperformance of certain entities. All of these expenses are non-cash items.
The Company recorded consolidated revenue of $202.5 million for the third quarter of 2009 compared with $277.0 million in the third quarter of 2008. The majority of the 27% decrease was attributed to lower jet fuel costs in 2009 versus 2008. Fuel costs, along with a dollar based margin on fuel sales, are recovered in revenue. Year to date revenue through September 30, 2009 totaled $567.5 million, down 33% compared with the nine month period in 2008, also primarily on lower jet fuel costs.
An analysis of gross profit removes the volatility in revenue associated with costs that are typically passed through to customers. Gross profit for the quarter decreased 7.5% to $95.2 million from $103.0 million in 2008. The decline in gross profit was driven by a reduction in the volume of jet fuel sold compared with the third quarter in 2008, partially offset by margin expansion in certain businesses. Gross profit for the nine months ended September 30, 2009 of $274.1 million was 15% lower than the comparable period in 2008.
Cash Generation
MIC believes that its financial results under Generally Accepted Accounting Principles ("GAAP") alone do not reflect all of the items that management considers in estimating the amount of cash it has available to reduce debt, make distributions or reinvest in growth projects. Therefore, the Company discloses estimated cash available before debt reduction ("CADR"), a non-GAAP measure, to provide better insight into its future ability to deploy cash.
The estimation of CADR for MIC's consolidated businesses begins with cash from operations and adjusts for changes in working capital and certain items including dividend income and cash capital expenditures for the quarter and year to date periods. Consistent with the terms of the shareholder agreement between MIC and the other shareholders of the bulk liquid storage business, CADR for the business is determined as cash from operations and cash from investing activities less maintenance and environmental capital expenditures. Results for the Company's airport parking business have been excluded from CADR in both the current and prior comparable periods given the sales process underway for that business.
In 2008, MIC reported its 50% interest in the dividend generated by the bulk liquid storage business as CADR of MIC. For purposes of the table below, the results for the bulk liquid storage business in 2008 have been conformed to the current period's presentation and reflect MIC's 50% interest in the CADR generated by the business.
MIC's CADR for the third quarter of 2009 totaled $24.2 million compared with $28.0 million in the third quarter of 2008. The decrease in CADR is primarily the result of a reduction in cash from operating activities generated by the airport services business and a decrease in gross profit generated by the environmental response unit of the bulk liquid storage terminal business. The table below summarizes CADR, by ongoing business, for the quarter and year to date periods ended September 30, 2009 and September 30, 2008.
Entity 3Q'09 3Q'08 % Change YTD'09 YTD'08 % Change ($ Millions) Bulk Liquid Storage 6.0 11.2 (46.4) 31.0 21.0 47.6 Gas Production 4.4 3.8 15.8 16.7 12.4 34.7 District Energy 5.8 4.9 18.4 10.7 9.9 8.1 Airport Services 11.1 14.8 (25.0) 30.1 57.5 (47.7) MIC LLC (3.1) (6.7) (53.7) (8.4) (10.5) (20.0) Total 24.2 28.0 (13.6) 80.1 90.3 (11.3) See attached tables for a reconciliation of CADR to cash from operations
CADR generated by the bulk liquid storage business declined in the third quarter versus the prior comparable period as a result of the business' environmental response unit generating an outsized contribution in the third quarter of 2008 stemming from an oil spill on the Mississippi River in August. The cash generated by the bulk liquid storage business through three quarters in 2009 has been retained to fund growth capital expenditures.
CADR generated by the gas production and district energy businesses has been accumulated and is available to repay a portion of the outstanding borrowings under the MIC LLC holding company debt facility.
CADR generated by the airport services business has been used to reduce that business' term loan facility principal and to pay associated swap breakage fees. The decline in CADR versus the 2008 comparable periods reflects reduced flight activity in the general aviation sector broadly, partially offset by reduced operating expenses.
Operating Businesses
The Company discloses EBITDA excluding non-cash items for each of its operating segments, individually and in consolidation, as it is a key metric relied on by management in evaluating the performance of its businesses. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, principally goodwill impairments and unrealized gains and losses on derivative instruments. The presentation of EBITDA excluding non-cash items provides additional insight into the performance of the operating companies and their ability to service or reduce debt, to fund existing growth capital projects and/or support distributions up to the MIC holding company.
For the quarter and nine months ended September 30, 2008, MIC reported EBITDA alone. The following tables reflect results of operations for the Company's businesses for the quarter and nine months ended September 30, 2008 and 2009. The results for the 2008 periods have been conformed to the current period's presentation of EBITDA excluding non-cash items.
Energy-Related Businesses
Bulk Liquid Storage Terminal Business
To enable meaningful analysis of the performance of the bulk liquid storage terminal business across periods, the table and discussion below refers to the business' overall results rather than its contribution to MIC's consolidated results.
($Millions) 3Q'09 3Q'08 %Change YTD'09 YTD'08 %Change Terminal Revenue 81.0 76.1 6.4 242.5 223.2 8.7 Terminal Gross Profit 42.8 40.0 7.2 127.9 109.1 17.2 EBITDA excluding non-cash 36.8 40.9 (10.1) 108.7 100.4 8.2 items* * See attached tables for a reconciliation of EBITDA excluding non-cash items to net income
Terminal revenue and terminal gross profit grew primarily as a result of a 9% increase in average storage rental rates for both the quarter and nine month periods ended September 30. Terminal revenue and gross profit also benefited from increases in rented storage capacity resulting from tank construction projects completed in late 2008 and the first nine months of 2009. EBITDA excluding non-cash items declined as a result of an oil spill and related environmental response revenue in the third quarter of 2008 that did not recur in 2009.
Cash flow from operating activities for the nine month period increased to $92.7 million from $76.5 million in the comparable 2008 period. CADR generated in both the quarter and year to date periods were retained for reinvestment in approved growth projects.
Maintenance and environmental capital expenditures totaled $10.2 million and $26.9 million for the quarter and year to date 2009 periods, respectively. The business has revised its forecast for maintenance capital expenditures for the full-year 2009 to between $35.0 million and $40.0 million from $55.0 million at the end of the second quarter. The decrease reflects primarily the deferral of certain infrastructure-related projects, as well as a deferral of a small number of tank cleanings and inspections. Maintenance and environmental capital expenditures in 2010 are expected to be in a range of between $55.0 million and $65.0 million.
The business expects to spend an additional $67.5 million to complete a total of $138.2 million of growth projects currently underway. Financing for these projects is in place. These projects are expected to produce an incremental estimated $19.7 million of annualized gross profit and EBITDA. The storage portion of these projects is expected to be in service in the fourth quarter of 2009 and early 2010. The infrastructure-related (pumps, pipes and docks) portion of these projects enhances the marketability of the related storage and is expected to support sustained increases in average storage rates in 2010.
Gas Production and Distribution Business ($Millions) 3Q'09 3Q'08 % Change YTD'09 YTD'08 % Change Revenue 44.7 59.6 (24.9) 125.8 167.5 (24.9) Gross Profit 13.8 11.5 20.3 41.9 34.2 22.6 EBITDA excluding 8.3 7.1 16.6 25.9 21.1 22.7 non-cash items* * See attached tables for a reconciliation of EBITDA excluding non-cash items to net income
The gas production and distribution business continued to implement the utility rate increases for which it received interim approval in June 2009. The majority of its utility customers were billed at the new rates during the quarter. Approximately two thirds of the quarterly improvement in gross profit and EBITDA excluding non-cash items compared with the third quarter in 2008 was attributable to the rate increase.
Approximately one third of the quarterly improvement in gross profit and EBITDA excluding non-cash items was attributable to improved performance in the unregulated portion of the business. Lower costs of propane resulted in both margin expansion and reduced costs to consumers during the quarter and year to date in 2009.
District Energy Business ($Millions) 3Q'09 3Q'08 % Change YTD'09 YTD'08 % Change Revenue 16.6 17.4 (4.4) 38.3 38.7 (1.1) Gross Profit 6.1 6.2 (1.0) 13.1 13.5 (3.2) EBITDA excluding 7.2 6.8 7.3 15.6 15.1 3.1 non-cash items* * See attached tables for a reconciliation of EBITDA excluding non-cash items to net income
Capacity revenue, based on the number of tons of cooling under contract, grew with an increase in the number of customers connected to the system and the step-up in inflation-linked rate escalators over the prior comparable periods.
A cooler second and third quarter this year compared with 2008 reduced cooling demand and consumption revenue and contributed to a modest decrease in gross profit for the quarter and year to date periods. However, EBITDA excluding non-cash items increased versus the prior comparable periods primarily as a result of the receipt of a termination payment made by one customer who left the system during the third quarter of 2009.
Aviation-Related Businesses
Airport Services ($Millions) 3Q'09 3Q'08 % Change YTD'09 YTD'08 % Change Revenue 124.2 181.3 (31.5) 352.4 579.0 (39.1) Gross Profit 71.4 82.0 (12.9) 215.2 265.2 (18.9) EBITDA excluding 27.9 32.0 (12.9) 80.2 108.6 (26.2) non-cash items* * See attached tables for a reconciliation of EBITDA excluding non-cash items to net income
A decline in general aviation activity (flight movements) in both the quarter and year to date periods compared with 2008 resulted in a decrease in gross profit and EBITDA excluding non-cash items. A portion of the decrease in EBITDA was offset by reductions in expenses stemming from acquisition integration and staffing reductions. The business has recorded sequential improvement in EBITDA excluding non-cash items in each of the three quarters of 2009 reflective of the stabilizing environment for general aviation and increases in flight activity.
The volume of general aviation jet fuel sold by the business declined by 13% in the third quarter of 2009 compared with the third quarter of 2008 and by 19% on a year to date basis. An increase in average margins on fuel sales offset a portion of the quarterly volume decline. Average margins on fuel sales were flat through nine months. The volume of fuel sold in the third quarter of 2009 increased modestly compared with the second quarter.
The airport services business generated cash in excess of its operating requirements for the third quarter and the cash was used to reduce the business' term loan principal and pay related swap breakage costs. The business paid down a total of $12.0 million of debt in the quarter and paid swap breakage costs of $1.2 million. The business paid down an additional $9.0 million of loan principal and incurred $0.9 million of swap breakage costs during the first week of November that will be recorded in the fourth quarter.
Including the November payment the proforma ratio of debt to EBITDA at September 30, (leverage, as defined in the term loan agreement) was 7.79 times compared with a maximum allowable under its debt facility of 8.25 times. Assuming the current level of flight activity at the business' 72 locations continues, the business will remain in compliance with its debt covenants and continue to reduce its debt balance without further equity contributions from MIC.
Airport Parking Business ($Millions) 3Q'09 3Q'08 % Change YTD'09 YTD'08 % Change Revenue 17.0 18.7 (9.2) 51.0 57.0 (10.5) Gross Profit 3.9 3.3 17.9 3.9 10.7 (63.4) EBITDA excluding 1.6 2.6 (38.4) 6.2 7.7 (19.6) non-cash items* * See attached tables for a reconciliation of EBITDA excluding non-cash items to net income
Lot utilization, as measured by the number of cars exiting the airport parking business' facilities, declined 6% compared with the third quarter in 2008 and 12% year to date. The decline in volume and the resulting decline in revenue were partially offset by an increase in average revenue per car in the quarter and year to date periods of 6% and 9%, respectively.
The airport parking business does not have sufficient capital and liquidity with which to service and/or support the refinancing of its long-term debt. A letter of intent was signed during the quarter with a third party, which is conducting due diligence and with which the business is currently negotiating an asset purchase agreement. The business expects to close a sale transaction in 2010, which will likely occur in connection with a bankruptcy filing and consummation of a Chapter 11 plan.
MIC has no intention of contributing additional capital to this business and is in negotiations with a potential acquirer of the assets of the business. Creditors of this business do not have recourse to any of MIC's assets or the assets of its other businesses, other than approximately $5.3 million in lease payments guaranteed by MIC.
Conference Call and WEBCAST
When: Management has scheduled a conference call for 11:00 a.m. Eastern Time on Thursday, November 5, 2009 to review the Company's results.
How: To listen to the conference call please dial +1(888) 490-2763 (domestic) or +1(719) 457-2626 (international) at least 10 minutes prior to the scheduled start time. Interested parties can also listen to a live webcast of the call. The webcast 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 website the morning of November 5, 2009 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.
Replay: For interested individuals unable to participate in the conference call, a replay will be available after 2:00 p.m. on November 5, 2009 through November 19, 2009, at +1(888) 203-1112 (domestic) or +1(719) 457-0820 (international), Passcode: 7642770. An online archive of the webcast will be available on the Company's website for one year following the call.
About Macquarie Infrastructure Company
Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic, everyday services, to customers in the United States. Its ongoing businesses consist of three energy-related businesses including a 50% indirect interest in a bulk liquid storage terminal business (International-Matex Tank Terminals), a gas production and distribution business (The Gas Company in Hawaii) and a district energy business (Thermal Chicago) as well as an aviation-related airport services business (Atlantic Aviation). The Company is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic.
Forward-Looking Statements
This filing contains forward-looking statements. We may, in some cases, use words such as "project", "believe", "anticipate", "plan", "expect", "estimate", "intend", "should", "would", "could", "potentially", or "may" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond our control including, among other things: changes in general economic or business conditions, our 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 our strategy, our shared decision-making with co-investors over investments including the distribution of dividends, our 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 costs, our ability to recover increases in costs from customers, reliance on sole or limited source suppliers, foreign exchange fluctuations, risks or conflicts of interests involving our relationship with the Macquarie Group and changes in U.S. federal tax law.
Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our 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. We undertake 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 Company LLC 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 Company LLC. MIC-G
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)
September 30, 2009 December 31, 2008
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 56,217 $ 68,231
Restricted cash 2,452 1,063
Accounts receivable, less allowance
for doubtful accounts of 54,495 62,240
$2,167 and $2,230, respectively
Dividends receivable - 7,000
Other receivables 20 132
Inventories 14,762 15,968
Prepaid expenses 9,096 9,156
Deferred income taxes 3,774 3,774
Land - available for sale - 11,931
Income tax receivable - 489
Other 11,203 13,440
Total current assets 152,019 193,424
Property, equipment, land and 663,555 673,981
leasehold improvements, net
Restricted cash 16,016 19,939
Equipment lease receivables 34,031 36,127
Investment in unconsolidated business 201,585 184,930
Goodwill 516,182 586,249
Intangible assets, net 760,050 812,184
Deferred financing costs, net of 18,385 23,383
accumulated amortization
Other 3,052 4,033
Total assets $ 2,364,875 $ 2,534,250
LIABILITIES AND MEMBERS'/STOCKHOLDERS'
EQUITY
Current liabilities:
Due to manager - related party $ 1,696 $ 3,521
Accounts payable 49,173 47,886
Accrued expenses 27,750 29,448
Current portion of notes payable and 9,585 2,724
capital leases
Current portion of long-term debt 315,549 201,344
Fair value of derivative instruments 50,228 51,441
Customer deposits 5,673 5,457
Other 9,382 10,785
Total current liabilities 469,036 352,606
Notes payable and capital leases, net 1,990 2,274
of current portion
Long-term debt, net of current portion 1,152,985 1,327,800
Deferred income taxes 51,998 65,042
Fair value of derivative instruments 64,507 105,970
Other 46,869 46,297
Total liabilities 1,787,385 1,899,989
Commitments and contingencies - -
Members'/stockholders' equity:
LLC interests, no par value;
500,000,000 authorized; 45,112,604 LLC
interests issued and outstanding at 958,258 956,956
September 30, 2009 and 44,948,694 LLC
interests issued and outstanding at
December 31, 2008
Accumulated other comprehensive loss (53,630) (97,190)
Accumulated deficit (331,260) (230,928)
Total members'/stockholders' equity 573,368 628,838
Noncontrolling interests 4,122 5,423
Total equity 577,490 634,261
Total liabilities and equity $ 2,364,875 $ 2,534,250
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and per Share Data)
Quarter Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
Revenue
Revenue from $ 103,017 $ 152,060 $ 281,639 $ 478,219
product sales
Revenue from
product sales - 26,056 36,060 67,637 97,317
utility
Service revenue 72,264 87,714 214,614 263,171
Financing and
equipment lease 1,190 1,164 3,587 3,537
income
Total revenue 202,527 276,998 567,477 842,244
Costs and
expenses
Cost of product 61,349 109,801 160,624 337,819
sales
Cost of product 19,406 31,161 50,016 82,175
sales - utility
Cost of 26,562 33,070 82,701 98,615
services
Selling,
general and 54,782 57,426 167,468 182,928
administrative
Fees to manager 1,639 2,737 2,952 11,872
- related party
Goodwill - - 71,200 -
impairment
Depreciation 7,177 7,101 29,597 20,139
Amortization of 9,126 10,563 51,923 32,206
intangibles
Total operating 180,041 251,859 616,481 765,754
expenses
Operating 22,486 25,139 (49,004) 76,490
income (loss)
Other income
(expense)
Interest income 8 268 116 1,038
Interest (24,639) (26,114) (81,861) (77,616)
expense
Equity in
earnings and
amortization 1,178 4,051 16,655 10,603
charges of
investees
Loss on
derivative (17,371) (765) (29,872) (1,651)
instruments
Other income, 269 6 1,693 661
net
Net (loss)
income before
income taxes (18,069) 2,585 (142,273) 9,525
and
noncontrolling
interests
(Provision)
benefit for (327) (2,254) 41,021 (3,254)
income taxes
Net (loss)
income before (18,396) 331 (101,252) 6,271
noncontrolling
interests
Net loss
attributable to (48) (167) (920) (575)
noncontrolling
interests
Net (loss) $ (18,348) $ 498 $ (100,332) $ 6,846
income
Basic (loss)
earnings per $ (0.41) $ 0.01 $ (2.23) $ 0.15
share:
Weighted
average number
of shares 45,006,771 44,948,694 44,969,093 44,942,859
outstanding:
basic
Diluted (loss)
earnings per $ (0.41) $ 0.01 $ (2.23) $ 0.15
share:
Weighted
average number
of shares 45,006,771 44,962,809 44,969,093 44,955,236
outstanding:
diluted
Cash
distributions $ - $ 0.645 $ - $ 1.925
declared per
share
MACQUARIE INFRASTRUCTURE COMPANY LLC
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)
Nine Months Ended
September 30, 2009 September 30, 2008
Operating activities
Net (loss) income before $ (101,252) $ 6,271
noncontrolling interests
Adjustments to reconcile net (loss)
income before noncontrolling
interests to net
cash provided by operating
activities:
Non-cash goodwill impairment 71,200 -
Depreciation and amortization of 43,227 28,359
property and equipment
Amortization of intangible assets 51,923 32,206
Equity in earnings and amortization (16,655) (10,603)
charges of investees
Equity distributions from investees 7,000 10,603
Amortization of debt financing costs 4,998 4,941
Non-cash derivative loss, net of 29,872 1,897
non-cash interest expense
Base management fee to be settled in 1,639 -
LLC interests
Equipment lease receivable, net 2,009 1,621
Deferred rent 1,265 1,535
Deferred taxes (41,892) 1,904
Other non-cash expenses, net 167 658
Changes in other assets and
liabilities, net of acquisitions:
Restricted cash (756) 24
Accounts receivable 7,188 (3,436)
Inventories 776 (2,027)
Prepaid expenses and other current 2,830 4,944
assets
Due to manager - related party (2,613) (2,958)
Accounts payable and accrued expenses 1,655 (110)
Income taxes payable (537) (1,530)
Other, net (2,635) 828
Net cash provided by operating 59,409 75,127
activities
Investing activities
Acquisitions of businesses and - (53,338)
investments, net of cash acquired
Proceeds from sale of investment, net - 1,861
of cash divested
Purchases of property and equipment (19,981) (52,587)
Return of investment in - 10,397
unconsolidated business
Other 115 223
Net cash used in investing activities (19,866) (93,444)
Financing activities
Proceeds from long-term debt 10,000 5,000
Proceeds from line of credit 9,250 87,800
facilities
Offering and equity raise costs paid - (65)
Distributions paid to holders of LLC - (86,520)
interests
Distributions paid to noncontrolling (381) (363)
interests
Payment of long-term debt (72,859) (120)
Debt financing costs paid - (1,874)
Change in restricted cash 3,292 (501)
Payment of notes and capital lease (859) (1,629)
obligations
Net cash (used in) provided by (51,557) 1,728
financing activities
Net change in cash and cash (12,014) (16,589)
equivalents
Cash and cash equivalents, beginning 68,231 57,473
of period
Cash and cash equivalents, end of $ 56,217 $ 40,884
period
Supplemental disclosures of cash flow
information:
Non-cash investing and financing
activities:
Accrued purchases of property and $ 209 $ 1,226
equipment
Acquisition of equipment through $ 129 $ 490
capital leases
Issuance of LLC interests to manager $ 851 $ -
for payment of base management fee
Issuance of LLC interests to $ 450 $ 450
independent directors
Taxes paid $ 1,167 $ 3,044
Interest paid $ 72,265 $ 73,148
CONSOLIDATED STATEMENT OF OPERATIONS
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Revenue
Revenue from $ 103,017 $ 152,060 (49,043 ) (32.3 ) $ 281,639 $ 478,219 (196,580 ) (41.1 )
product sales
Revenue from
product sales 26,056 36,060 (10,004 ) (27.7 ) 67,637 97,317 (29,680 ) (30.5 )
- utility
Service 72,264 87,714 (15,450 ) (17.6 ) 214,614 263,171 (48,557 ) (18.5 )
revenue
Financing and
equipment 1,190 1,164 26 2.2 3,587 3,537 50 1.4
lease income
Total revenue 202,527 276,998 (74,471 ) (26.9 ) 567,477 842,244 (274,767 ) (32.6 )
Costs and
expenses
Cost of 61,349 109,801 48,452 44.1 160,624 337,819 177,195 52.5
product sales
Cost of
product sales 19,406 31,161 11,755 37.7 50,016 82,175 32,159 39.1
- utility
Cost of 26,562 33,070 6,508 19.7 82,701 98,615 15,914 16.1
services
Gross profit 95,210 102,966 (7,756 ) (7.5 ) 274,136 323,635 (49,499 ) (15.3 )
Selling,
general and 54,782 57,426 2,644 4.6 167,468 182,928 15,460 8.5
administrative
Fees to
manager - 1,639 2,737 1,098 40.1 2,952 11,872 8,920 75.1
related party
Goodwill - - - - 71,200 - (71,200 ) NM
impairment
Depreciation 7,177 7,101 (76 ) (1.1 ) 29,597 20,139 (9,458 ) (47.0 )
Amortization 9,126 10,563 1,437 13.6 51,923 32,206 (19,717 ) (61.2 )
of intangibles
Total
operating 72,724 77,827 5,103 6.6 323,140 247,145 (75,995 ) (30.7 )
expenses
Operating 22,486 25,139 (2,653 ) (10.6 ) (49,004 ) 76,490 (125,494 ) (164.1 )
income (loss)
Other income
(expense)
Interest 8 268 (260 ) (97.0 ) 116 1,038 (922 ) (88.8 )
income
Interest (24,639 ) (26,114 ) 1,475 5.6 (81,861 ) (77,616 ) (4,245 ) (5.5 )
expense
Equity in
earnings and
amortization 1,178 4,051 (2,873 ) (70.9 ) 16,655 10,603 6,052 57.1
charges of
investees
Loss on
derivative (17,371 ) (765 ) (16,606 ) NM (29,872 ) (1,651 ) (28,221 ) NM
instruments
Other income, 269 6 263 NM 1,693 661 1,032 156.1
net
Net (loss)
income before
income taxes (18,069 ) 2,585 (20,654 ) NM (142,273 ) 9,525 (151,798 ) NM
and
noncontrolling
interests
(Provision)
benefit for (327 ) (2,254 ) 1,927 85.5 41,021 (3,254 ) 44,275 NM
income taxes
Net (loss)
income before (18,396 ) 331 (18,727 ) NM (101,252 ) 6,271 (107,523 ) NM
noncontrolling
interests
Net (loss)
income
attributable (48 ) (167 ) (119 ) (71.3 ) (920 ) (575 ) (345 ) (60.0 )
to
noncontrolling
interests
Net (loss) $ (18,348 ) $ 498 (18,846 ) NM $ (100,332 ) $ 6,846 (107,178 ) NM
income
NM - Not
meaningful
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF CONSOLIDATED NET (LOSS) INCOME TO CONSOLIDATED EBITDA EXCLUDING NON-CASH ITEMS
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Net (loss) $ (18,348 ) $ 498 $ (100,332 ) $ 6,846
income
Interest 24,631 25,846 81,745 76,578
expense, net
Provision
(benefit) 327 2,254 (41,021 ) 3,254
for income
taxes
Depreciation 7,177 7,101 29,597 20,139
(1)
Depreciation
- cost of 2,552 2,709 13,630 8,220
services (1)
Amortization
of 9,126 10,563 51,923 32,206
intangibles
(2)
Goodwill - - 71,200 -
impairment
Loss on
derivative 17,371 765 29,872 1,651
instruments
50% share of
IMTT
unrealized
losses 4,037 2,396 (10,227 ) 2,251
(gains) on
derivative
instruments
EBITDA
excluding $ 46,873 $ 52,132 (5,259 ) (10.1 ) $ 126,387 $ 151,145 (24,758 ) (16.4 )
non-cash
items
NM - Not
meaningful
(1) Depreciation - cost of services includes depreciation expense for our district energy business and
airport parking business, which are reported in cost of services in our consolidated condensed
statements of operations. Depreciation and Depreciation - cost of services do not include step-up
depreciation expense of $1.7 million for each quarter in connection with our investment in IMTT, which
is reported in equity in earnings and amortization charges of investees in our consolidated condensed
statements of operations.
(2) Amortization of intangibles does not include step-up amortization expense of $283,000 for each
quarter related to intangible assets in connection with our investment in IMTT, which is reported in
equity in earnings and amortization charges of investees in our consolidated condensed statements of
operations.
MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF SEGMENT NET (LOSS) INCOME TO EBITDA EXCLUDING NON-CASH ITEMS AND
SEGMENT REVENUE TO CONTRIBUTION MARGIN
Energy-Related Business: Bulk Liquid Storage Terminal Business
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Revenue
Terminal $ 80,962 $ 76,062 4,900 6.4 $ 242,524 $ 223,185 19,339 8.7
revenue
Environmental
response 4,206 28,432 (24,226 ) (85.2 ) 11,421 37,933 (26,512 ) (69.9 )
revenue
Total revenue 85,168 104,494 (19,326 ) (18.5 ) 253,945 261,118 (7,173 ) (2.7 )
Costs and
expenses
Terminal
operating 38,114 36,076 (2,038 ) (5.6 ) 114,577 114,061 (516 ) (0.5 )
costs
Environmental
response 3,829 19,564 15,735 80.4 11,759 27,459 15,700 57.2
operating
costs
Total
operating 41,943 55,640 13,697 24.6 126,336 141,520 15,184 10.7
costs
Terminal gross 42,848 39,986 2,862 7.2 127,947 109,124 18,823 17.2
profit
Environmental
response gross 377 8,868 (8,491 ) (95.7 ) (338 ) 10,474 (10,812 ) (103.2 )
profit (loss)
Gross profit 43,225 48,854 (5,629 ) (11.5 ) 127,609 119,598 8,011 6.7
General and
administrative 6,653 8,267 1,614 19.5 19,220 21,462 2,242 10.4
expenses
Depreciation
and 13,457 11,303 (2,154 ) (19.1 ) 39,735 31,960 (7,775 ) (24.3 )
amortization
Operating 23,115 29,284 (6,169 ) (21.1 ) 68,654 66,176 2,478 3.7
income
Interest (7,378 ) (6,909 ) (469 ) (6.8 ) (21,990 ) (16,801 ) (5,189 ) (30.9 )
expense, net
Other income 340 110 230 NM 172 1,861 (1,689 ) (90.8 )
Unrealized
(losses) gains (8,074 ) (4,792 ) (3,282 ) (68.5 ) 20,454 (4,502 ) 24,956 NM
on derivative
instruments
Provision for (3,137 ) (7,412 ) 4,275 57.7 (27,035 ) (18,874 ) (8,161 ) (43.2 )
income taxes
Noncontrolling (145 ) 185 (330 ) (178.4 ) 152 442 (290 ) (65.6 )
interest
Net income $ 4,721 $ 10,466 (5,745 ) (54.9 ) $ 40,407 $ 28,302 12,105 42.8
Reconciliation of net income to EBITDA excluding non-cash items:
Net income $ 4,721 $ 10,466 $ 40,407 $ 28,302
Interest 7,378 6,909 21,990 16,801
expense, net
Provision for 3,137 7,412 27,035 18,874
income taxes
Depreciation
and 13,457 11,303 39,735 31,960
amortization
Unrealized
losses (gains) 8,074 4,792 (20,454 ) 4,502
on derivative
instruments
EBITDA
excluding $ 36,767 $ 40,882 (4,115 ) (10.1 ) $ 108,713 $ 100,439 8,274 8.2
non-cash items
NM - Not
meaningful
Energy-Related Business: Gas Production and Distribution Business
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Contribution margin
Revenue -- utility $ 26,056 $ 36,060 (10,004 ) (27.7 ) $ 67,637 $ 97,317 (29,680 ) (30.5 )
Cost of revenue -- 16,535 28,212 11,677 41.4 41,865 74,014 32,149 43.4
utility
Contribution margin -- 9,521 7,848 1,673 21.3 25,772 23,303 2,469 10.6
utility
Revenue -- non-utility 18,680 23,495 (4,815 ) (20.5 ) 58,145 70,177 (12,032 ) (17.1 )
Cost of revenue -- 8,952 14,613 5,661 38.7 26,569 44,381 17,812 40.1
non-utility
Contribution margin -- 9,728 8,882 846 9.5 31,576 25,796 5,780 22.4
non-utility
Total contribution 19,249 16,730 2,519 15.1 57,348 49,099 8,249 16.8
margin
Production 1,428 1,539 111 7.2 4,020 4,051 31 0.8
Transmission and 4,003 3,705 (298 ) (8.0 ) 11,415 10,858 (557 ) (5.1 )
distribution
Gross profit 13,818 11,486 2,332 20.3 41,913 34,190 7,723 22.6
Selling, general and 5,516 4,444 (1,072 ) (24.1 ) 15,923 13,280 (2,643 ) (19.9 )
administrative expenses
Depreciation and 1,713 1,677 (36 ) (2.1 ) 5,135 5,009 (126 ) (2.5 )
amortization
Operating income 6,589 5,365 1,224 22.8 20,855 15,901 4,954 31.2
Interest expense, net (2,212 ) (2,354 ) 142 6.0 (6,709 ) (7,025 ) 316 4.5
Other (expense) income (43 ) 41 (84 ) NM (68 ) 213 (281 ) (131.9 )
Unrealized losses on (3,194 ) (73 ) (3,121 ) NM (392 ) (223 ) (169 ) (75.8 )
derivative instruments
Provision for income (446 ) (1,166 ) 720 61.7 (5,359 ) (3,471 ) (1,888 ) (54.4 )
taxes
Net income(1) $ 694 $ 1,813 (1,119 ) (61.7 ) $ 8,327 $ 5,395 2,932 54.3
Reconciliation of net income to EBITDA excluding non-cash items:
Net income(1) $ 694 $ 1,813 $ 8,327 $ 5,395
Interest expense, net 2,212 2,354 6,709 7,025
Provision for income 446 1,166 5,359 3,471
taxes
Depreciation and 1,713 1,677 5,135 5,009
amortization
Unrealized losses on 3,194 73 392 223
derivative instruments
EBITDA excluding $ 8,259 $ 7,083 1,176 16.6 $ 25,922 $ 21,123 4,799 22.7
non-cash items
________________________
NM - Not meaningful
(1) Corporate allocation expense and the federal tax effect have been excluded from the above table as they are
eliminated on consolidation at the MIC Inc. level.
Energy-Related Business: District Energy Business
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Cooling capacity revenue $ 5,224 $ 4,850 374 7.7 $ 15,231 $ 14,484 747 5.2
Cooling consumption 9,400 10,654 (1,254 ) (11.8 ) 17,130 18,495 (1,365 ) (7.4 )
revenue
Other revenue 832 752 80 10.6 2,331 2,201 130 5.9
Finance lease revenue 1,190 1,164 26 2.2 3,587 3,537 50 1.4
Total revenue 16,646 17,420 (774 ) (4.4 ) 38,279 38,717 (438 ) (1.1 )
Direct expenses -- 5,715 6,982 1,267 18.1 11,103 11,984 881 7.4
electricity
Direct expenses -- other 4,803 4,247 (556 ) (13.1 ) 14,075 13,200 (875 ) (6.6 )
(1)
Direct expenses -- total 10,518 11,229 711 6.3 25,178 25,184 6 -
Gross profit 6,128 6,191 (63 ) (1.0 ) 13,101 13,533 (432 ) (3.2 )
Selling, general and 697 740 43 5.8 2,051 2,498 447 17.9
administrative expenses
Amortization of 345 345 - - 1,023 1,027 4 0.4
intangibles
Operating income 5,086 5,106 (20 ) (0.4 ) 10,027 10,008 19 0.2
Interest expense, net (2,554 ) (2,609 ) 55 2.1 (7,589 ) (7,761 ) 172 2.2
Other income 447 45 402 NM 541 155 386 NM
Unrealized (losses) gains (4,069 ) 10 (4,079 ) NM (639 ) 28 (667 ) NM
on derivative instruments
Income tax benefit 500 (623 ) 1,123 180.3 (721 ) (516 ) (205 ) (39.7 )
(provision)
Noncontrolling interest (174 ) (147 ) (27 ) (18.4 ) (515 ) (437 ) (78 ) (17.8 )
Net (loss) income(2) $ (764 ) $ 1,782 (2,546 ) (142.9 ) $ 1,104 $ 1,477 (373 ) (25.3 )
Reconciliation of net (loss) income to EBITDA excluding non-cash items:
Net (loss) income (2) $ (764 ) $ 1,782 $ 1,104 $ 1,477
Interest expense, net 2,554 2,609 7,589 7,761
Income tax (benefit) (500 ) 623 721 516
provision
Depreciation 1,541 1,402 4,506 4,354
Amortization of 345 345 1,023 1,027
intangibles
Unrealized losses (gains) 4,069 (10 ) 639 (28 )
on derivative instruments
EBITDA excluding non-cash $ 7,245 $ 6,751 494 7.3 $ 15,582 $ 15,107 475 3.1
items
__________________________
NM - Not meaningful
(1) Includes depreciation expense of $1.5 million and $1.4 million for the quarters ended September 30, 2009 and 2008,
respectively, and $4.5 million and $4.4 million for the nine month periods ended September 30, 2009 and September 30,
2008, respectively.
(2) Corporate allocation expense, and the federal tax effect, have been excluded from the above table as they are
eliminated on consolidation at the MIC Inc. level.
Aviation-Related Business: Airport Services Business
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Revenue
Fuel revenue $ 84,337 $ 128,565 (44,228 ) (34.4 ) $ 223,494 $ 408,042 (184,548 ) (45.2 )
Non-fuel revenue 39,843 52,772 (12,929 ) (24.5 ) 128,911 170,990 (42,079 ) (24.6 )
Total revenue 124,180 181,337 (57,157 ) (31.5 ) 352,405 579,032 (226,627 ) (39.1 )
Cost of revenue
Cost of revenue -- fuel 49,837 92,894 43,057 46.4 126,772 286,690 159,918 55.8
Cost of revenue -- 2,943 6,433 3,490 54.3 10,423 27,101 16,678 61.5
non-fuel
Total cost of revenue 52,780 99,327 46,547 46.9 137,195 313,791 176,596 56.3
Fuel gross profit 34,500 35,671 (1,171 ) (3.3 ) 96,722 121,352 (24,630 ) (20.3 )
Non-fuel gross profit 36,900 46,339 (9,439 ) (20.4 ) 118,488 143,889 (25,401 ) (17.7 )
Gross profit 71,400 82,010 (10,610 ) (12.9 ) 215,210 265,241 (50,031 ) (18.9 )
Selling, general and
administrative expenses 43,413 49,989 6,576 13.2 134,734 156,922 22,188 14.1
(1)
Goodwill impairment - - - - 71,200 - (71,200 ) NM
Depreciation and 14,245 15,242 997 6.5 75,362 44,366 (30,996 ) (69.9 )
amortization
Operating income (loss) 13,742 16,779 (3,037 ) (18.1 ) (66,086 ) 63,953 (130,039 ) NM
Interest expense, net (15,865 ) (15,751 ) (114 ) (0.7 ) (52,552 ) (47,032 ) (5,520 ) (11.7 )
Other (expense) income (109 ) (27 ) (82 ) NM (322 ) 283 (605 ) NM
Unrealized losses on (10,517 ) (578 ) (9,939 ) NM (28,601 ) (1,133 ) (27,468 ) NM
derivative instruments
Benefit (provision) for 5,137 (170 ) 5,307 NM 59,467 (6,476 ) 65,943 NM
income taxes
Net (loss) income(2) $ (7,612 ) $ 253 (7,865 ) NM $ (88,094 ) $ 9,595 (97,689 ) NM
Reconciliation of net (loss) income to EBITDA excluding non-cash items:
Net (loss) income(2) $ (7,612 ) $ 253 $ (88,094 ) $ 9,595
Interest expense, net 15,865 15,751 52,552 47,032
(Benefit) provision for (5,137 ) 170 (59,467 ) 6,476
income taxes
Depreciation and 14,245 15,242 75,362 44,366
amortization
Goodwill impairment - - 71,200 -
Unrealized losses on 10,517 578 28,601 1,133
derivative instruments
EBITDA excluding $ 27,878 $ 31,994 (4,116 ) (12.9 ) $ 80,154 $ 108,602 (28,448 ) (26.2 )
non-cash items
________________________
NM - Not meaningful
(1) Includes $2.4 million increase in bad debt reserve in the first quarter of 2009 due to the deterioration of accounts
receivable aging.
(2) Corporate allocation expense and the federal tax effect have been excluded from the above table as they are eliminated
on consolidation at the MIC Inc. level.
Aviation-Related Business: Airport Parking Business
Quarter Ended Change Nine Months Ended Change
September 30, Favorable/ September 30, Favorable/
(Unfavorable) (Unfavorable)
2009 2008 $ % 2009 2008 $ %
($ In Thousands) (Unaudited)
Revenue $ 16,965 $ 18,686 (1,721 ) (9.2 ) $ 51,011 $ 57,001 (5,990 ) (10.5 )
Direct 13,102 15,409 2,307 15.0 47,101 46,330 (771 ) (1.7 )
expenses (1)
Gross profit 3,863 3,277 586 17.9 3,910 10,671 (6,761 ) (63.4 )
Selling,
general and 3,424 2,308 (1,116 ) (48.4 ) 8,680 7,914 (766 ) (9.7 )
administrative
expenses
Amortization - 400 400 NM - 1,943 1,943 NM
of intangibles
Operating 439 569 (130 ) (22.8 ) (4,770 ) 814 (5,584 ) NM
income (loss)
Interest (3,192 ) (3,741 ) 549 14.7 (11,673 ) (11,377 ) (296 ) (2.6 )
expense, net
Other
(expense) (76 ) 2 (78 ) NM 398 62 336 NM
income
Unrealized
gains on 490 88 402 NM 163 246 (83 ) (33.7 )
derivative
instruments
Benefit for 907 1,185 (278 ) (23.5 ) 6,184 3,956 2,228 56.3
income taxes
Noncontrolling 222 314 (92 ) (29.3 ) 1,435 1,012 423 41.8
interest
Net loss(2) $ (1,210 ) $ (1,583 ) 373 23.6 $ (8,263 ) $ (5,287 ) (2,976 ) (56.3 )
Reconciliation of net loss to EBITDA excluding non-cash items:
Net loss (2) $ (1,210 ) $ (1,583 ) $ (8,263 ) $ (5,287 )
Interest 3,192 3,741 11,673 11,377
expense, net
Benefit for (907 ) (1,185 ) (6,184 ) (3,956 )
income taxes
Depreciation 1,011 1,307 9,124 3,866
(1)
Amortization - 400 - 1,943
of intangibles
Unrealized
gains on (490 ) (88 )
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