MIC Reports 2017 Financial Results, Increase In Quarterly Dividend
NEW YORK, Feb. 21, 2018 /PRNewswire/ -- Macquarie Infrastructure Corporation (NYSE: MIC) today reported financial results for full year 2017 that included growth investments of more than $625.0 million and a cash dividend of $1.44 per share for the fourth quarter.
"The performance of our businesses in the fourth quarter and the full year 2017 resulted in year over year growth in cash generation of 8.2%, including the impact of a 2.9% increase in the weighted number of shares outstanding," said Christopher Frost, chief executive officer of MIC. "Effective deployment of a substantial amount of growth capital offset a slightly weaker than anticipated rate of organic growth. With the increase in cash generation, we are pleased to announce that the MIC board has approved a cash dividend for the fourth quarter that raises the total distribution for 2017 to $5.56 per share, consistent with our guidance for a year over year increase of 10%."
"While our results for 2017 were solid, in an effort to improve MIC's overall mix of business we are undertaking a review of strategic options available to us with respect to the Bayonne Energy Center, OMI Environmental Solutions and other smaller businesses in our portfolio," Frost noted. "Having largely completed the development of the Bayonne Energy Center as envisioned when we acquired the business in 2015, we believe now may be an opportune time to monetize a portion of it. To address changing demand drivers for certain liquid products, as we have in the past, we intend to repurpose certain of the assets of our bulk liquid terminals business as well. We believe these actions will position MIC to continue to deliver attractive total shareholder returns."
"In addition, we have made the decision to reduce our 2018 dividend in favor of internally funding the repurposing of the assets at International-Matex Tank Terminals and to take advantage of the incentives to invest in growth projects that are a part of recent tax reform," Frost added. "We believe that our guidance for a dividend of $1.00 per share, per quarter, in 2018 strikes a balance between continuing to return the majority of our Free Cash Flow to shareholders in the form of a dividend and strengthening our balance sheet in support of future dividend growth."
MIC reported fourth quarter and full year 2017 net income of $361.3 million and $456.1 million, respectively, an increase of 408% and 195% compared with $71.1 million and $154.9 million in the comparable periods in 2016. The increases in net income were primarily the result of changes in U.S. tax law that went into effect with the signing of the Tax Cuts and Jobs Act of 2017 ("Tax Act") in December of 2017. A reduction in the Company's net Deferred Tax Liability to reflect a reduction in the corporate federal income tax rate constituted the largest portion of the benefit.
Net income before taxes decreased to $61.8 million and $222.0 million, respectively, for the fourth quarter and full year in 2017, compared with $82.0 million and $226.1 million in comparable periods in 2016. The decrease in pre-tax net income reflects primarily higher interest expense in the fourth quarter and a decrease in other income related to the absence of insurance recoveries in 2017 in the full year period.
The Company reported generation of cash from operating activities of $131.8 million and $529.5 million in the quarter and full-year periods ended December 31, 2017, respectively, compared with $123.3 million and $560.3 million in the comparable periods in 2016. Cash from operating activities declined primarily as a result of changes in working capital related to fluctuations in the price of jet fuel and gas sold by certain of MIC's businesses.
MIC produced $135.5 million and $568.0 million of Adjusted Free Cash Flow in the fourth quarter and full year periods in 2017, respectively, up from $118.6 million and $510.2 million in the comparable periods in 2016. The aggregate increase in Adjusted Free Cash Flow of 14.2% and 11.3% for the quarter and full-year, respectively, was partially offset by an increase in the weighted average number of shares of MIC outstanding.
Fourth Quarter 2017 Dividend
The MIC board of directors has authorized a cash dividend of $1.44 per share for the fourth quarter of 2017. The dividend will be payable March 8, 2018 to shareholders of record on March 5, 2018. Including the dividend of $1.44, MIC will have distributed approximately 81.4% of the Adjusted Free Cash Flow generated during 2017 for a dividend coverage ratio of approximately 1.2 times.
Outlook
Taking into consideration the planned repurposing of certain of the assets of International-Matex Tank Terminals ("IMTT"), MIC is forecasting generation of consolidated earnings before interest, taxes, depreciation and amortization ("EBITDA") excluding non-cash items in a range of between $690.0 million and $720.0 million in 2018. The year over year decline reflects a decrease in EBITDA generated by IMTT, offset by continued increases at Atlantic Aviation, Contracted Power and MIC Hawaii. Atlantic Aviation is expected to benefit from ongoing increases in flight activity while Contracted Power is expected to benefit from the completion of the BEC II expansion project.
With respect to the Company's preliminary outlook for EBITDA excluding non-cash items in 2018, a reconciliation to net income (loss), the most comparable GAAP measure, is not available without unreasonable effort due to the Company's limited visibility into and inability to make accurate projections and estimates of items including management fees, hedging agreements, depreciation and any (benefit) provision for income taxes. These items may vary greatly from year to year and could significantly impact MIC's results as reported in accordance with GAAP.
MIC expects Free Cash Flow produced in 2018 to decline by between 8% and 10% versus 2017 including the impact of expected share issuance. The Company's forecast reflects primarily a reduction in cash generation by IMTT, increased interest expense and the near-term impact of tax reform. IMTT is forecast to generate a reduced amount of cash in 2018 as consequence of global shifts in refined petroleum product production and consumption that have reduced demand for residual and heavy oil and trading activity related to those products. IMTT's cash generating capacity will be lower while certain of its tanks are out of service for cleaning and repurposing.
Offsetting a portion of the anticipated decline in Free Cash Flow are contributions from the more than $625.0 million deployed in growth investments in 2017, together with the partial year impact of the pending Hawaii Gas rate case and potential capital deployment in 2018. The primary components of the 2017 capital deployment activity were:
-- Investments by Atlantic Aviation of approximately $230.0 million
including acquisitions of FBOs in Oxford, CT and Opa-Locka, FL totaling
$155.0 million;
-- Investments by IMTT of approximately $220.0 million including the
acquisition of Epic Midstream Terminals for $171.5 million;
-- Investments within Contracted Power of approximately $140.0 million
including construction of the Bayonne Energy Center Phase II ("BEC II")
and related projects of approximately $120.0 million; and
-- Investments within MIC Hawaii of approximately $25.0 million.
MIC believes that the contribution to EBITDA from these investments will be approximately $60.0 million on an annualized basis.
"We believe that MIC's performance will continue to reflect the generally strong demand for the products and services its businesses provide," Frost said. "While we foresee a temporary downturn in the contribution from IMTT tied primarily to reduced demand for storage and handling of residual and heavy oil, we have a clear repurposing strategy with respect to capitalizing on our preeminent locations in the Lower Mississippi River and New York Harbor markets and taking advantage of positive demand trends in other products and segments of the bulk liquid marketplace."
The Company anticipates deploying approximately $350.0 million of growth capital per year in each of the next several years. Approximately half of the expected deployments in 2018 relate to residual expenditures for initiatives including previously granted lease extensions at Atlantic Aviation and the completion of BEC II. MIC anticipates funding the entirety of its planned 2018 deployments using internally generated resources including capital retained as a consequence of the dividend reduction, and potential proceeds from sales of non-core assets.
"We remain confident in our prospects and our ability to drive value for our shareholders. We have the financial and human capital to deploy in the construction or acquisition of quality, cash generative opportunities in each of our segments and look forward to making the most of favorable trends in those in 2018 and beyond," said Frost.
2017 Segment Cash Generation
MIC's fourth quarter and full-year results reflected continued strong performance by its airport services business, Atlantic Aviation, including contributions from two acquisitions completed in 2017. In May, Atlantic Aviation acquired the fixed base operator at Waterbury-Oxford Airport in Oxford, CT and acquired a fixed base operator at Miami Opa-Locka airport in Opa-Locka, FL in September. Excluding interest rate swap breakage fees and the premium paid on an interest rate cap associated with the refinancing of the business in 2016, Free Cash Flow generated by Atlantic Aviation decreased by 2.3% in the fourth quarter and increased 9.5% for the full year versus the prior comparable periods. The period over period decrease in Free Cash Flow generation in the fourth quarter was attributable in part to the timing of certain state income tax payments. Atlantic Aviation's performance was underpinned by growth in general aviation flight activity in the U.S. of approximately 3.6% in 2017.
The Company's bulk liquid terminals business, IMTT, benefitted from an acquisition of a portfolio of seven terminals in August of 2017 and generated increases in Free Cash Flow of 7.6% and 9.4%, respectively, in the fourth quarter and full year periods versus the comparable periods in 2016. Contributions from the acquired terminals helped offset non-renewal of a small number of primarily residual and heavy oil contracts late in the year and a full-year loss at IMTT subsidiary OMI Environmental Services, Inc. ("OMI"). OMI generates revenue primarily from oil spill clean-up and tank cleaning and inspection activities.
MIC's Contracted Power segment includes a thermal facility in Bayonne, NJ, the Bayonne Energy Center ("BEC"), and a portfolio of renewable facilities primarily in the southwest U.S. Together, these produced growth in segment Free Cash Flow of 15.7% in the fourth quarter and 3.4% for the full year versus the prior comparable periods. The increases in cash generation were the result of a full-year contribution from the acquisition of a renewable facility in 2016 and additional tariff-based services completed in 2017, together with receipt of development profits related to the sale of wind projects during the year. The increases were offset by higher interest expense and by mild weather in the Northeast that reduced demand for power from BEC as well as unplanned outages that had an adverse impact on portions of the renewables portfolio.
MIC Hawaii comprises Hawaii Gas, a mechanical contractor and several renewable power facilities, all located in Hawaii. Free Cash Flow produced by the segment increased by 8.0% in the fourth quarter and by 6.6% for the full year compared with 2016. The increases were attributable to a reduction in maintenance capital expenditures and the absence of a cash pension contribution, partially offset by negative Free Cash Flow generation by the mechanical contracting business reflecting primarily cost overruns on projects with fixed revenue.
MIC's Corporate and Other segment comprises primarily interest expense on holding company level debt, investments in various development platforms and costs not otherwise covered by the fee paid to MIC's external manager. The segment recorded positive Free Cash Flow in the fourth quarter of $2.4 million compared with negative Free Cash Flow of $5.2 million in the prior comparable quarter primarily as a result of a current federal income tax benefit that reflects tax sharing payments made to MIC by its subsidiaries. For the full year 2017, the Corporate and Other segment recorded negative Free Cash Flow of $21.0 million compared with negative Free Cash Flow of $15.3 million in 2016 as a result of increased costs related to both acquisitions and the implementation of the Company's shared services center.
"Each of our larger businesses produced solid growth in cash generation including the impact of capital deployed in 2017," noted Frost. "Portfolio wide, aggregate same store growth in Free Cash Flow was approximately 3% for the year with capital deployment contributing the balance. The deployment of growth capital relatively late in the year and in some case into projects that will not be in service until this year means that those deployments will have a larger impact on our 2018 results."
Impact of Tax Reform
At year-end 2016, MIC had gross Net Operating Loss ("NOL") carryforwards of approximately $400.0 million. At year-end 2017, MIC's gross NOL was approximately $350.0 million with $50.0 million having been used to offset current federal income taxes of approximately $63.0 million. As a consequence of the recent reforms to the U.S. Tax Code and their impact on the utilization of NOLs, MIC does not foresee having a material federal income tax liability prior to 2020.
The Tax Act includes a provision that allows for immediate expensing, or bonus depreciation, of investments in qualifying capital assets. MIC expects a substantial portion of its approximately $350.0 million per year of growth capital deployments over the 2018 - 2021 time period will be into qualifying assets. If the Company is successful in these efforts, it expects they will shield it from any material federal income tax liability until 2022.
The enactment of the Tax Act has an immediate impact on two of MIC's businesses. Although the regulated portion of MIC's Hawaii Gas business is expected to realize a year over year increase in revenue as a result of the pending rate case, any increase will be partially offset as a consequence of the business collecting a smaller amount of federal taxes. The revenue reduction will be offset by a corresponding decrease in Hawaii Gas' standalone federal income tax liability. Tax reform should have a positive impact on the unregulated portion of MIC Hawaii.
Second, IMTT has been capitalized in part using tax exempt bonds. The indenture agreements related to those bonds provide that the bondholder must be compensated for a reduction in federal tax rates. As a result, the interest on the bonds will increase by approximately 0.6% to compensate the bondholders for the reduced tax advantage under the new federal income tax regime.
Summary Financial Information
Quarter Ended Change Year Ended Change
December 31, Favorable/(Unfavorable) December 31, Favorable/(Unfavorable)
------------ ----------------------- ------------ -----------------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
GAAP Metrics
Net income $361,276 $71,131 290,145 NM $456,112 $154,869 301,243 194.5
Weighted average number of shares
outstanding: basic 84,572,725 81,853,027 2,719,698 3.3 83,204,404 80,892,654 2,311,750 2.9
Net income per share attributable
to MIC $4.13 $0.89 3.24 NM $5.42 $1.93 3.49 180.8
Cash provided by operating
activities 131,790 123,332 8,458 6.9 529,459 560,320 (30,861) (5.5)
MIC Non-GAAP Metrics
EBITDA excluding non-cash
items(1)(2) $177,980 $166,006 11,974 7.2 $711,903 $695,588 16,315 2.3
Shared service implementation
costs(3) 1,655 - 1,655 NM 8,502 - 8,502 NM
Investment and acquisition
costs(3) 1,381 - 1,381 NM 9,254 - 9,254 NM
----- --- ----- ----- --- -----
Adjusted EBITDA excluding non-
cash items(2)(3) $181,016 $166,006 15,010 9.0 $729,659 $695,588 34,071 4.9
======== ======== ====== ======== ======== ======
Cash interest(4) $(28,106) $(25,922) (2,184) (8.4) $(107,541) $(107,930) 389 0.4
Cash taxes (2,667) (2,027) (640) (31.6) (11,160) (7,310) (3,850) (52.7)
Cash pension contribution - (3,500) 3,500 100.0 - (3,500) 3,500 100.0
Maintenance capital
expenditures(5) (12,140) (13,478) 1,338 9.9 (35,202) (58,203) 23,001 39.5
Noncontrolling interest(6) (2,583) (2,446) (137) (5.6) (7,806) (8,400) 594 7.1
------ ------ ---- ------ ------ ---
Adjusted Free Cash Flow(3)(4) $135,520 $118,633 16,887 14.2 $567,950 $510,245 57,705 11.3
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______________________
NM - Not meaningful
(1) EBITDA excluding non-cash items is calculated as net income before interest expense, taxes, depreciation and amortization expense, management fees, pension expense and other non-cash (income) expense recorded in the consolidated statement of operations. See below for reconciliation of net income (loss) to EBITDA excluding non-cash items.
(2) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT.
(3) For the quarter and year ended December 31, 2017, Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow exclude costs relating to implementation of our shared services initiative and costs relating to certain investment and acquisition activities.
(4) Cash interest is calculated as interest expense, net, excluding the impact of non-cash adjustments for unrealized (gains) losses from derivative instruments, amortization of deferred financing costs and the amortization of debt discount recorded in the consolidated statement of operations. For purposes of calculating Adjusted Free Cash Flow, for the quarter and year ended December 31, 2016, cash interest excludes $17.8 million for the payment of interest rate
swap breakage fees and $8.6 million for the payment of interest rate cap premium.
(5) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses, at IMTT.
(6) Noncontrolling interest adjustment represents the portion of Free Cash Flow not attributable to MIC's ownership interest.
Conference Call and Webcast
When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, February 22, 2018 during which it will review and comment on MIC's results for the fourth quarter and full year 2017.
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, 2018 through midnight on March 1, 2018, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 9489207. 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 and certain proportionately combined financial metrics. Proportionately combined financial metrics reflect the Company's proportionate interest in its wind and solar facilities.
MIC measures EBITDA excluding non-cash items as a reflection of its businesses' ability to effectively manage the volume of products sold or services provided, the operating margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses. The Company believes investors use EBITDA excluding non-cash items primarily as a measure to assess the operating performance of its businesses and to make comparisons with the operating performance of other businesses whose depreciation and amortization expense may vary widely from 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 expenses 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 its Contracted Power and MIC Hawaii segments, together with obligations to report the results of these businesses on a consolidated basis, GAAP measures such as net income (loss) do not fully reflect all of the items management considers in assessing the amount of cash generated based on its proportionate interest in its wind and solar facilities. 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 and not in lieu of its financial results reported under GAAP.
The Company's businesses are characteristically owners of high-value, long-lived assets capable of generating substantial Free Cash Flow. MIC defines Free Cash Flow as cash from operating activities -- the most comparable GAAP measure -- which includes cash 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 total 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; (vi) gains (losses) on disposal of assets; and (vii) pension expenses. Pension expenses primarily consist of interest expense, 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 total return.
In its 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 EBITDA excluding non-cash items and Free Cash Flow support a more complete and accurate understanding of the financial and operating performance of its businesses than would otherwise be achieved using GAAP results alone.
Free Cash Flow does not take into consideration required payments on indebtedness and other fixed obligations or other cash items that are excluded from MIC's definition of Free Cash Flow. Management notes that Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure and not in lieu of its financial results reported under GAAP.
See also "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" below.
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.
MIC does not bifurcate specific capital expenditures into maintenance and growth components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.
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,
------------------
2017 2016
---- ----
ASSETS
Current assets:
Cash and cash equivalents $47,121 $44,767
Restricted cash 24,963 16,420
Accounts receivable, less allowance for
doubtful accounts of $895 and $1,434,
respectively 158,152 124,846
Inventories 36,955 31,461
Prepaid expenses 14,685 14,561
Fair value of derivative instruments 11,965 5,514
Other current assets 13,804 7,099
------ -----
Total current assets 307,645 244,668
Property, equipment, land and leasehold
improvements, net 4,659,614 4,346,536
Investment in unconsolidated business 9,526 8,835
Goodwill 2,068,668 2,024,409
Intangible assets, net 914,098 888,971
Fair value of derivative instruments 24,455 30,781
Other noncurrent assets 24,945 15,053
------ ------
Total assets $8,008,951 $7,559,253
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to Manager - related party $5,577 $6,594
Accounts payable 60,585 69,566
Accrued expenses 89,496 83,734
Current portion of long-term debt 50,835 40,016
Fair value of derivative instruments 1,710 9,297
Other current liabilities 47,762 41,802
------ ------
Total current liabilities 255,965 251,009
Long-term debt, net of current portion 3,530,311 3,039,966
Deferred income taxes 632,070 896,116
Fair value of derivative instruments 4,668 5,966
Tolling agreements - noncurrent 52,595 60,373
Other noncurrent liabilities 182,639 158,289
------- -------
Total liabilities 4,658,248 4,411,719
========= =========
Commitments and contingencies - -
Stockholders' equity:
Common stock ($0.001 par value;
500,000,000 authorized; 84,733,957
shares issued and outstanding at
December 31, 2017 and 82,047,526 shares
issued and outstanding at December 31,
2016) $85 $82
Additional paid in capital 1,840,033 2,089,407
Accumulated other comprehensive loss (29,993) (28,960)
Retained earnings 1,343,567 892,365
--------- -------
Total stockholders' equity 3,153,692 2,952,894
Noncontrolling interests 197,011 194,640
------- -------
Total equity 3,350,703 3,147,534
--------- ---------
Total liabilities and equity $8,008,951 $7,559,253
========== ==========
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
($ in Thousands, Except Share and Per Share Data)
Year Ended December 31,
-----------------------
2017 2016 2015
---- ---- ----
Revenue
Service revenue $1,445,832 $1,288,562 $1,288,501
Product revenue 368,881 363,169 350,749
------- ------- -------
Total revenue 1,814,713 1,651,731 1,639,250
--------- --------- ---------
Costs and expenses
Cost of services 624,214 524,423 551,029
Cost of product sales 164,311 142,731 168,954
Selling, general and
administrative 331,345 303,033 304,862
Fees to Manager - related party 71,388 68,486 354,959
Depreciation 234,164 226,492 215,243
Amortization of intangibles 68,253 65,425 101,435
------ ------ -------
Total operating expenses 1,493,675 1,330,590 1,696,482
--------- --------- ---------
Operating income (loss) 321,038 321,141 (57,232)
Other income (expense)
Interest income 199 132 55
Interest expense(1) (110,602) (116,933) (123,079)
Other income, net 11,323 21,786 1,288
------ ------ -----
Net income (loss) before income
taxes 221,958 226,126 (178,968)
Benefit (provision) for income
taxes 234,154 (71,257) 65,161
------- ------- ------
Net income (loss) $456,112 $154,869 $(113,807)
Less: net income (loss)
attributable to noncontrolling
interests 4,910 (1,512) (5,270)
----- ------ ------
Net income (loss) attributable
to MIC $451,202 $156,381 $(108,537)
======== ======== =========
Basic income (loss) per share
attributable to MIC $5.42 $1.93 $(1.39)
----- ----- ------
Weighted average number of
shares outstanding: basic 83,204,404 80,892,654 77,997,826
========== ========== ==========
Diluted income (loss) per share
attributable to MIC $5.13 $1.85 $(1.39)
----- ----- ------
Weighted average number of
shares outstanding: diluted 91,073,362 82,218,627 77,997,826
========== ========== ==========
Cash dividends declared per
share $5.56 $5.05 $4.46
----- ----- -----
(1) Interest expense includes gains on derivative instruments of $3.0 million and losses on derivative instruments of $5.0 million and $28.5 million for the years ended December 31, 2017, 2016
and 2015, respectively.
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
($ in Thousands)
Year Ended December 31,
-----------------------
2017 2016 2015
---- ---- ----
Operating activities
Net income (loss) $456,112 $154,869 $(113,807)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization of
property and equipment 234,164 226,492 215,243
Amortization of intangible assets 68,253 65,425 101,435
Amortization of debt financing costs 8,700 21,041 9,075
Amortization of debt discount 3,266 1,007 -
Adjustments to derivative instruments (9,010) (54,549) (47,208)
Fees to Manager - related party 71,388 68,486 287,139
Deferred taxes (245,314) 63,947 (58,734)
Pension expense 8,106 8,601 7,300
Other non-cash income, net (2,463) (1,370) (1,047)
Changes in other assets and
liabilities, net of acquisitions:
Restricted cash 425 525 722
Accounts receivable (31,444) (8,415) 5,418
Inventories (6,182) (2,343) (84)
Prepaid expenses and other current
assets (7,044) 7,794 (6,964)
Due to Manager - related party (130) 135 (33)
Accounts payable and accrued expenses (7,073) 4,686 (8,002)
Income taxes payable 464 8,251 (5,926)
Pension contribution - (3,500) -
Other, net (12,759) (762) (3,371)
------- ---- ------
Net cash provided by operating
activities 529,459 560,320 381,156
------- ------- -------
Investing activities
Acquisitions of businesses and
investments, net of cash acquired (209,962) (69,168) (266,895)
Purchases of property and equipment (340,952) (314,684) (194,148)
Proceeds from insurance claim 83 11,068 -
Loan to project developer (23,341) (5,000) -
Loan repayment from project developer 17,079 - -
Change in restricted cash (9,295) (84) 10,559
Other, net 272 1,023 1,668
--- ----- -----
Net cash used in investing activities (566,116) (376,845) (448,816)
-------- -------- --------
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - (continued)
($ in Thousands)
Year Ended December 31,
-----------------------
2017 2016 2015
---- ---- ----
Financing activities
Proceeds from long-term debt $931,001 $1,311,000 $2,486,569
Payment of long-term debt (440,950) (1,476,228) (2,554,552)
Proceeds from the issuance of shares 6,060 12,623 492,433
Dividends paid to common stockholders (452,949) (396,093) (341,560)
Contributions received from
noncontrolling interests 458 15,431 532
Purchase of noncontrolling interest - (9,909) -
Distributions paid to noncontrolling
interests (3,936) (4,630) (2,546)
Offering and equity raise costs paid (466) (1,601) (16,984)
Debt financing costs paid (717) (17,392) (23,816)
Proceeds from the issuance of
convertible senior notes - 402,500 -
Change in restricted cash 397 5,587 5,166
Payment of capital lease obligations (398) (2,601) (2,346)
---- ------ ------
Net cash provided by (used in)
financing activities 38,500 (161,313) 42,896
------ -------- ------
Effect of exchange rate changes on
cash and 511 211 (856)
cash equivalents
Net change in cash and cash
equivalents 2,354 22,373 (25,620)
----- ------ -------
Cash and cash equivalents, beginning
of period 44,767 22,394 48,014
------ ------ ------
Cash and cash equivalents, end of
period $47,121 $44,767 $22,394
======= ======= =======
Supplemental disclosures of cash flow
information
Non-cash investing and financing
activities:
Accrued financing costs $107 $3 $3
==== === ===
Accrued purchases of property and
equipment $24,940 $28,228 $23,396
======= ======= =======
Acquisition of equipment through
capital leases $ - $ - $398
=== === === === ====
Issuance of shares to Manager $72,274 $135,345 $218,645
======= ======== ========
Issuance of shares to independent
directors $681 $750 $750
==== ==== ====
Issuance of shares for acquisition of
business $125,000 $ - $ -
======== === === === ===
Conversion of convertible senior
notes to shares $20 $4 $25
=== === ===
Conversion of LLC interests to common
stock $ - $ - $79
=== === === === ===
Conversion of LLC interests to
additional paid in capital $ - $ - $2,428,334
=== === === === ==========
Distributions payable to
noncontrolling interests $22 $42 $33
=== === ===
Taxes paid (refund), net $10,704 $(898) $6,654
======= ===== ======
Interest paid $112,132 $108,737 $109,450
======== ======== ========
MACQUARIE INFRASTRUCTURE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS - MD&A
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands, Except Share and Per Share Data) (Unaudited)
Revenue
Service revenue $378,763 $346,125 32,638 9.4 $1,445,832 $1,288,562 157,270 12.2
Product revenue 92,442 91,116 1,326 1.5 368,881 363,169 5,712 1.6
------ ------ ----- ------- ------- -----
Total revenue 471,205 437,241 33,964 7.8 1,814,713 1,651,731 162,982 9.9
------- ------- ------ --------- --------- -------
Costs and expenses
Cost of services 169,176 152,591 (16,585) (10.9) 624,214 524,423 (99,791) (19.0)
Cost of product sales 41,168 34,808 (6,360) (18.3) 164,311 142,731 (21,580) (15.1)
Selling, general and administrative 86,528 80,851 (5,677) (7.0) 331,345 303,033 (28,312) (9.3)
Fees to Manager - related party 16,778 18,916 2,138 11.3 71,388 68,486 (2,902) (4.2)
Depreciation 61,411 54,367 (7,044) (13.0) 234,164 226,492 (7,672) (3.4)
Amortization of intangibles 17,333 15,508 (1,825) (11.8) 68,253 65,425 (2,828) (4.3)
------ ------ ------ ------ ------ ------
Total operating expenses 392,394 357,041 (35,353) (9.9) 1,493,675 1,330,590 (163,085) (12.3)
------- ------- ------- --------- --------- --------
Operating income 78,811 80,200 (1,389) (1.7) 321,038 321,141 (103) -
Other income (expense)
Interest (expense) income, net(1) (20,403) 382 (20,785) NM (110,403) (116,801) 6,398 5.5
Other income, net 3,430 1,397 2,033 145.5 11,323 21,786 (10,463) (48.0)
----- ----- ----- ------ ------ -------
Net income before income taxes 61,838 81,979 (20,141) (24.6) 221,958 226,126 (4,168) (1.8)
Benefit (provision) for income taxes 299,438 (10,848) 310,286 NM 234,154 (71,257) 305,411 NM
------- ------- ------- ------- ------- -------
Net income $361,276 $71,131 290,145 NM $456,112 $154,869 301,243 194.5
Less: net income (loss) attributable to noncontrolling 12,204 (1,677) (13,881) NM 4,910 (1,512) (6,422) NM
interests
Net income attributable to MIC $349,072 $72,808 276,264 NM $451,202 $156,381 294,821 188.5
======== ======= ======= ======== ======== =======
Basic income per share attributable to MIC $4.13 $0.89 3.24 NM $5.42 $1.93 3.49 180.8
----- ----- ---- ----- ----- ----
Weighted average number of shares outstanding: basic 84,572,725 81,853,027 2,719,698 3.3 83,204,404 80,892,654 2,311,750 2.9
========== ========== ========= ========== ========== =========
____________________
NM - Not meaningful
(1) Interest expense, net, includes gains on derivative instruments of $9.9 million and $3.0 million for the quarter and year ended December 31, 2017, respectively. For the quarter and year ended December 31, 2016, interest (expense) income, net, includes gains on derivative instruments of $38.0 million and losses on derivative instruments of $5.0 million, respectively.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF CONSOLIDATED NET INCOME TO EBITDA EXCLUDING NON-CASH
ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO
FREE CASH FLOW
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Net income $361,276 $71,131 $456,112 $154,869
Interest expense (income), net(1) 20,403 (382) 110,403 116,801
(Benefit) provision for income
taxes (299,438) 10,848 (234,154) 71,257
Depreciation 61,411 54,367 234,164 226,492
Amortization of intangibles 17,333 15,508 68,253 65,425
Fees to Manager - related party 16,778 18,916 71,388 68,486
Pension expense(2) 1,625 2,088 8,106 8,601
Other non-cash income, net(3) (1,408) (6,470) (2,369) (16,343)
------ ------ ------ -------
EBITDA excluding non-cash items(4) $177,980 $166,006 11,974 7.2 $711,903 $695,588 16,315 2.3
======== ======== ====== ======== ======== ======
EBITDA excluding non-cash items(4) $177,980 $166,006 $711,903 $695,588
Interest (expense) income, net(1) (20,403) 382 (110,403) (116,801)
Adjustments to derivative
instruments recorded in interest
expense(1) (10,828) (40,816) (9,104) (13,177)
Amortization of debt financing
costs(1) 2,236 13,505 8,700 21,041
Amortization of debt discount(1) 889 1,007 3,266 1,007
Interest rate swap breakage fees - (17,770) - (17,770)
Interest rate cap premium - (8,629) - (8,629)
Provision for current income taxes (2,667) (2,027) (11,160) (7,310)
Pension contribution - (3,500) - (3,500)
Changes in working capital (15,417) 15,174 (63,743) 9,871
------- ------ ------- -----
Cash provided by operating
activities 131,790 123,332 529,459 560,320
Changes in working capital 15,417 (15,174) 63,743 (9,871)
Maintenance capital
expenditures(5) (12,140) (13,478) (35,202) (58,203)
------- ------- ------- -------
Free cash flow $135,067 $94,680 40,387 42.7 $558,000 $492,246 65,754 13.4
======== ======= ====== ======== ======== ======
_________________
(1) Interest expense (income), net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023. Interest expense (income), net, also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas and the October 2016 refinancing at
Atlantic Aviation.
(2) 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.
(3) Other non-cash income, 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.
(4) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT.
(5) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses, at IMTT.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO PROPORTIONATELY
COMBINED FREE CASH FLOW
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 $ % 2017 2016 $ %
---- ---- --- --- ---- ---- --- ---
($ In Thousands) (Unaudited)
Free Cash Flow - Consolidated basis $135,067 $94,680 40,387 42.7 $558,000 $492,246 65,754 13.4
100% of CP Free Cash Flow included
in consolidated Free Cash Flow (18,621) (16,099) (75,134) (72,631)
MIC's share of CP Free Cash Flow 16,042 13,654 67,342 64,234
100% of MIC Hawaii Free Cash Flow
included in consolidated Free Cash
Flow (6,347) (5,879) (38,715) (36,311)
MIC's share of MIC Hawaii Free Cash
Flow 6,343 5,878 38,701 36,308
----- ----- ------ ------
Free Cash Flow - Proportionately
Combined basis $132,484 $92,234 40,250 43.6 $550,194 $483,846 66,348 13.7
======== ======= ====== ======== ======== ======
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND A
RECONCILIATION FROM CASH PROVIDED BY/(USED IN) OPERATING ACTIVITIES TO FREE CASH FLOW
IMTT
----
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenue 139,294 135,686 3,608 2.7 549,422 532,472 16,950 3.2
Cost of services 48,317 54,434 6,117 11.2 196,369 204,279 7,910 3.9
Selling, general and administrative
expenses 10,779 8,365 (2,414) (28.9) 36,406 32,687 (3,719) (11.4)
Depreciation and amortization 32,637 30,773 (1,864) (6.1) 126,463 134,385 7,922 5.9
------ ------ ------ ------- ------- -----
Operating income 47,561 42,114 5,447 12.9 190,184 161,121 29,063 18.0
Interest (expense) income, net(1) (7,650) 2,710 (10,360) NM (38,357) (38,752) 395 1.0
Other (expense) income, net (196) 1,562 (1,758) (112.5) 1,758 18,509 (16,751) (90.5)
Benefit (provision) for income
taxes 256,150 (19,019) 275,169 NM 209,464 (57,736) 267,200 NM
------- ------- ------- ------- ------- -------
Net income 295,865 27,367 268,498 NM 363,049 83,142 279,907 NM
Less: net income attributable to
noncontrolling interests - - - - - 59 59 100.0
--- --- --- --- --- ---
Net income attributable to MIC 295,865 27,367 268,498 NM 363,049 83,083 279,966 NM
======= ====== ======= ======= ====== =======
Reconciliation of net income to
EBITDA excluding non-cash items
and a reconciliation of cash
provided by operating activities
to Free Cash Flow:
Net income 295,865 27,367 363,049 83,142
Interest expense (income), net(1) 7,650 (2,710) 38,357 38,752
(Benefit) provision for income
taxes (256,150) 19,019 (209,464) 57,736
Depreciation and amortization 32,637 30,773 126,463 134,385
Pension expense(2) 1,347 1,805 6,996 7,219
Other non-cash expense, net 452 26 767 657
--- --- --- ---
EBITDA excluding non-cash items(3) 81,801 76,280 5,521 7.2 326,168 321,891 4,277 1.3
====== ====== ===== ======= ======= =====
EBITDA excluding non-cash items(3) 81,801 76,280 326,168 321,891
Interest (expense) income, net(1) (7,650) 2,710 (38,357) (38,752)
Adjustments to derivative
instruments recorded in interest
expense(1) (3,577) (12,892) (3,834) (2,169)
Amortization of debt financing
costs(1) 411 412 1,647 1,654
Provision for current income taxes (1,348) (2,367) (4,417) (5,438)
Changes in working capital (20,382) 7,992 (32,795) (3,734)
------- ----- ------- ------
Cash provided by operating
activities 49,255 72,135 248,412 273,452
Changes in working capital 20,382 (7,992) 32,795 3,734
Maintenance capital expenditures(4) (6,580) (5,521) (20,143) (38,620)
------ ------ ------- -------
Free cash flow 63,057 58,622 4,435 7.6 261,064 238,566 22,498 9.4
====== ====== ===== ======= ======= ======
____________________
NM - Not meaningful
(1) Interest (expense) income, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses.
(3) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks. These insurance recoveries were used to repair damaged docks and recorded in Other (expense) income, net. The cost of those repairs were recorded in Maintenance Capital Expenditures. Excluding insurance proceeds, EBITDA excluding non-cash items
would have been $75.3 million and $305.4 million for the quarter and year ended December 31, 2016, respectively. On that basis, EBITDA excluding non-cash items would have increased by $6.5 million, or 8.6%, for the quarter ended December 31, 2017, and increased by $20.8 million, or 6.8%, for the year ended December 31, 2017 compared with the prior comparable periods.
(4) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses. Excluding these costs, maintenance capital expenditures would have been $24.7 million for the year ended December 31, 2016. On that basis, maintenance capital expenditures would have decreased by $4.6 million, or 18.6%, for the year ended December
31, 2017 compared with the prior comparable period.
Atlantic Aviation
-----------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Revenue 225,282 196,180 29,102 14.8 846,431 740,209 106,222 14.4
Cost of services (exclusive of
depreciation and amortization of
intangibles shown separately
below) 105,509 85,773 (19,736) (23.0) 378,494 303,899 (74,595) (24.5)
------- ------ ------- ------- ------- -------
Gross margin 119,773 110,407 9,366 8.5 467,937 436,310 31,627 7.2
Selling, general and administrative
expenses 58,693 55,312 (3,381) (6.1) 222,205 212,331 (9,874) (4.7)
Depreciation and amortization 26,296 21,618 (4,678) (21.6) 100,190 90,659 (9,531) (10.5)
------ ------ ------ ------- ------ ------
Operating income 34,784 33,477 1,307 3.9 145,542 133,320 12,222 9.2
Interest expense, net(1) (864) (6,524) 5,660 86.8 (14,512) (33,961) 19,449 57.3
Other (expense) income, net (32) (123) 91 74.0 (151) 68 (219) NM
Benefit (provision) for income
taxes 30,257 (10,631) 40,888 NM (6,509) (39,889) 33,380 83.7
------ ------- ------ ------ ------- ------
Net income 64,145 16,199 47,946 NM 124,370 59,538 64,832 108.9
====== ====== ====== ======= ====== ======
Reconciliation of net income to
EBITDA excluding non-cash items
and a reconciliation of cash
provided by operating activities
to Free Cash Flow:
Net income 64,145 16,199 124,370 59,538
Interest expense, net(1) 864 6,524 14,512 33,961
(Benefit) provision for income
taxes (30,257) 10,631 6,509 39,889
Depreciation and amortization 26,296 21,618 100,190 90,659
Pension expense(2) 5 60 20 110
Other non-cash expense, net 390 457 1,642 905
--- --- ----- ---
EBITDA excluding non-cash items 61,443 55,489 5,954 10.7 247,243 225,062 22,181 9.9
====== ====== ===== ======= ======= ======
EBITDA excluding non-cash items 61,443 55,489 247,243 225,062
Interest expense, net(1) (864) (6,524) (14,512) (33,961)
Convertible senior notes
interest(3) (2,013) (1,969) (7,782) (1,969)
Adjustments to derivative
instruments recorded in interest
expense(1) (2,721) (8,574) 429 (4,158)
Amortization of debt financing
costs(1) 351 11,699 1,170 14,195
Interest rate swap breakage fees - (17,770) - (17,770)
Interest rate cap premium - (8,629) - (8,629)
(Provision) benefit for current
income taxes (8,647) 384 (14,457) (2,137)
Changes in working capital (573) (248) (7,240) 11,164
---- ---- ------ ------
Cash provided by operating
activities 46,976 23,858 204,851 181,797
Changes in working capital 573 248 7,240 (11,164)
Maintenance capital expenditures (2,894) (4,816) (7,965) (10,632)
------ ------ ------ -------
Free cash flow 44,655 19,290 25,365 131.5 204,126 160,001 44,125 27.6
====== ====== ====== ======= ======= ======
____________________
NM - Not meaningful
(1) Interest expense, net, included adjustments to derivative instruments and non-cash amortization of deferred financing fees. For the quarter and year ended December 31, 2016, interest expense also included non-cash write-off of deferred financing costs related to the October 2016 refinancing.
(2) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses.
(3) Represents the cash interest expense reclassified from MIC Corporate related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviation's credit facility in October 2016.
Contracted Power
----------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenue 35,245 35,993 (748) (2.1) 145,926 150,010 (4,084) (2.7)
Cost of product sales 4,996 5,807 811 14.0 20,524 23,302 2,778 11.9
Selling, general and administrative
expenses 7,385 6,143 (1,242) (20.2) 25,703 25,474 (229) (0.9)
Depreciation and amortization 15,269 13,855 (1,414) (10.2) 60,300 55,548 (4,752) (8.6)
------ ------ ------ ------ ------ ------
Operating income 7,595 10,188 (2,593) (25.5) 39,399 45,686 (6,287) (13.8)
Interest (expense) income, net(1) (3,056) 10,328 (13,384) (129.6) (23,487) (21,286) (2,201) (10.3)
Other income, net 5,025 182 4,843 NM 11,465 4,021 7,444 185.1
Benefit (provision) for income
taxes 2,040 (6,702) 8,742 130.4 (6,169) (14,328) 8,159 56.9
----- ------ ----- ------ ------- -----
Net income 11,604 13,996 (2,392) (17.1) 21,208 14,093 7,115 50.5
Less: net income attributable to
noncontrolling interest 12,281 1,875 (10,406) NM 5,058 2,092 (2,966) (141.8)
------ ----- -------
Net (loss) income attributable to
MIC (677) 12,121 (12,798) (105.6) 16,150 12,001 4,149 34.6
==== ====== ======= ====== ====== =====
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 11,604 13,996 21,208 14,093
Interest expense (income), net(1) 3,056 (10,328) 23,487 21,286
(Benefit) provision for income
taxes (2,040) 6,702 6,169 14,328
Depreciation and amortization 15,269 13,855 60,300 55,548
Other non-cash income, net(2) (1,933) (1,623) (8,103) (7,047)
------ ------ ------ ------
EBITDA excluding non-cash 25,956 22,602 3,354 14.8 103,061 98,208 4,853 4.9
items
EBITDA excluding non-cash 25,956 22,602 103,061 98,208
items
Interest (expense) income, net(1) (3,056) 10,328 (23,487) (21,286)
Adjustments to derivative
instruments recorded in interest
expense(1) (4,019) (16,756) (5,301) (4,762)
Amortization of debt financing
costs(1) 379 376 1,516 1,489
(Provision) benefit for current
income taxes (135) 2 (129) (6)
Changes in working capital 6,223 780 (3,480) (1,129)
----- --- ------ ------
Cash provided by operating
activities 25,348 17,332 72,180 72,514
Changes in working capital (6,223) (780) 3,480 1,129
Maintenance capital expenditures (504) (453) (526) (1,012)
---- ---- ---- ------
Free cash flow 18,621 16,099 2,522 15.7 75,134 72,631 2,503 3.4
====== ====== ===== ====== ====== =====
_____________________
NM - Not meaningful
(1) Interest (expense) income, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Other non-cash income, net, primarily includes amortization of tolling liabilities. See "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics" above for further discussion.
MIC Hawaii
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Product revenue 57,197 55,123 2,074 3.8 222,955 213,159 9,796 4.6
Service revenue 15,437 15,504 (67) (0.4) 54,913 20,762 34,151 164.5
------ ------ --- ------ ------ ------
Total revenue 72,634 70,627 2,007 2.8 277,868 233,921 43,947 18.8
Cost of product sales (exclusive of
depreciation and amortization of
intangibles shown separately
below) 36,172 29,001 (7,171) (24.7) 143,787 119,429 (24,358) (20.4)
Cost of services (exclusive of
depreciation and amortization of
intangibles shown separately
below) 15,350 12,389 (2,961) (23.9) 49,365 16,335 (33,030) NM
------ ------ ------ ------ ------ -------
Cost of revenue - total 51,522 41,390 (10,132) (24.5) 193,152 135,764 (57,388) (42.3)
------ ------ ------- ------- ------- -------
Gross margin 21,112 29,237 (8,125) (27.8) 84,716 98,157 (13,441) (13.7)
Selling, general and administrative
expenses 7,209 8,046 837 10.4 26,938 24,276 (2,662) (11.0)
Depreciation and amortization 4,381 3,629 (752) (20.7) 15,303 11,325 (3,978) (35.1)
----- ----- ---- ------ ------ ------
Operating income 9,522 17,562 (8,040) (45.8) 42,475 62,556 (20,081) (32.1)
Interest (expense) income, net(1) (1,246) 665 (1,911) NM (7,041) (5,559) (1,482) (26.7)
Other expense, net (349) (224) (125) (55.8) (731) (812) 81 10.0
Benefit (provision) for income
taxes 1,485 (5,578) 7,063 126.6 (9,287) (20,441) 11,154 54.6
----- ------ ----- ------ ------- ------
Net income 9,412 12,425 (3,013) (24.2) 25,416 35,744 (10,328) (28.9)
Less: net loss attributable to
noncontrolling interests (77) (3,552) (3,475) (97.8) (148) (3,663) (3,515) (96.0)
--- ------ ------ ---- ------ ------
Net income attributable to MIC 9,489 15,977 (6,488) (40.6) 25,564 39,407 (13,843) (35.1)
===== ====== ====== ====== ====== =======
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 9,412 12,425 25,416 35,744
Interest expense (income), net(1) 1,246 (665) 7,041 5,559
(Benefit) provision for income
taxes (1,485) 5,578 9,287 20,441
Depreciation and amortization 4,381 3,629 15,303 11,325
Pension expense(2) 273 223 1,090 1,272
Other non-cash (income) expense,
net(3) (614) (5,448) 2,494 (11,539)
---- ------ ----- -------
EBITDA excluding non-cash items 13,213 15,742 (2,529) (16.1) 60,631 62,802 (2,171) (3.5)
====== ====== ====== ====== ====== ======
EBITDA excluding non-cash items 13,213 15,742 60,631 62,802
Interest (expense) income, net(1) (1,246) 665 (7,041) (5,559)
Adjustments to derivative
instruments recorded in interest
expense(1) (511) (2,594) (398) (2,088)
Amortization of debt financing
costs(1) 100 100 403 948
Provision for current income taxes (3,047) (1,846) (8,312) (8,353)
Pension contribution - (3,500) - (3,500)
Changes in working capital 6,488 3,788 (6,364) 9,342
----- ----- ------ -----
Cash provided by operating
activities 14,997 12,355 38,919 53,592
Changes in working capital (6,488) (3,788) 6,364 (9,342)
Maintenance capital expenditures (2,162) (2,688) (6,568) (7,939)
------ ------ ------ ------
Free cash flow 6,347 5,879 468 8.0 38,715 36,311 2,404 6.6
===== ===== === ====== ====== =====
___________________
NM - Not meaningful
(1) Interest (expense) income, net, includes adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees. For the year ended December 31, 2016, interest (expense) income, net, also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas.
(2) 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.
(3) Other non-cash (income) expense, net, primarily includes non-cash adjustments related to unrealized gains (losses) on commodity hedges and asset retirement obligations. See "Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics" above for further discussion.
Corporate and Other
-------------------
Quarter Ended Change Year Ended Change
December 31, Favorable/ December 31, Favorable/
(Unfavorable) (Unfavorable)
------------ ------------
2017 2016 2017 2016
---- ---- ---- ----
$ $ $ % $ $ $ %
--- --- --- --- --- --- --- ---
($ In Thousands) (Unaudited)
Fees to Manager - related party 16,778 18,916 2,138 11.3 71,388 68,486 (2,902) (4.2)
Selling, general and administrative
expenses(1) 3,712 4,225 513 12.1 25,013 13,056 (11,957) (91.6)
Depreciation 161 - (161) NM 161 - (161) NM
--- --- ---- --- --- ----
Operating loss (20,651) (23,141) 2,490 10.8 (96,562) (81,542) (15,020) (18.4)
Interest expense, net(2) (7,587) (6,797) (790) (11.6) (27,006) (17,243) (9,763) (56.6)
Other expense, net (1,018) - (1,018) NM (1,018) - (1,018) NM
Benefit for income taxes 9,506 31,082 (21,576) (69.4) 46,655 61,137 (14,482) (23.7)
----- ------ ------- ------ ------ -------
Net (loss) income (19,750) 1,144 (20,894) NM (77,931) (37,648) (40,283) (107.0)
======= ===== ======= ======= ======= =======
Reconciliation of net (loss) income
to EBITDA excluding non-cash
items and a reconciliation of cash
used in operating activities to
Free Cash Flow:
Net (loss) income (19,750) 1,144 (77,931) (37,648)
Interest expense, net(2) 7,587 6,797 27,006 17,243
Benefit for income taxes (9,506) (31,082) (46,655) (61,137)
Depreciation 161 - 161 -
Fees to Manager-related party 16,778 18,916 71,388 68,486
Other non-cash expense 297 118 831 681
--- --- --- ---
EBITDA excluding non-cash items (4,433) (4,107) (326) (7.9) (25,200) (12,375) (12,825) (103.6)
====== ====== ==== ======= ======= =======
EBITDA excluding non-cash items (4,433) (4,107) (25,200) (12,375)
Interest expense, net(2) (7,587) (6,797) (27,006) (17,243)
Convertible senior notes
interest(3) 2,013 1,969 7,782 1,969
Amortization of debt financing
costs(2) 995 918 3,964 2,755
Amortization of debt discount(2) 889 1,007 3,266 1,007
Benefit for current income taxes 10,510 1,800 16,155 8,624
Changes in working capital (7,173) 2,862 (13,864) (5,772)
------ ----- ------- ------
Cash used in operating activities (4,786) (2,348) (34,903) (21,035)
Changes in working capital 7,173 (2,862) 13,864 5,772
----- ------ ------ -----
Free cash flow 2,387 (5,210) 7,597 145.8 (21,039) (15,263) (5,776) (37.8)
===== ====== ===== ======= ======= ======
____________________
NM - Not meaningful
(1) For the quarter and year ended December 31, 2017, selling, general and administrative expenses included $1.7 million and $8.5 million, respectively, of costs related to the implementation of a shared service initiative and $1.4 million and $9.3 million, respectively, of costs incurred in connection with the evaluation of various investment and acquisition opportunities.
(2) Interest expense, net, includes non-cash amortization of deferred financing fees and amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023.
(3) Represents the cash interest expense reclassified to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviation's credit facility in October 2016.
MACQUARIE INFRASTRUCTURE CORPORATION
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA EXCLUDING
NON-CASH ITEMS AND A RECONCILIATION FROM CASH PROVIDED BY/(USED IN)
OPERATING ACTIVITIES TO PROPORTIONATELY COMBINED FREE CASH FLOW
For the Quarter Ended December 31, 2017
---------------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
($ in Thousands) (Unaudited)
Net income (loss) 295,865 64,145 10,394 9,413 (19,750) 360,067 11,604 9,412
Interest expense, net(3) 7,650 864 2,660 1,246 7,587 20,007 3,056 1,246
Benefit for income taxes (256,150) (30,257) (2,040) (1,485) (9,506) (299,438) (2,040) (1,485)
Depreciation and amortization of
intangibles 32,637 26,296 13,387 4,376 161 76,857 15,269 4,381
Fees to Manager - related - - - - 16,778 16,778 - -
party
Pension expense(4) 1,347 5 - 273 - 1,625 - 273
Other non-cash expense (income),
net(5) 452 390 (1,934) (614) 297 (1,409) (1,933) (614)
--- --- ------ ---- --- ------ ------ ----
EBITDA excluding non-cash items 81,801 61,443 22,467 13,209 (4,433) 174,487 25,956 13,213
------ ------ ------ ------ ------ ------- ------ ------
EBITDA excluding non-cash items 81,801 61,443 22,467 13,209 (4,433) 174,487 25,956 13,213
Interest expense, net(3) (7,650) (864) (2,660) (1,246) (7,587) (20,007) (3,056) (1,246)
Convertible senior notes interest(6) - (2,013) - - 2,013 - - -
Adjustments to derivative
instruments recorded in interest
expense, net(3) (3,577) (2,721) (3,616) (510) - (10,424) (4,019) (511)
Amortization of debt financing
costs(3) 411 351 364 99 995 2,220 379 100
Amortization of debt discount(3) - - - - 889 889 - -
(Provision) benefit for current
income taxes (1,348) (8,647) (136) (3,047) 10,510 (2,668) (135) (3,047)
Changes in working capital (20,382) (573) 6,832 6,477 (7,173) (14,819) 6,223 6,488
------- ---- ----- ----- ------ ------- ----- -----
Cash provided by (used in) operating
activities 49,255 46,976 23,251 14,982 (4,786) 129,678 25,348 14,997
Changes in working capital 20,382 573 (6,832) (6,477) 7,173 14,819 (6,223) (6,488)
Maintenance capital expenditures (6,580) (2,894) (377) (2,162) - (12,013) (504) (2,162)
------ ------ ---- ------ --- ------- ---- ------
Proportionately Combined Free Cash
flow 63,057 44,655 16,042 6,343 2,387 132,484 18,621 6,347
====== ====== ====== ===== ===== ======= ====== =====
For the Quarter Ended December 31, 2016
---------------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
($ in Thousands) (Unaudited)
Net income 27,367 16,199 11,413 12,419 1,144 68,542 13,996 12,425
Interest (income) expense,
net(3) (2,710) 6,524 (9,260) (657) 6,797 694 (10,328) (665)
Provision (benefit) for
income taxes 19,019 10,631 6,702 5,578 (31,082) 10,848 6,702 5,578
Depreciation and
amortization of
intangibles 30,773 21,618 11,980 3,623 - 67,994 13,855 3,629
Fees to Manager - related
party - - - - 18,916 18,916 - -
Pension expense(4) 1,805 60 - 223 - 2,088 - 223
Other non-cash expense
(income), net(5) 26 457 (1,623) (5,448) 118 (6,470) (1,623) (5,448)
--- --- ------ ------ --- ------ ------ ------
EBITDA excluding non-cash
items(7) 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742
------ ------ ------ ------ ------ ------- ------ ------
EBITDA excluding non-cash
items(7) 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742
Interest income (expense),
net(3) 2,710 (6,524) 9,260 657 (6,797) (694) 10,328 665
Convertible senior notes
interest(6) - (1,969) - - 1,969 - - -
Adjustments to derivative
instruments recorded in
interest expense, net(3) (12,892) (8,574) (14,844) (2,583) - (38,893) (16,756) (2,594)
Amortization of debt
financing costs(3) 412 11,699 363 100 918 13,492 376 100
Amortization of debt
discount(3) - - - - 1,007 1,007 - -
Interest rate swap breakage
fees - (17,770) - - - (17,770) - -
Interest rate cap premium - (8,629) - - - (8,629) - -
(Provision) benefit for
current income taxes (2,367) 384 2 (1,846) 1,800 (2,027) 2 (1,846)
Pension contribution - - - (3,500) - (3,500) - (3,500)
Changes in working capital 7,992 (248) 1,039 3,777 2,862 15,422 780 3,788
----- ---- ----- ----- ----- ------ --- -----
Cash provided by (used in)
operating activities 72,135 23,858 15,032 12,343 (2,348) 121,020 17,332 12,355
Changes in working capital (7,992) 248 (1,039) (3,777) (2,862) (15,422) (780) (3,788)
Maintenance capital
expenditures (5,521) (4,816) (339) (2,688) - (13,364) (453) (2,688)
------ ------ ---- ------ --- ------- ---- ------
Proportionately Combined
Free Cash Flow 58,622 19,290 13,654 5,878 (5,210) 92,234 16,099 5,879
====== ====== ====== ===== ====== ====== ====== =====
For the Year Ended December 31, 2017
------------------------------------
IMTT Atlantic Contracted MIC MIC Proportionately Contracted MIC
Aviation Power(1) Hawaii(1) Corporate Combined(2) Power Hawaii
100% 100%
--- ---
($ in Thousands) (Unaudited)
Net income (loss) 363,049 124,370 20,252 25,422 (77,931) 455,162 21,208 25,416
Interest expense, net(3) 38,357 14,512 20,837 7,035 27,006 107,747 23,487 7,041
(Benefit) provision for
income taxes (209,464) 6,509 6,169 9,287 (46,655) (234,154) 6,169 9,287
Depreciation and
amortization of
intangibles 126,463 100,190 52,777 15,284 161 294,875 60,300 15,303
Fees to Manager - related
party - - - - 71,388 71,388 - -
Pension expense(4) 6,996 20 - 1,090 - 8,106 - 1,090
Other non-cash expense
(income), net(5) 767 1,642 (8,082) 2,494 831 (2,348) (8,103) 2,494
--- ----- ------ ----- --- ------ ------ -----
EBITDA excluding non-cash
items 326,168 247,243 91,953 60,612 (25,200) 700,776 103,061 60,631
------- ------- ------ ------ ------- ------- ------- ------
EBITDA excluding non-cash
items 326,168 247,243 91,953 60,612 (25,200) 700,776 103,061 60,631
Interest expense, net(3) (38,357) (14,512) (20,837) (7,035) (27,006) (107,747) (23,487) (7,041)
Convertible senior notes
interest(6) - (7,782) - - 7,782 - - -
Adjustments to derivative
instruments recorded in
interest expense, net(3) (3,834) 429 (4,704) (398) - (8,507) (5,301) (398)
Amortization of debt
financing costs(3) 1,647 1,170 1,458 402 3,964 8,641 1,516 403
Amortization of debt
discount(3) - - - - 3,266 3,266 - -
(Provision) benefit for
current income taxes (4,417) (14,457) (129) (8,312) 16,155 (11,160) (129) (8,312)
Changes in working capital (32,795) (7,240) (2,992) (6,356) (13,864) (63,247) (3,480) (6,364)
------- ------ ------ ------ ------- ------- ------ ------
Cash provided by (used in)
operating activities 248,412 204,851 64,749 38,913 (34,903) 522,022 72,180 38,919
Changes in working capital 32,795 7,240 2,992 6,356 13,864 63,247 3,480 6,364
Maintenance capital
expenditures (20,143) (7,965) (399) (6,568) - (35,075) (526) (6,568)
------- ------ ---- ------ --- ------- ---- ------
Proportionately Combined
Free Cash Flow 261,064 204,126 67,342 38,701 (21,039) 550,194 75,134 38,715
======= ======= ====== ====== ======= ======= ====== ======
For the Year Ended December 31, 2016
------------------------------------
IMTT(8) Atlantic Contracted MIC Hawaii(1) MIC Corporate Proportionately
Power(1) Combined(2) Contracted Power MIC
Aviation 100% Hawaii
100%
---
($ in Thousands) (Unaudited)
Net income (loss) 83,142 59,538 12,309 35,741 (37,648) 153,082 14,093 35,744
Interest expense, net(3) 38,752 33,961 18,541 5,564 17,243 114,061 21,286 5,559
Provision (benefit) for income taxes 57,736 39,889 14,327 20,441 (61,137) 71,256 14,328 20,441
Depreciation and amortization of
intangibles 134,385 90,659 48,047 11,317 - 284,408 55,548 11,325
Fees to Manager - related party - - - - 68,486 68,486 - -
Pension expense(4) 7,219 110 - 1,272 - 8,601 - 1,272
Other non-cash expense (income),
net(5) 657 905 (7,028) (11,539) 681 (16,324) (7,047) (11,539)
--- --- ------ ------- --- ------- ------ -------
EBITDA excluding non-cash items(7) 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802
------- ------- ------ ------ ------- ------- ------ ------
EBITDA excluding non-cash items(7) 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802
Interest expense, net(3) (38,752) (33,961) (18,541) (5,564) (17,243) (114,061) (21,286) (5,559)
Convertible senior notes interest(6) - (1,969) - - 1,969 - - -
Adjustments to derivative
instruments recorded in interest
expense, net(3) (2,169) (4,158) (4,088) (2,080) - (12,495) (4,762) (2,088)
Amortization of debt financing
costs(3) 1,654 14,195 1,434 948 2,755 20,986 1,489 948
Amortization of debt discount(3) - - - - 1,007 1,007 - -
Interest rate swap breakage - (17,770) - - - (17,770) - -
fees
Interest rate cap premium - (8,629) - - - (8,629) - -
(Provision) benefit for current
income taxes (5,438) (2,137) (7) (8,353) 8,624 (7,311) (6) (8,353)
Pension contribution - - - (3,500) - (3,500) - (3,500)
Changes in working capital (3,734) 11,164 (1,148) 9,335 (5,772) 9,845 (1,129) 9,342
------ ------ ------ ----- ------ ----- ------ -----
Cash provided by (used in) operating
activities 273,452 181,797 63,846 53,582 (21,035) 551,642 72,514 53,592
Changes in working capital 3,734 (11,164) 1,148 (9,335) 5,772 (9,845) 1,129 (9,342)
Maintenance capital expenditures(9) (38,620) (10,632) (760) (7,939) - (57,951) (1,012) (7,939)
------- ------- ---- ------ --- ------- ------ ------
Proportionately Combined Free Cash
Flow 238,566 160,001 64,234 36,308 (15,263) 483,846 72,631 36,311
======= ======= ====== ====== ======= ======= ====== ======
____________________
--------------------
(1) Represents MIC's proportionately combined interests in the businesses comprising these reportable segments.
(2) The sum of the amounts attributable to MIC in proportion to its ownership.
(3) Interest expense (income), net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October 2023. Interest expense (income), net, also includes a non-cash write-off of deferred financing fees related to the February 2016 refinancing at
Hawaii Gas and the October 2016 refinancing at Atlantic Aviation.
(4) 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.
(5) Other non-cash expense (income), 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.
(6) Represents the cash interest expense reclassified from MIC Corporate to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviation's credit facility in October 2016.
(7) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT.
(8) On March 31, 2016, IMTT acquired the remaining 33.3% interest in its Quebec terminal that it did not previously own. IMTT was previously providing management services to this terminal and no operational changes are expected. Prior to the acquisition, IMTT consolidated the results of the Quebec terminal in its financial statements and adjusted for the portion that it did not own
through noncontrolling interests. Since the IMTT Acquisition in July 2014 and prior to the acquisition of the noncontrolling interest, MIC reported IMTT's EBITDA excluding non-cash items and Free Cash Flow including the 33.3% portion of the Quebec terminal. The contribution from the minority interest was not significant. Therefore, there were no changes to our historical EBITDA
excluding non-cash items, Free Cash Flow or results generally as a function of acquiring this noncontrolling interest.
(9) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses, at IMTT.
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SOURCE Macquarie Infrastructure Corporation
