|From: JakeStraw||4/19/2007 8:13:53 AM|
|Macquarie Infrastructure Company to Acquire Mercury Air Centers|
Thursday April 19, 12:01 am ET
Transaction Creates Largest FBO Network in US
NEW YORK, April 19 /PRNewswire-FirstCall/ -- Macquarie Infrastructure Company (NYSE: MIC), a market leader in the ownership and operation of infrastructure businesses in the US, has entered into a definitive agreement to acquire the fixed base operations business of Mercury Air Centers ("Mercury") for $456.2 million. Mercury operates a network of 24 fixed base operations, or FBOs, at 22 airports across the US. Mercury is majority owned by Allied Capital Corporation (NYSE: ALD).
The business will be operated as a part of MIC's airport services business, Atlantic Aviation ("Atlantic"). Atlantic will operate a total of 68 FBOs following the acquisition of Mercury. The transaction is expected to close during the third quarter of 2007, subject to consent (or letters of estoppel) being received from relevant airport authorities.
"We are pleased to be able to further expand our presence in this exciting market with the acquisition of a substantial portfolio of quality FBOs", said Peter Stokes, Chief Executive Officer of MIC. "With the addition of Mercury, Atlantic will become the largest network of FBOs in the country, serving the general aviation sector of the air transportation industry throughout the US."
There is no overlap between the Mercury and Atlantic networks. The addition of Mercury will extend the Atlantic brand into strong general aviation markets including Los Angeles, Burbank, Cleveland and Nashville.
The $456.2 million purchase price includes transaction costs, pre-funded capital expenditures and debt service reserves of $29.2 million. The final purchase price is subject to working capital and capital expenditure adjustments.
MIC will fund a portion of the acquisition with a $192.0 million, two-year term loan secured by Mercury. The balance will be funded with proceeds from MIC's existing acquisition-related revolving credit facility and $20.0 million of available cash. The Company plans to refinance both the Mercury term loan and Atlantic's credit facility into a single facility following the closing of the acquisition. The proceeds of the refinancing will be used to repay the Mercury debt, Atlantic's current debt, and a portion of the borrowings under MIC's acquisition facility, reducing the Company's equity investment in Mercury.
The Company intends to raise an estimated $150.0 million of new equity in a follow-on offering of trust stock to repay the remaining borrowings under its acquisition facility. New shares will be offered at management's discretion, subject to favorable market conditions.
Impact on MIC
The transaction is expected to be immediately yield accretive, including distributions on shares issued in connection with raising new equity. The Company anticipates that Mercury will generate pro-forma gross profit in a range of $79.5 million to $82.5 million. Consistent with Atlantic's performance historically, MIC further expects that Mercury will generate EBITDA in a range of 44% to 46% of gross profit, or in excess of $35.0 million, during the first full year of its ownership.
As it has with prior acquisitions in the airport services sector, MIC believes that it will realize both economies of scale as well as opportunities for incremental revenue generation in combining the Mercury and Atlantic organizations. The Mercury sites will be integrated into the existing Atlantic regional management structure. In addition, Atlantic's highly regarded loyalty program, Atlantic Awards, will be introduced at the Mercury sites. The process of integrating and re-branding the facilities is expected to take 12 - 18 months.
|RecommendKeepReplyMark as Last Read|
|From: JakeStraw||5/8/2007 8:08:58 AM|
|Macquarie Infrastructure Company Reports First Quarter 2007 Financial Results|
Tuesday May 8, 7:30 am ET
Increased First Quarter Distribution of $0.59 Per Share Declared
NEW YORK, May 8 /PRNewswire-FirstCall/ -- Macquarie Infrastructure Company (NYSE: MIC), a leader in the ownership and operation of U.S. infrastructure businesses, reported consolidated revenue and operating income for the first quarter of 2007 of $169.0 million and $19.8 million, respectively. Revenue increased 96% and operating income increased 359% over first quarter of 2006.
Reported gross profit was $75.2 million for the quarter versus $39.9 million in the first quarter of 2006. Gross profit, or revenues less costs of goods sold/sales, removes the volatility in revenue associated with costs that are typically passed through to customers by infrastructure businesses and provides additional insight into the performance of the Company.
MIC also reported a year over year increase in estimated cash available for distribution ("CAD"). CAD is a measure used by the Company to assess its ability to sustain and increase quarterly distributions to shareholders. CAD for the quarter increased to $28.0 million, or $0.75 per share, from $11.5 million, or $0.42 per share, in the first quarter of 2006. The increase in CAD was attributable in part to successful acquisitions during 2006 and continued strong performance on the part of the Company's airport services business. CAD also includes a $2.6 million (net) federal income tax refund resulting from an overpayment of estimated taxes by the airport services and district energy businesses in 2004. Excluding the tax refund, CAD would have been $25.4 million or $0.68 per share.
The Company's board of directors has approved a distribution to shareholders of $0.59 per share for the first quarter of 2007. This is the fourth consecutive quarter for which the board has increased the distribution. The $0.59 per share is an 18% increase over the $0.50 per share paid for the first quarter of 2006. The distribution will be made on June 8, 2007 to shareholders of record on June 5, 2007. MIC anticipates declaring and paying a quarterly distribution for the quarter ending June 30, 2007 of $0.59 per share.
"Once again our businesses generated strong cash flows that we were able to use to support an above average return to our investors" said Peter Stokes, Chief Executive Officer of Macquarie Infrastructure Company. "The performance of our businesses in the first quarter was consistent with the guidance that we have provided to the markets for the full year."
OPERATING BUSINESSES PERFORMANCE HIGHLIGHTS
MIC reports EBITDA and contribution margin, both non-GAAP financial measures as it considers them to be an important indicator of overall performance. See the attached tables for a reconciliation of EBITDA to net income and contribution margin to revenue. The Company believes that EBITDA provides additional insight into the performance of its operating companies and their ability to generate dividends that allow it to service its debt and support its ongoing distribution policy. The reporting of contribution margin by the gas production and distribution business provides additional insight into the performance of that business net of changes in fuel prices that are typically passed through to customers.
The Company has implemented systems and procedures that will help ensure that its interest rate swaps achieve hedge accounting treatment in 2007. However, portions of certain economically effective swaps that qualify for hedge accounting will continue to be "ineffective" from an accounting standpoint. As a result, the changes in the fair value of the ineffective portion of these instruments will continue to flow through the income statement of the business that entered into the swap.
-- Gross profit in the Company's airport services business was $57.1
million for the quarter, an increase of 75.2% over the first quarter in
2006. Gross profit at comparable locations (excluding the acquisition
of the Trajen sites in July 2006) increased 18.4%.
- EBITDA increased to $25.6 million or 20.8% over the first quarter in
2006. EBITDA was reduced by a $0.95 million non-cash loss on the
ineffective portion of certain interest rates hedges compared to a
$7.3 million non-cash gain in the prior comparable period. Reported
EBITDA at existing locations decreased 15.6%, however, EBITDA at
existing locations would have increased by 36% excluding both the
non-cash derivatives gain in the first quarter of 2006 and the non-
cash derivatives loss in the first quarter of 2007.
- The business benefited from increased de-icing revenue, an increased
average dollar-based margin per gallon of fuel sold and a higher
volume of fuel sold during the first quarter in 2007 over the first
quarter in 2006.
-- The Company's bulk liquid storage terminal business declared a dividend
of $7.0 million to MIC for the first quarter of 2007. The
dividend payment was accrued at quarter-end and cash was received on
April 25, 2007. As an owner of 50% of this business, MIC does not
consolidate the financial results of the bulk liquid storage terminal
business with those of its controlled businesses.
- MIC expects to receive a dividend of $7.0 million each quarter
through the end of 2008. Beginning with the first quarter in 2009,
the Company expects to receive a dividend equal to 50% of the
cash from operations, less maintenance and environmental remediation
capital expenditures, generated by this business, subject to
satisfaction of certain conditions.
- Terminal revenue increased to $54.8 million in the first quarter of
2007 from $46.4 million in the first quarter of 2006. The increase
was primarily the result of a $5.1 million increase in storage
revenue ($1.6 million of which related to the consolidation of the
results of operations at Quebec), a $935,000 increase in throughput
revenue and a $2.0 million increase in revenue from other terminal
- Cash flow from operations in the bulk liquid storage business
increased to $31.0 million from $20.5 million or 51.1% over the first
quarter of 2006.
- Operating income in the bulk liquid storage business for the first
quarter of 2007 was $16.8 million, an increase of 46.4% over the
first quarter of 2006.
-- The Company's gas production and distribution business generated a
total contribution margin of $15.4 million or 3.8% less than in the
first quarter of 2007.
- Utility revenue does not include $766,000 of Fuel Adjustment Charges
that were recovered from an escrow established for that purpose at
closing of the acquisition. Revenue in the first quarter of 2006
included an accrual for unbilled revenue that was $1.1 million higher
than the accrual in the first quarter of 2007.
- EBITDA of $6.5 million was 14.8% lower than in the first quarter of
2006. The lower amount reflects the reduction in revenue from the
Fuel Adjustment Charges, a larger accrual for unbilled revenue of
$1.1 million in 2006 and the impact of a $267,000 non-cash loss
on the ineffective portion of certain interest rates hedges.
- The total volume of gas sold increased slightly over the prior
-- District energy business gross profit and EBITDA increased to $2.7
million and $3.3 million, respectively, or 5.4% and 11.0% over the
first quarter in 2006.
- Capacity revenue increased with the conversion of four interruptible
customers to continuous service during June through September, 2006.
- Higher electricity costs resulting from deregulation of the Illinois
electricity generation market resulted in higher consumption revenue,
as they were effectively passed through to customers.
-- Gross profit at the Company's airport parking business declined 5.4% to
$4.5 million in the first quarter of 2007 versus the same period in
2006. EBITDA for the period declined 12.5% to $4.1 million.
- Average revenue per car out increased 7.5%, however the number of
cars out declined 4.4%.
- Excluding non-cash gains and losses pertaining to derivatives in use
in the business, EBITDA would have increased by 3.9% relative to the
first quarter in 2006.
ESTIMATED CASH AVAILABLE FOR DISTRIBUTION
The Company believes that its results under GAAP, after certain adjustments, provide better insights into its ability to support ongoing distributions. GAAP results alone do not reflect all of the items that management considers in estimating distributable cash, such as the cash received in excess of the equity in earnings on its investment in the bulk liquid storage terminal business. The table below summarizes MIC's cash receipts and payments, adjusted for certain dividend income and cash expenditures, for the first quarter.
MIC's consolidated cash from operations increased to $27.6 million in the first quarter of 2007 from $11.8 million in the first quarter of 2006. Adjustments to cash from operations include a net $2.6 million tax refund resulting from overpayment of estimated taxes by the Company's airport services and district energy businesses in 2004. Adjustments also include a $766,000 recovery from an escrow account by the gas production and distribution business.
Estimated CAD is reduced by a net $5.2 million in cash from investing activities that includes the $3.5 million portion of the dividend from the Company's bulk liquid storage business that does not flow through earnings offset by $8.7 million of capital expenditures paid in cash or accrued.
Estimated CAD includes a net $5.9 million in cash from financing activities that is the portion of the capital expenditures in the period that was primarily growth related and therefore debt funded.
Estimated CAD excludes $3.9 million of cash generated by working capital reductions.
Net of all adjustments, MIC estimates cash available for distribution in the first quarter of 2007 increased to $28.0 million versus $11.4 million in the prior comparable period.
Cash from operations 27.6
Cash from operations adjustments 3.6
CAD from investing activities (5.2)
CAD from financing activities 5.9
Working capital (3.9)
Estimated Cash Available for Distribution 28.0
BUSINESS UPDATE AND OUTLOOK
MIC's Manager earned a performance fee of $957,148 for the first quarter of 2007 and has elected to receive payment of the fee in shares of trust stock. The number and price of the additional shares will be determined based on the volume-weighted average price of MIC's currently outstanding shares over a fifteen day trading period that is expected to begin in the first week of June 2007.
Airport services business - On April 23, 2007 the Company announced its intention to acquire a portfolio of 24 FBOs collectively known as Mercury Air Centers for $456.2 million. The price includes $29.2 million of pre-funded capital expenditures, debt services reserves and transaction related expenses. MIC expects to close the transaction in the third quarter of 2007 subject to satisfaction of usual and customary conditions precedent for transactions of this size and type including the receipt of the consent of the airport authorities at each of the locations.
MIC expects continued strong performance from the airport services segment to be supported by a full-year contribution from sites acquired in 2006 as well as continued increases in the number of general aviation aircraft in service and the number of hours those aircraft are being flown.
Bulk liquid storage terminal business - The performance of the bulk liquid storage business is expected to continue to improve as inflation escalators generate revenue growth from existing contracts and storage tanks currently under construction become operational. Of 25 new tanks under construction, 10 have been completed. Approximately $232.2 million of growth capital expenditure commitments have been made in the bulk liquid storage terminal business since the beginning of 2006. The Company expects that the capital projects will generate an incremental increase in annual gross profit and EBITDA of $31.1 million when complete.
MIC believes that the bulk liquid storage terminal business will continue to generate a quarterly dividend of $14.0 million, 50% of which is payable to the Company, through the end of 2008.
Gas production and distribution business - The fundamental driver of continued growth in the gas production and distribution business will be population growth in Hawaii. Beyond this, MIC believes that it can effectively market its synthetic natural gas and liquid petroleum gas products as an efficient, environmentally friendly fuel source, thereby increasing its market share relative to other fuel/power sources.
MIC believes that its gas production and distribution business will continue to be a stable source of distributable cash.
District energy business - The Company expects continued stable performance from its district energy business based on an assumption of a historically normal level of demand for cooling during the upcoming summer. Expansion of the current system, in conjunction with operational strategies and efficiencies, will increase saleable capacity by approximately 9,300 tons. Approximately 90% of the new capacity has been sold to five new customers, one of which came on-line in late 2006. The remaining newly contracted customers will come on-line in 2007 through 2009.
Airport parking business - The re-branding of the Company's airport parking business as FastTrack Airport Parking is proceeding as expected. Eight facilities have been re-branded to date. The re-branding will encompass both facilities and the business' web presence. Marketing and promotional efforts will focus on building brand awareness which is expected to help grow the customer base.
Relative underperformance in the business has been linked to a small number of sites. Remedial actions up to and including changes in the management at those sites have been implemented.
|RecommendKeepReplyMark as Last Read|
|From: JakeStraw||5/23/2007 9:28:46 AM|
|Macquarie Infrastructure Company Announces Share Exchange|
Wednesday May 23, 9:00 am ET
Simplifies Corporate Structure, Tax Reporting
NEW YORK, May 23 /PRNewswire-FirstCall/ -- Macquarie Infrastructure Company Trust (NYSE: MIC), a market leader in the ownership and operation of infrastructure businesses in the US, will effect a mandatory exchange ("Exchange") of all outstanding shares of its trust stock. On June 25, 2007, all shares of beneficial interest in Macquarie Infrastructure Company Trust will be exchanged for limited liability company membership interests in Macquarie Infrastructure Company LLC.
|RecommendKeepReplyMark as Last Read|
|From: JakeStraw||6/19/2007 11:18:17 AM|
|Macquarie to Buy SJJC Aviation|
Monday June 18, 6:10 pm ET
Macquarie Infrastructure to Acquire SJJC Aviation Services in Expansion of Mercury Air Deal
NEW YORK (AP) -- Macquarie Infrastructure Co., which provides fueling and aircraft storage services, said Monday it has agreed to acquire SJJC Aviation Services LLC.
SJJC Aviation Services LLC owns fixed base operations doing business as San Jose Jet Center and ACM Aviation, Macquarie said.
The deal is an expansion of the acquisition of Mercury Air Centers originally announced in April, the company said.
With the agreement to buy SJJC, Macquarie will acquire a total of 26 fixed base operations in the Mercury transaction. The total purchase price will be about $615 million, the company said.
In addition, Macquarie said it expects to spend $18 million for a new hangar. The deal is expected to close in the third quarter, the company said.
|RecommendKeepReplyMark as Last Read|
|From: JakeStraw||2/28/2008 7:58:06 AM|
|Macquarie Infrastructure Company Reports Full Year 2007 Financial Results|
Thursday February 28, 7:30 am ET
- Cash Available for Distribution Increases 46.5% to $105 Million
- Quarterly Dividend Increased to $0.635 Per Share
- Performance Fees, Non-Cash Expenses Contribute to Net Loss
NEW YORK, Feb. 28 /PRNewswire-FirstCall/ -- Macquarie Infrastructure Company (NYSE: MIC - News), a leader in the ownership and operation of U.S. infrastructure businesses, reported consolidated revenue for the fourth quarter and full year 2007 of $263.7 million and $831.4 million, respectively. Revenue for the full year increased 60% over 2006.
MIC reported gross profit for 2007 of $351.5 million or an increase of 59% over 2006. Gross profit is an important measure of the profitability of the Company and its ability to maintain and, where possible, improve margins in its businesses.
The Company successfully refinanced the debt of two of its consolidated businesses during 2007. The improved terms of the refinanced facilities resulted in an increase in the average maturity of all operating company debt to 5.8 years at January 30, 2008. The weighted average cost of MIC's operating company level debt decreased to 6.6%.
Expenses incurred in connection with the debt refinancing contributed to a net loss for the year ended December 31, 2007 of $52.1 million. In addition to $27.5 million of refinancing-related expenses, the Company also recorded a net $66.7 million of non-cash depreciation and amortization expenses and performance fees payable to its manager of $44.0 million.
Refinancing expenses other than the non-cash write-down of deferred financing costs were funded from proceeds of new debt facilities and did not impact distributable cash. Performance fees were reinvested in MIC LLC interests and did not impact distributable cash. For 2006 MIC reported net income of $49.9 million including $60.1 million in gains from the sale of certain assets, $65.2 million of non-cash depreciation and amortization expenses, and $4.1 million of performance fees payable to our manager that were reinvested in MIC LLC interests.
MIC's estimated cash available for distribution ("CAD") increased 46% to $105.0 million in 2007 from $71.7 million in 2006. CAD is a non-GAAP measure used by the Company to assess its ability to sustain and increase its quarterly dividends. MIC distributes substantially all CAD to investors, subject to maintaining prudent reserves in its businesses. CAD exceeded the sum of cash distributions made during 2007 by 7.2%.
On February 25, MIC's board of directors approved a dividend of $0.635 per share for the fourth quarter of 2007. The dividend will be payable on March 10, 2008 to shareholders of record on March 5, 2008. The increase is the Company's seventh consecutive step-up in quarterly dividends and is 11.4% more than the dividend paid in the fourth quarter of 2006.
"MIC's businesses are providers of basic, everyday services. Their strong performance in both the fourth quarter and full year 2007, and our ability to once again increase our cash dividend, reflects the stable, defensive nature of the asset class" said Peter Stokes, Chief Executive Officer of Macquarie Infrastructure Company.
Operating Businesses Performance Highlights
MIC reports EBITDA and contribution margin, both of which are non-GAAP financial measures, as it considers them to be important indicators of overall performance. The attached tables provide a reconciliation of EBITDA to net income, and contribution margin to revenue. The Company believes that EBITDA, net of other non-cash and non-recurring items, also provides insight into the performance of certain of its operating companies and their ability to generate distributable cash. The reporting of contribution margin by the gas production and distribution business provides additional insight into the performance of that business net of changes in synthetic natural gas feedstock prices that typically are recovered in revenue.
-- Gross profit in the Company's airport services business was $90.1
million and $276.7 million for the fourth quarter and full year 2007,
respectively. Gross profit from all locations increased by 66% over
the full year 2006. Gross profit generated at sites owned for more
than 12 months increased by 11% for the full year.
-- Fuel sales and fuel-related services are the primary drivers of
gross profit in the business. The airport services business
reported increases in both the volume of general aviation fuel sold
and the average margin on fuel sales. Margin improvement was driven
by an increased proportion of transient customers who typically pay
a higher margin on fuel relative to base tenants.
-- EBITDA generated by the airport services business increased to $26.1
million and $108.9 million in the fourth quarter and for the full
year, respectively. The improvement is an increase of 54% over the
full year 2006. Reported EBITDA for 2007 included a $9.8 million
expense, "loss on extinguishment of debt," incurred in connection
with refinancing of the business' debt facility in the fourth
quarter. The expense was a non-cash write down of deferred
financing costs and had no impact on distributable cash. EBITDA
also included a $1.7 million non-cash loss stemming from the change
in the value of interest rate hedges. Excluding the losses on
derivatives and the write down of deferred financing costs, both of
which are non-cash, EBITDA from existing locations would have
increased by 14%.
-- In the December 2007 quarter the business completed the sale of its
fixed based operation ("FBO") at the airport at South Lake Tahoe and
the acquisition of the sole FBO at the airport at Rifle, Colorado.
The Rifle FBO was acquired for $15.5 million in cash. The sale of
South Lake Tahoe resulted in a non-cash loss on disposal of $760,000
in the fourth quarter. The business also entered into an agreement
to acquire a portfolio of three FBOs for a total of $42.0 million
including transaction related costs. The acquisition includes sites
at Sun Valley, Idaho, and Farmington and Albuquerque, New Mexico.
The Company expects the acquisition to close in the first quarter of
2008 and to be funded using proceeds drawn on the MIC Inc. level
acquisition-related revolving credit facility.
-- In May, 2006, MIC acquired a 50% interest in the company that owns the
fourth largest bulk liquid storage terminal business in the country.
The business generated gross profit of $32.9 million and $120.1 million
in the fourth quarter and for the full year 2007, respectively. The
largest component, terminal gross profit or gross profit generated by
storage related activities, increased by 21% over the full year 2006.
Excluding the results of the IMTT-Quebec operations that were not
consolidated in the business' accounts in 2006, terminal gross profit
increased by 16%. MIC does not consolidate the financial results of the
bulk liquid storage terminal business with those of its controlled
-- The improved performance in the bulk liquid storage business was
primarily the result of a 9.1% increase in average storage rental
rates. Continued strong demand for storage allowed the business to
increase rates in storage contracts that renewed during the year.
-- The bulk liquid storage terminal business paid MIC a total of $28.0
million in dividends in 2007 including a dividend of $7.0 million
for the December quarter. MIC expects to receive cash dividends of
$7.0 million per quarter from the business during 2008.
-- Cash flow from operations in the bulk liquid storage business
increased to $91.4 million in 2007 or by 37% over 2006. Maintenance
and environmental capital expenditures for the year totaled $31.6
-- The bulk liquid storage business generated EBITDA of $14.2 million
and $67.1 million in the fourth quarter and for the full year 2007.
Reported EBITDA decreased by 20% compared to the full year 2006.
The decrease reflects non-cash losses of $21.0 million on changes in
the value of interest rate hedges and a $12.3 million non-recurring
"make whole" payment (net present value of future interest and
principal payments foregone by the lender) incurred in connection
with refinancing the business' debt. The refinancing expense was
funded using a portion of the proceeds of a new debt facility and
had no impact on distributable cash. Excluding these items, EBITDA
for the full year would have increased by 21%.
-- The business has completed or committed to expansion projects having
a total value of $322.0 million. Through year end the business had
completed construction of and was generating revenue from 18 of 31
new tanks that are a part of the expansion at existing sites. A
substantial portion of a new chemicals logistics center at Geismar,
LA has also been completed. In addition, the business acquired a
small facility at Joliet, IL for total consideration of $18.5
million. Including the acquisition, management expects that the
expansion projects will produce an annualized incremental $48.3
million of gross profit and EBITDA beginning in 2009.
-- The Company's gas production and distribution business generated a
combined utility and non-utility contribution margin of $16.0 million
and $61.1 million in the fourth quarter and for the full year 2007,
respectively. Total contribution margin for the full year increased 6%
over 2006. The increase was primarily the result of $4.1 million of
customer credits that reduced revenue in 2006, offset by higher fuel
cost adjustments. Utility therms (gas volume) sold and non-utility
gallons sold both increased slightly compared to 2006.
-- The business generated full year EBITDA of $23.9 million, a 38%
increase over 2006, on the increased contribution margin, partially
offset by higher operating expenses. The increased expenses
included primarily higher employee benefits costs and costs
associated with a pipeline inspection program. Excluding non-cash
losses on changes in the value of interest rate hedges, and the 2006
customer credits recovered from an acquisition-related escrow
account, EBITDA would have decreased by 3% compared to 2006.
-- Gas products are used primarily for cooking, laundry (hot water,
steam) and environmental lighting in Hawaii. As a result, demand
and gross profit remain quite constant throughout both market cycles
-- MIC's district energy business reported gross profit of $3.1 million
and $16.4 million in the quarter and for the full year 2007,
respectively. Gross profit increased 16% over the full year 2006. The
combination of inflation-based rate increases and warmer summer
temperatures in Chicago in 2007 compared to 2006 contributed to the
-- EBITDA generated in the fourth quarter and for the full year was
$3.6 million and $1.4 million, respectively. Reported EBITDA
decreased 91% compared to 2006 as a result of a "make-whole" payment
(net present value of future interest and principal payments
foregone by the lender) and non-cash write-down of deferred
financing costs together totaling $17.7 million. The expenses were
incurred in connection with the successful refinancing of the long-
term debt of the business in the third quarter. The make-whole
expense of $14.7 million was funded with a portion of the proceeds
of a new debt facility and had no impact on distributable cash
generated by the business. Excluding these non-cash and non-
recurring items, EBITDA would have increased by 24%.
-- During 2007 and year to date in 2008 the district energy business
increased its net tons of cooling under contract by 6.5%. Delivery
of the cooling will commence over a period of several years as the
new buildings are completed.
-- Gross profit at the Company's airport parking business was $3.0 million
and $17.7 million in the fourth quarter and for the full year 2007,
respectively. Full year gross profit decreased 18% year over year as
improvement in average revenue per car was more than offset by non-cash
expenses (depreciation, rent in excess of lease), higher operating
expenses including for improved staffing and security, and lower
overall customer volume.
-- EBITDA declined to $3.2 million and $15.5 million in the fourth
quarter and for the full year 2007, respectively. Excluding non-
cash losses resulting from the change in value of interest rate
hedges, EBITDA would have been 24% lower than in 2006.
-- Average revenue per car out increased 4.8% in both the fourth
quarter and for the full year 2007. The increase reflects both the
strategic shift away from marketing to airline/Transportation
Security Administration employees and success in attracting higher
margin business and leisure travelers.
Estimated Cash Available for Distribution
The Company believes that it can provide better insight into its ability to support its distributions by making certain adjustments to its "as reported" results. For example, its results under Generally Accepted Accounting Principles ("GAAP") alone do not reflect all of the items that management considers in estimating distributable cash. The table below summarizes MIC's estimated cash available for distribution ("CAD"), beginning with cash from operations and adjusted for certain dividend income and cash expenditures. Estimated cash available for distribution totaled $105.0 million for the year, a 46% increase over the $71.7 million reported for 2006.
($ Millions) Total
Cash from operations 96.55
Cash from operations adjustments 14.25
Cash from investing and financing activities 11.79
Working capital (17.57)
Estimated Cash Available for Distribution 105.03
MIC's consolidated cash from operations more than doubled to $96.6 million in 2007, from $46.4 million in 2006. The increase in cash from operations was attributable to same site growth in the airport services and district energy businesses and contributions from successful acquisitions concluded during 2006 and 2007 by the airport services business. Cash from operations is the starting point for calculating estimated cash available for distribution.
-- Estimated CAD for 2007 is increased by a net $14.5 million of
adjustments to cash from operations including primarily income tax
refunds received by the airport services business, escrow recoveries by
the gas production and distribution business and equity-funded
acquisition integration expenses in the airport services business.
-- Estimated CAD for 2007 is increased by a net $11.8 million in cash from
investing and financing activities. The increase reflects primarily
the $28.0 million dividend received from the Company's bulk liquid
storage business that does not flow through earnings or cash from
operations, offset by a net $14.4 million of capital expenditures paid
in cash or accrued and a net $2.1 million in capital lease/debt
paydowns and restricted cash releases.
-- Estimated CAD is reduced also by $17.6 million of net changes in
working capital movements as normal changes in working capital are not
considered when calculating CAD.
MIC estimates that cash available for distribution exceeded the sum of quarterly cash distributions made during 2007 by $7.1 million.
Business Update and Outlook
Airport services business - The airport services business expects to complete the acquisition of the SevenBar FBOs in the first quarter. The contribution from additional sites at Sun Valley, Idaho and Albuquerque and Farmington, New Mexico is expected to be immediately yield accretive to MIC. The acquisition will be funded with a drawdown from the Company's MIC Inc. level revolving credit facility.
MIC expects continued strong performance from its airport services business. General aviation aircraft manufacturers continue to report strong demand for new planes. The increased number of hours that general aviation aircraft are being flown is expected to continue to drive growth in the volume of fuel sold. Management of the airport services business believes that improved access to general aviation and the challenges facing commercial aviation associated with higher load levels, potential mainline carrier consolidation and security-related delays will result in the business being relatively insensitive to downturns in the broader economy.
Bulk liquid storage terminal business - The bulk liquid storage business is expected to continue to perform well as inflation escalators generate terminal revenue growth from existing contracts, expiring contracts are renewed at higher storage rates and storage tanks currently under construction become operational.
Construction of the Geismar facility remains on pace for completion in the second quarter of 2008. Strong fundamental drivers of growth, combined with the incremental increase in gross profit expected from growth capital expenditures including Geismar, are expected to support dividends in excess of the current fixed level following conversion to a variable dividend. In the first quarter of 2009 and thereafter MIC will receive a dividend equal to 50% of the bulk liquid storage terminal business' cash from operations plus cash from financing activity less maintenance and environmental capital expenditures.
Gas production and distribution business - The fundamental driver of continued growth in the gas production and distribution business is population growth in Hawaii. MIC believes that the business will continue to be a stable source of distributable cash based on the basic nature of the products and services provided.
District energy business - The Company expects continued stable performance from its district energy business, assuming a historically normal level of demand for cooling during the summer of 2008. The business will increase saleable tons of cooling through expansion of chilling and pumping capacity and improvements in system hydrology. System expansion will be undertaken only when contracts for cooling have been signed and not on a speculative basis.
Airport parking business - Yield management strategies, including implementation of lot-level technology for tracking activity, are expected to continue to generate improvement in average revenue per car. The fundamental driver of the volume of cars out, the forecast rate of growth in the number of commercial enplanements nationally, remains intact at approximately 3.5% per year. We expect that effective marketing of the business will result in a comparable level of growth in cars out in the business.
|RecommendKeepReplyMark as Last ReadRead Replies (2)|
|To: JakeStraw who wrote (6)||12/27/2008 10:56:20 PM|
Is MIC an infrastructure play when Obama takes office? This looks interesting where it's sitting below $5. Even with the cut in dividend, it still is paying over 20% at its current market price. What do you think of MIC now? They need to refi some debt in 2009?
|RecommendKeepReplyMark as Last Read|
|To: JakeStraw who wrote (6)||10/25/2010 12:27:00 PM|
|Macquarie Infrastructure has been moving back up nicely for over a year and a half. It is coming off its lows. How much higher can it go?|
Reuters has it rated as an outperform.
|RecommendKeepReplyMark as Last Read|
|From: OldAIMGuy||8/28/2018 3:06:38 PM|
|The move up yesterday was enough to trigger a sale of 10% of my current holding. Those shares were purchased back in May at $37.14 so carry a +27% LIFO gain with them. (That's even better than the dividend) It also gives me a slight cushion of cash now in case MIC cycles downward once again. |
My initial buy was at $64.50 back in January. After that I had three buys under $39 which helped the average cost per share quite a bit. Those three additional buys nearly doubled my initial position.
|RecommendKeepReplyMark as Last Read|