MIC Reports First Quarter 2021 Financial And Operational Results

MIC Reports First Quarter 2021 Financial And Operational Results

eTurboNews-

NEW YORK, May 4, 2021 /PRNewswire/ — Macquarie Infrastructure Corporation (NYSE: MIC) (the “Company”) today announced its operational and financial results for the first quarter 2021. The results reflect better than expected contributions from Atlantic Aviation driven by increasing general aviation flight activity, and from MIC Hawaii driven by increasing numbers of visitors to Hawaii.

“We are pleased to report improved overall results this quarter. The ongoing recovery in economic activity lifted general aviation flight activity in March above the corresponding 2019 levels in markets served by Atlantic Aviation,” said Christopher Frost, chief executive officer of MIC. “While visitor arrivals in Hawaii have yet to reach 2019 numbers, they are ahead of our expectations and contributing to a recovery in the performance of our MIC Hawaii businesses.”

“On the strength of our financial performance in the first quarter, we are raising our earnings estimates for 2021. We remain confident in our ability to execute on our strategic priorities heading into the second half of the year,” added Frost.

MIC reported net income from continuing operations of $13.8 million compared with a net loss of $7.0 million in the first quarter of 2020. The improvement reflects primarily a reduction in selling, general and administrative expenses and lower interest expense.

The Company recorded Adjusted EBITDA excluding non-cash items from continuing operations of $76.9 million for the quarter, up 2% versus the first quarter of 2020.

MIC generated cash from operating activities of $40.0 million for the quarter, down 22% versus the prior comparable period. The decline primarily reflects a net unfavorable impact to working capital resulting from the reduction in business activity in March 2020 and payment of expenses in the first quarter of 2021 related to the sale of IMTT in December 2020.

The Company recorded Adjusted Free Cash Flow from continuing operations of $57.0 million, up 23% versus the prior comparable period. The increase reflects lower cash interest expense, maintenance capital expenditures and cash taxes together with the increase in Adjusted EBITDA excluding non-cash items versus the first quarter of 2020.

Update on Sales Processes

On October 31, 2019, MIC announced its intention to pursue strategic alternatives for the Company and has since been actively engaged in processes to sell its operating businesses. The Company completed the sale of its International-Matex Tank Terminals business in December 2020.

“The sale processes for our remaining businesses are progressing,” noted Frost. “We are pleased with the level of interest from potential buyers, particularly in our Atlantic Aviation business, and we remain confident in our ability to unlock value for shareholders through sales of both Atlantic Aviation and MIC Hawaii.”

The Company currently expects to sell Atlantic Aviation before the end of 2021. The regulatory approval process associated with a sale of the businesses comprising MIC Hawaii makes it more likely that a sale of that segment occurs in 2022.

To facilitate the tax-efficient sale of Atlantic Aviation prior to a sale of MIC Hawaii, shareholders will be asked to approve a plan of merger that could result in the reorganization of MIC from a corporation to a listed limited liability company treated as a partnership for tax purposes. The Company will seek approval of the plan of merger at a Special Meeting of Shareholders scheduled for May 6, 2021.

In connection with the sales processes, MIC is winding down operations at its shared services center in Plano, Texas. Functions other than those supporting the public company will be allocated to or reconstituted in both of its operating businesses.

First Quarter 2021 Segment Results

Atlantic Aviation

“Atlantic Aviation performed well during the first quarter, driven by the continued improvement in general aviation flight activity. The improvement was supported by strong demand at leisure-oriented destinations that exceeded expectations and increased demand at business-oriented destinations. Flight activity surpassed pre-pandemic levels in regions of the country that have shown consistent strength over the past year, including the Intermountain West and Florida. In addition, the business benefitted from steady growth in tenant hangar rental revenue,” Frost observed.

Atlantic Aviation generated EBITDA excluding non-cash items of $67.3 million in the first quarter of 2021, up 2% versus the first quarter of 2020, but 16% below the $79.8 million recorded in the first quarter of 2019.

As reported by the Federal Aviation Administration, same store general aviation flight activity at airports on which Atlantic Aviation operates increased by 5% in the first quarter compared with the first quarter of 2020 and decreased by 6% versus the first quarter of 2019. Flight activity at these airports was up 3% in March 2021 compared with March 2019.

MIC Hawaii

“The businesses that comprise our MIC Hawaii segment benefitted from a larger than anticipated number of visitors to the islands in the first quarter of the year. While the rate of recovery in visitor arrivals going forward remains uncertain, Hawaii appears to be a beneficiary of a low incidence of COVID-19 and pent-up consumer travel demand. At quarter end, visitor arrivals were approximately 60% below 2020 levels and 67% below 2019 levels, but well higher than those recorded in in the fourth quarter of 2020,” Frost noted.

MIC Hawaii generated EBITDA excluding non-cash items of $13.6 million in the first quarter of 2021, down 11% versus the first quarter in 2020 and down 30% versus the $19.5 million recorded in the first quarter in 2019. Residential gas consumption was flat during the quarter, as expected, while commercial and industrial gas consumption (including by hotels and restaurants) rose with the increase in visitor arrivals. Total gas consumption declined by 18% versus the first quarter in 2020 and 21% versus the first quarter in 2019.

Corporate and Other

MIC’s Corporate and Other segment includes primarily interest expense on holding company level debt, fees payable to the Company’s external manager and public company expenses. Reduced expenditures in the first quarter of 2021, including lower costs incurred in connection with efforts to sell the Company’s operating businesses, resulted in the generation of EBITDA excluding non-cash items of ($8.2) million compared with ($16.7) million the first quarter of 2020.

2021 Guidance Revision

On the strength of the Company’s financial results for the first quarter, MIC management has raised its earnings estimates for 2021.

Segment

Adjusted EBITDA Excluding Non-Cash Items Range ($ millions)

Atlantic Aviation

245 – 260

MIC Hawaii

35 – 45

Corporate and Other

(15)

MIC has raised its 2021 Adjusted EBITDA excluding non-cash items guidance for Atlantic Aviation to between $245 and $260 million from between $220 and $240 million. Based on demand during the first quarter, the Company believes that the rapid rollout of effective COVID-19 vaccines will continue to boost activity at leisure-oriented destinations through the summer. Consistent with prior guidance, the Company assumes that activity at business-oriented destinations, as well as international and event-driven travel, will recover during the second half of the year. Factors that could affect the outcome include, on the upside, an acceleration in the reopening of the economy or sustained leisure demand above historical levels through the remainder of 2021.  The current guidance does not assume a spreading of COVID-19 variants resistant to the current therapies or a resurgence of COVID-19 generally.

The better-than-expected number of visitors to Hawaii during the first quarter supported an upward revision in the Company’s 2021 Adjusted EBITDA excluding non-cash items guidance for its MIC Hawaii segment to between $35 and $45 million from between $30 and $40 million. MIC believes the rapid rollout of effective COVID-19 vaccines and the expected reopening of Hawaii to visitors from around the world will result in gas sales being above those previously anticipated, partially offset by an expected higher wholesale cost of propane and higher operating expenses due to the wind-down of the Company’s shared service center.

MIC revised its 2021 Adjusted EBITDA excluding non-cash items guidance for its Corporate and Other segment to ($15) million down from a previous estimate of ($20) million. The reduction primarily reflects lower professional services costs at the holding company level and the wind-down of the Company’s shared services center in Plano, Texas.

Balance Sheet Strength and Financial Flexibility

MIC reported aggregate leverage of approximately 3.8x net debt/Adjusted EBITDA excluding non-cash items (trailing twelve-month basis) on March 31, 2021. The Company expects its aggregate leverage to be below 3.0x net debt/Adjusted EBITDA at year-end.

The Company conducted a tender offer for any or all of its 2% Convertible Senior Notes due October 2023 during the first quarter. Including open market purchases made after quarter-end, MIC repurchased $364.3 million, or 91%, of the Notes outstanding.

On April 19, 2021, MIC’s Hawaii Gas business fully repaid its $100 million senior secured notes outstanding. The business incurred a $4.7 million ‘make-whole’ payment in connection with the repayment.

The Company continues to forecast deployment of growth capital of between $70 and $80 million in 2021, primarily on projects to which it has previously committed. MIC deployed $11.1 million in the first quarter of the year.

Summary Financial Information



Quarter Ended March 31,


Change
Favorable/
(Unfavorable)


2021


2020


$


%


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

GAAP Metrics








Continuing Operations








Net income (loss)

$

13,797



$

(6,988)



20,785



NM


Net income (loss) per share attributable to MIC

0.15



(0.08)



0.23



NM


Cash provided by operating activities

39,993



51,540



(11,547)



(22)


Discontinued Operations








Net income

$



$

18,215



(18,215)



(100)


Net income per share attributable to MIC



0.21



(0.21)



(100)


Cash provided by operating activities



48,688



(48,688)



(100)


Weighted average number of shares outstanding: basic

87,411,455



86,686,972



724,483



1


MIC Non-GAAP Metrics








EBITDA excluding non-cash items – continuing operations

$

72,650



$

64,464



8,186



13


Investment and acquisition/disposition costs

4,279



11,107



(6,828)



(61)


Adjusted EBITDA excluding non – cash items–continuing operations

$

76,929



$

75,571



1,358



2


Cash interest

$

(13,055)



$

(18,570)



5,515



30


Cash taxes

(3,209)



(4,820)



1,611



33


Maintenance capital expenditures

(3,664)



(5,714)



2,050



36


Adjusted Free Cash Flow – continuing operations

$

57,001



$

46,467



10,534



23


EBITDA excluding non-cash items – discontinued operations

$



$

77,647



(77,647)



(100)


Cash interest



(9,769)



9,769



100


Cash taxes



(2,107)



2,107



100


Maintenance capital expenditures



(5,615)



5,615



100


Free Cash Flow – discontinued operations

$



$

60,156



(60,156)



(100)


Adjusted Free Cash Flow – consolidated

$

57,001



$

106,623



(49,622)



(47)


Conference Call and Webcast

When: MIC has scheduled a conference call for 8:00 a.m. Eastern Time on Tuesday, May 4, 2021 during which management will review and comment on the first quarter 2021 results.

How: To listen to the conference call dial +1 877-407-2991 or +1 201-389-0925 at least ten 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. Allow extra time prior to the call to visit the site and download the software needed to listen to the webcast.

Slides: MIC will prepare supplemental materials that will be available for downloading from the Company’s website prior to the call.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. May 4, 2021 through midnight May 11, 2021, at +1 877-660-6853 or +1 201-612-7415, Passcode: 13718895. 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 businesses providing basic services to customers in the United States. Its businesses consist of an airport services business, Atlantic Aviation; and entities comprising an energy services, production and distribution segment, MIC Hawaii. For additional information, please visit the MIC website at www.macquarie.com/mic.

Use of Non-GAAP Measures

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

In addition to MIC’s results under U.S. GAAP, the Company uses the non-GAAP measures EBITDA excluding non-cash items and Free Cash Flow to assess the performance and prospects of its businesses.

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 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 expense reflected in the statements of operations. Other non-cash expenses, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries. EBITDA excluding non-cash items also excludes base management fees and performance fees, if any, whether paid in cash or stock.

The Company’s businesses can be characterized as 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 —less maintenance capital expenditures and adjusted for changes in working capital.

Management uses Free Cash Flow as a measure of its ability to fund acquisitions, invest in growth projects, reduce, or repay indebtedness and/or return capital to shareholders. 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 mark-to-market adjustment of the value of derivative instruments; (v) gains (losses) related to the write-off or disposal of assets or liabilities, (vi) non-cash compensation expense incurred in relation to the incentive plans for senior management of the Company’s operating business; and (vii) pension expense. 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 in Free Cash Flow and are not included in pension expense. Management believes that external consumers of its financial statements, including investors and research analysts, use Free Cash Flow to assess the Company’s ability to fund acquisitions, invest in growth projects, reduce or repay indebtedness, and/or return capital to shareholders.

In its Quarterly Report on Form 10-Q, the Company has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate and Other. 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 to help understand MIC’s financial performance and not in lieu of its financial results reported under GAAP.

See the tables below for a reconciliation of Net Income (loss) to EBITDA excluding non-cash items from continuing operations and a reconciliation of cash provided by operating activities from continuing operations to Free Cash Flow from continuing operations.

With respect to the Company’s guidance for EBITDA and Free Cash Flow in 2021, a reconciliation of EBITDA to net income (loss), the most comparable GAAP measure and a reconciliation of Free Cash Flow to cash from operating activities, the most comparable GAAP measure, are not available without unreasonable effort due to the Company’s limited visibility into and an 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.

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 various factors in determining whether a specific capital expenditure will be classified as maintenance or growth.

MIC does not bifurcate specific capital expenditures into growth and maintenance components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.

Forward-Looking Statements

This press release contains forward-looking statements. MIC may, in some cases, use words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “intend”, “should”, “would”, “could”, “potentially”, or “may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, statements regarding potential sales of the Company’s operating businesses (including the Company’s proposed reorganization) and the anticipated uses of any proceeds therefrom, statements regarding the anticipated specific and overall impacts of the COVID-19 pandemic, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. 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; the short and long term impact of the COVID-19 pandemic; its ability to complete the sale of the Company of its businesses of favorable terms, its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, complete growth projects, deploy growth capital and manage growth, make and finance future acquisitions, and implement its strategy; the regulatory environment; 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 associated with acquisitions or dispositions, litigation risks; 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.

MIC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia). The obligations of MIC 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 MIC.

MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Thousands, Except Share Data)



March 31, 2021


December 31, 2020

ASSETS

(Unaudited)



Current assets:




Cash and cash equivalents

$

529,639



$

1,828,063


Restricted cash

11,349



11,157


Accounts receivable, net of allowance for doubtful accounts

53,802



46,862


Inventories

16,933



16,551


Prepaid expenses

10,180



8,326


Other current assets

10,306



9,197


Total current assets

632,209



1,920,156


Property, equipment, land and leasehold improvements, net

849,670



854,200


Operating lease assets, net

323,948



322,892


Goodwill

617,072



616,939


Intangible assets, net

449,299



457,587


Other noncurrent assets

7,040



6,865


Total assets

$

2,879,238



$

4,178,639


LIABILITIES AND STOCKHOLDERS’ EQUITY




Current liabilities:




Due to Manager-related party

$

2,106



$

1,203


Accounts payable

30,310



30,470


Accrued expenses

40,583



46,112


Current portion of long-term debt

117,021



11,310


Dividend payable



960,981


Operating lease liabilities – current

17,032



17,157


Income taxes payable

133,768



132,113


Other current liabilities

22,270



22,861


Total current liabilities

363,090



1,222,207


Long-term debt, net of current portion

1,103,924



1,554,359


Deferred income taxes

125,220



126,858


Operating lease liabilities – noncurrent

312,927



311,597


Other noncurrent liabilities

67,308



70,312


Total liabilities

1,972,469



3,285,333


Commitments and contingencies




Stockholders’ equity(1):




Common Stock ($0.001 par value; 500,000,000 authorized; 87,505,452 shares issued and outstanding
  on March 31, 2021 and 87,361,929 shares issued and outstanding on December 31, 2020)

$

88



$

87


Additional paid in capital

170,678



177,975


Accumulated other comprehensive loss

(6,175)



(6,175)


Retained earnings

733,291



713,129


Total stockholders’ equity

897,882



885,016


Noncontrolling interests

8,887



8,290


Total equity

906,769



893,306


Total liabilities and equity

$

2,879,238



$

4,178,639








(1)

The Company is authorized to issue 100,000,000 shares of preferred stock, par value $0.001 per share authorized. On March 31, 2021 and December 31, 2020, no preferred stocks were issued or outstanding. The Company had 100 shares of special stock, par value $0.001 per share, issued and outstanding to its Manager on March 31, 2021 and December 31, 2020.

MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ in Thousands, Except Share and Per Share Data)



Quarter Ended March 31,


2021


2020

Revenue




Service revenue

$

209,604



$

223,997


Product revenue

54,587



60,462


Total revenue

264,191



284,459


Costs and expenses




Cost of services

82,233



94,663


Cost of product sales

34,756



41,934


Selling, general and administrative

77,012



87,583


Fees to Manager – related party

5,552



7,356


Depreciation

19,231



19,526


Amortization of intangibles

8,288



11,005


Total operating expenses 

227,072



262,067


Operating income

37,119



22,392


Other income (expense)




Interest income

161



468


Interest expense(1)

(18,619)



(26,705)


Other income (expense), net

502



(146)


Net income (loss) from continuing operations before income taxes

19,163



(3,991)


Provision for income taxes

(5,366)



(2,997)


Net income (loss) from continuing operations

13,797



(6,988)



Discontinued Operations(2)




Net income from discontinued operations before income taxes



24,545


Provision for income taxes



(6,330)


Net income from discontinued operations



18,215


Net income

13,797



11,227






Net income (loss) from continuing operations

13,797



(6,988)


Less: net income (loss) attributable to noncontrolling interest

597



(75)


Net income (loss) from continuing operations attributable to MIC

13,200



(6,913)


Net income from discontinued operations



18,215


Net income from discontinued operations attributable to MIC



18,215


Net income attributable to MIC

$

13,200



$

11,302


Basic income (loss) per share from continuing operations attributable to MIC

$

0.15



$

(0.08)


Basic income per share from discontinued operations attributable to MIC



0.21


Basic income per share attributable to MIC

$

0.15



$

0.13


Weighted average number of shares outstanding: basic

87,411,455



86,686,972






Diluted income (loss) per share from continuing operations attributable to MIC

$

0.15



$

(0.08)


Diluted income per share from discontinued operations attributable to MIC



0.21


Diluted income per share attributable to MIC

$

0.15



$

0.13


Weighted average number of shares outstanding: diluted

87,495,298



86,686,972







(1)

Interest expense includes non-cash gains on derivative instruments of $281,000 and non-cash losses of $4.3 million for the quarter ended March 31, 2021 and 2020, respectively.



(2)

See Note 4, “Discontinued Operations and Dispositions”, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended March 31, 2021, for discussions on businesses classified as held for sale.

MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in Thousands)



Quarter Ended March 31,


2021


2020

Operating activities




Net income (loss) from continuing operations

$

13,797



$

(6,988)


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




Depreciation

19,231



19,526


Amortization of intangibles

8,288



11,005


Write-off of debt discount and financing cost

4,311




Amortization of debt discount and financing costs

1,416



2,634


Adjustments to derivative instruments

(1,458)



7,385


Fees to Manager-related party

5,552



7,356


Deferred taxes

2,157



(1,823)


Other non-cash expense, net

3,046



1,979


Changes in other assets and liabilities, net of acquisitions:




Accounts receivable

(6,921)



17,490


Inventories

(713)



6,354


Prepaid expenses and other current assets

(2,771)



(2,526)


Due to Manager – related party



150


Accounts payable and accrued expenses

(4,373)



(14,740)


Income taxes payable

2,484



3,414


Other, net

(4,053)



324


Net cash provided by operating activities from continuing operations

39,993



51,540


Investing activities




Acquisitions of businesses and investments, net of cash, cash equivalents, and restricted cash acquired



(13,495)


Purchases of property and equipment

(15,856)



(16,910)


Other, net

17



3


Net cash used in investing activities from continuing operations

(15,839)



(30,402)


Financing activities




Proceeds from long-term debt



874,000


Payment of long-term debt

(361,405)



(3,059)


Dividends paid to common stockholders

(960,981)



(86,742)


Net cash (used in) provided by financing activities from continuing operations

(1,322,386)



784,199


Net change in cash, cash equivalents, and restricted cash from continuing operations

(1,298,232)



805,337


MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS – (continued)
(Unaudited)
($ in Thousands)



Quarter Ended March 31,


2021


2020

Cash flows provided by (used in) discontinued operations:




Net cash provided by operating activities

$



$

48,688


Net cash used in investing activities



(55,023)


Net cash used in discontinued operations



(6,335)


Effect of exchange rate changes on cash and cash equivalents



(792)


Net change in cash, cash equivalents, and restricted cash

(1,298,232)



798,210


Cash, cash equivalents, and restricted cash, beginning of period

1,839,220



358,565


Cash, cash equivalents, and restricted cash, end of period

$

540,988



$

1,156,775


Supplemental disclosures of cash flow information:




Non-cash investing and financing activities:




Accrued purchases of property and equipment from continuing operations

$

3,902



$

5,081


Accrued purchases of property and equipment from discontinued operations



18,583


   Leased assets obtained in exchange for new operating lease liabilities from
     continuing operations

787



4,886


Taxes paid, net, from continuing operations

660



1,405


Taxes paid, net, from discontinued operations



1,410


Interest paid, net, from continuing operations

16,570



17,308


Interest paid, net, from discontinued operations



4,026


The following table provides a reconciliation of cash, cash equivalents, and restricted cash from both continuing and discontinued operations reported within the consolidated condensed balance sheets that is presented in the consolidated condensed statements of cash flows:


As of March 31,


2021


2020

Cash and cash equivalents

$

529,639



$

1,131,685


Restricted cash – current

11,349



926


Cash, cash equivalents, and restricted cash included in assets held for sale



24,164


Total of cash, cash equivalents, and restricted cash shown in the consolidated condensed statements of cash flows

$

540,988



$

1,156,775


MACQUARIE INFRASTRUCTURE CORPORATION


CONSOLIDATED STATEMENTS OF OPERATIONS – MD&A



Quarter Ended
March 31,


Change
Favorable/(Unfavorable)


2021


2020


$


%


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

Revenue








Service revenue

$

209,604



$

223,997



(14,393)



(6)


Product revenue

54,587



60,462



(5,875)



(10)


Total revenue

264,191



284,459



(20,268)



(7)


Costs and expenses








Cost of services

82,233



94,663



12,430



13


Cost of product sales

34,756



41,934



7,178



17


Selling, general and administrative

77,012



87,583



10,571



12


Fees to Manager – related party

5,552



7,356



1,804



25


Depreciation and amortization

27,519



30,531



3,012



10


Total operating expenses 

227,072



262,067



34,995



13


Operating income

37,119



22,392



14,727



66


Other income (expense)








Interest income

161



468



(307)



(66)


Interest expense(1)

(18,619)



(26,705)



8,086



30


Other income (expense), net

502



(146)



648



NM


Net income (loss) from continuing operations before income taxes

19,163



(3,991)



23,154



NM


Provision for income taxes

(5,366)



(2,997)



(2,369)



(79)


Net income (loss) from continuing operations

13,797



(6,988)



20,785



NM





Discontinued Operations








Net income from discontinued operations before income taxes



24,545



(24,545)



(100)


Provision for income taxes



(6,330)



6,330



100


Net income from discontinued operations



18,215



(18,215)



(100)


Net income

13,797



11,227



2,570



23










Net income (loss) from continuing operations

13,797



(6,988)



20,785



NM


Less: net income (loss) attributable to noncontrolling interests

597



(75)



(672)



NM


Net income (loss) from continuing operations attributable to MIC

13,200



(6,913)



20,113



NM


Net income from discontinued operations



18,215



(18,215)



(100)


Net income from discontinued operations attributable to MIC



18,215



(18,215)



(100)


Net income attributable to MIC

$

13,200



$

11,302



1,898



17


Basic income (loss) per share from continuing operations attributable to MIC

$

0.15



$

(0.08)



0.23



NM


Basic income per share from discontinued operations attributable to MIC



0.21



(0.21)



(100)


Basic income per share attributable to MIC

$

0.15



$

0.13



0.02



15


Weighted average number of shares outstanding: basic

87,411,455



86,686,972



724,483



1







NM — Not meaningful.


(1) Interest expense includes non-cash gains on derivative instruments of $281,000 and non-cash losses of $4.3 million for the quarter ended March 31, 2021 and 2020, respectively.

MACQUARIE INFRASTRUCTURE CORPORATION


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



Quarter Ended
March 31,


Change
Favorable/(Unfavorable)


2021


2020


$


%


($ In Thousands) (Unaudited)

Net income (loss) from continuing operations

$

13,797



$

(6,988)






Interest expense, net(1)

18,458



26,237






Provision for income taxes

5,366



2,997






Depreciation and amortization

27,519



30,531






Fees to Manager – related party

5,552



7,356






Other non-cash expense, net(2)

1,958



4,331






EBITDA excluding non-cash items – continuing operations

$

72,650



$

64,464



8,186



13










EBITDA excluding non-cash items – continuing operations

$

72,650



$

64,464






Interest expense, net(1)

(18,458)



(26,237)






Non-cash interest expense, net(1)

5,403



7,667






Provision for current income taxes

(3,209)



(4,820)






Changes in working capital

(16,393)



10,466






Cash provided by operating activities – continuing operations

39,993



51,540






Changes in working capital

16,393



(10,466)






Maintenance capital expenditures

(3,664)



(5,714)






Free cash flow – continuing operations

$

52,722



$

35,360



17,362



49












(1)

Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees, and non-cash amortization of debt discount related to our 2.00% Convertible Senior Notes. For the quarter ended March 31, 2021, interest expense also includes non-cash write-offs of deferred financing costs related to the repurchase of our 2.00% Convertible Senior Notes and the cancellation of the holding company revolving credit facility.



(2)

Other non-cash expense, net, includes primarily non-cash mark-to-market adjustment of the value of the commodity hedge contracts, non-cash compensation expense incurred in relation to the incentive plans for senior management of our operating businesses, and non-cash gains (losses) related to the write-off or disposal of assets or liabilities. Other non-cash expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.

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


Atlantic Aviation


Quarter Ended
March 31,


Change
Favorable/(Unfavorable)


2021


2020



$


$


$


%


($ In Thousands) (Unaudited)

Service revenue

209,604



223,997



(14,393)



(6)


Cost of services (exclusive of depreciation and
   amortization shown separately below)

82,233



94,663



12,430



13


Gross margin

127,371



129,334



(1,963)



(2)


Selling, general and administrative expenses

61,586



64,140



2,554



4


Depreciation and amortization

23,300



26,579



3,279



12


Operating income

42,485



38,615



3,870



10


Interest expense, net(1)

(10,730)



(18,876)



8,146



43


Other expense, net

(18)



(72)



54



75


Provision for income taxes

(8,596)



(5,479)



(3,117)



(57)


Net income

23,141



14,188



8,953



63


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

23,141



14,188






Interest expense, net(1)

10,730



18,876






Provision for income taxes

8,596



5,479






Depreciation and amortization

23,300



26,579






Other non-cash expense, net(2)

1,569



813






EBITDA excluding non-cash items

67,336



65,935



1,401



2










EBITDA excluding non-cash items

67,336



65,935






Interest expense, net(1)

(10,730)



(18,876)






  Non-cash interest expense, net(1)

943



5,159






Provision for current income taxes

(4,480)



(8,577)






Changes in working capital

1,916



15,667






Cash provided by operating activities

54,985



59,308






Changes in working capital

(1,916)



(15,667)






Maintenance capital expenditures

(2,550)



(3,045)






Free cash flow

50,519



40,596



9,923



24














(1)

Interest expense, net, includes  non-cash adjustments to derivative instruments and non-cash amortization of deferred financing fees.



(2)

Other non-cash expense, net, includes primarily non-cash compensation expense incurred in relation to incentive plans and non-cash gains (losses) related to the write-off or disposal of assets or liabilities. Other non-cash expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.

MIC Hawaii



Quarter Ended
March 31,


Change
Favorable/(Unfavorable)


2021


2020



$


$


$


%


($ In Thousands) (Unaudited)

Product revenue

54,587



60,462



(5,875)



(10)


Cost of product sales (exclusive of depreciation and amortization shown separately below)

34,756



41,934



7,178



17


Gross margin

19,831



18,528



1,303



7


Selling, general and administrative expenses

5,677



6,322



645



10


Depreciation and amortization

3,748



3,624



(124)



(3)


Operating income

10,406



8,582



1,824



21


Interest expense, net(1)

(1,304)



(2,775)



1,471



53


Other expense, net

(336)



(112)



(224)



(200)


Provision for income taxes

(2,367)



(1,775)



(592)



(33)


Net income

6,399



3,920



2,479



63


Less: net income (loss) attributable to noncontrolling interests

597



(75)



(672)



NM


Net income attributable to MIC

5,802



3,995



1,807



45


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

6,399



3,920






Interest expense, net(1)

1,304



2,775






Provision for income taxes

2,367



1,775






Depreciation and amortization

3,748



3,624






Other non-cash (income) expense, net(2)

(256)



3,113






EBITDA excluding non-cash items

13,562



15,207



(1,645)



(11)










EBITDA excluding non-cash items

13,562



15,207






Interest expense, net(1)

(1,304)



(2,775)






Non-cash interest (income) expense, net(1)

(231)



1,003






Provision for current income taxes

(1,516)



(2,123)






Changes in working capital

(1,696)



(5,086)






Cash provided by operating activities

8,815



6,226






Changes in working capital

1,696



5,086






Maintenance capital expenditures

(1,114)



(2,669)






Free cash flow

9,397



8,643



754



9















NM — Not meaningful.



(1)

Interest expense, net, includes non-cash adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees.



(2)

Other non-cash (income) expense, net, includes primarily non-cash mark-to-market adjustment of the value of the commodity hedge contracts, non-cash compensation expense incurred in relation to incentive plans, and non-cash gains (losses) related to the write-off or disposal of assets or liabilities. Other non-cash (income) expense, net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.

Corporate and Other



Quarter Ended
March 31,


Change
Favorable/(Unfavorable)


2021


2020



$


$


$


%


($ In Millions) (Unaudited)

Selling, general and administrative expenses

9,749



17,121



7,372



43


Fees to Manager – related party

5,552



7,356



1,804



25


Depreciation and amortization

471



328



(143)



(44)


Operating loss

(15,772)



(24,805)



9,033



36


Interest expense, net(1)

(6,424)



(4,586)



(1,838)



(40)


Other income, net

856



38



818



NM


Benefit for income taxes

5,597



4,257



1,340



31


Net loss

(15,743)



(25,096)



9,353



37


Reconciliation of net loss to EBITDA excluding non-cash items  and a reconciliation of cash used in  operating activities to Free Cash Flow:








Net loss

(15,743)



(25,096)






Interest expense, net(1)

6,424



4,586






Benefit for income taxes

(5,597)



(4,257)






Fees to Manager – related party

5,552



7,356






Depreciation and amortization

471



328






Other non-cash expense, net(2)

645



405






EBITDA excluding non-cash items

(8,248)



(16,678)



8,430



51










EBITDA excluding non-cash items

(8,248)



(16,678)






Interest expense, net(1)

(6,424)



(4,586)






Non-cash interest expense, net(1)

4,691



1,505






Benefit for current income taxes

2,787



5,880






Changes in working capital

(16,613)



(115)






Cash used in operating activities

(23,807)



(13,994)






Changes in working capital

16,613



115






Free cash flow

(7,194)



(13,879)



6,685



48




























NM — Not meaningful.



(1)

Interest expense, net, includes, non-cash amortization of deferred financing fees, and non-cash amortization of debt discount related to our 2.00% Convertible Senior Notes. For the quarter ended March 31, 2021, interest expense also includes non-cash write-offs of deferred financing costs related to the repurchase of our 2.00% Convertible Senior Notes and the cancellation of the holding company revolving credit facility.



(2)

Other non-cash expense, net, includes primarily non-cash adjustments related to non-cash compensation expense incurred in relation to incentive plans and non-cash gains (losses) related to the write-off or disposal of assets or liabilities. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.

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 FREE CASH FLOW



For the Quarter Ended March 31, 2021


Atlantic
Aviation


MIC
Hawaii


Corporate
and Other


Total Continuing
Operations


Discontinued Operations


Total


($ in Thousands) (Unaudited)

Net income (loss)

23,141



6,399



(15,743)



13,797





13,797


Interest expense, net(1)

10,730



1,304



6,424



18,458





18,458


Provision (benefit) for income taxes

8,596



2,367



(5,597)



5,366





5,366


Depreciation and amortization

23,300



3,748



471



27,519





27,519


Fees to Manager – related party





5,552



5,552





5,552


Other non-cash expense (income), net(2)

1,569



(256)



645



1,958





1,958


EBITDA excluding non-cash items

67,336



13,562



(8,248)



72,650





72,650


EBITDA excluding non-cash items

67,336



13,562



(8,248)



72,650





72,650


Interest expense, net(1)

(10,730)



(1,304)



(6,424)



(18,458)





(18,458)


Non-cash interest expense (income), net(1)

943



(231)



4,691



5,403





5,403


(Provision) benefit for current income taxes

(4,480)



(1,516)



2,787



(3,209)





(3,209)


Changes in working capital

1,916



(1,696)



(16,613)



(16,393)





(16,393)


Cash provided by (used in) operating activities

54,985



8,815



(23,807)



39,993





39,993


Changes in working capital

(1,916)



1,696



16,613



16,393





16,393


Maintenance capital expenditures

(2,550)



(1,114)





(3,664)





(3,664)


Free Cash Flow

50,519



9,397



(7,194)



52,722





52,722




For the Quarter Ended March 31, 2020


Atlantic
Aviation


MIC
Hawaii


Corporate
and Other


Total Continuing
Operations


Discontinued Operations


Total


($ in Thousands) (Unaudited)

Net income (loss)

14,188



3,920



(25,096)



(6,988)



18,215



11,227


Interest expense, net(1)

18,876



2,775



4,586



26,237



15,299



41,536


Provision (benefit) for income taxes

5,479



1,775



(4,257)



2,997



6,330



9,327


Depreciation and amortization

26,579



3,624



328



30,531



34,480



65,011


Fees to Manager – related party





7,356



7,356





7,356


Other non-cash expense, net(2)

813



3,113



405



4,331



3,323



7,654


EBITDA excluding non-cash items

65,935



15,207



(16,678)



64,464



77,647



142,111


EBITDA excluding non-cash items

65,935



15,207



(16,678)



64,464



77,647



142,111


Interest expense, net(1)

(18,876)



(2,775)



(4,586)



(26,237)



(15,299)



(41,536)


  Non-cash interest expense, net(1)

5,159



1,003



1,505



7,667



5,530



13,197


(Provision) benefit for current income taxes

(8,577)



(2,123)



5,880



(4,820)



(2,107)



(6,927)


Changes in working capital

15,667



(5,086)



(115)



10,466



(17,083)



(6,617)


Cash provided by (used in) operating activities

59,308



6,226



(13,994)



51,540



48,688



100,228


Changes in working capital

(15,667)



5,086



115



(10,466)



17,083



6,617


Maintenance capital expenditures

(3,045)



(2,669)





(5,714)



(5,615)



(11,329)


Free Cash Flow

40,596



8,643



(13,879)



35,360



60,156



95,516


















(1)

Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees, and non-cash amortization of debt discount related to our 2.00% Convertible Senior Notes. For the quarter ended March 31, 2021, interest expense also includes non-cash write-offs of deferred financing costs related to the repurchase of our 2.00% Convertible Senior Notes and the cancellation of the holding company revolving credit facility.



(2)

Other non-cash expense (income), net, includes primarily non-cash mark-to-market adjustment of the value of the commodity hedge contracts, non-cash compensation expense incurred in relation to the incentive plans for senior management of our operating businesses, and non-cash gains (losses) related to the write-off or disposal of assets or liabilities. Other non-cash expense (income), net, excludes the adjustment to bad debt expense related to the specific reserve component, net of recoveries, for which this adjustment is reported in working capital in the above table. See “Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Free Cash Flow” above for further discussion.

SOURCE Macquarie Infrastructure Corporation

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