Macquarie Infrastructure Company Reports First Quarter 2005 Financial Results
NEW YORK, May 16, 2005 -- Macquarie Infrastructure Company (the "Company" or "MIC") announced the consolidated results of its operations for the quarter ended March 31, 2005, reflecting solid performance from all operating businesses and investments. Revenues for the period were $65.7 million. The Company generated cash from operations during the period of $9.8 million and received $686,000 in principal repayments on a subordinated loan to Yorkshire Link ("YLL"). The Company reported a Net Loss of $83,000 or $0.003 per share.
EBITDA (earnings before interest, taxes, depreciation and amortization) was $12.9 million for the quarter. For a reconciliation of Net Loss to EBITDA, please see the last page of this release. The Company has included EBITDA, a non-GAAP financial measure, on both a consolidated basis as well as for each segment as it considers it to be an important measure of its overall performance. The Company believes EBITDA provides additional insight into the performance of its operating companies and its ability to service its obligations and support its ongoing dividend policy.
Operational Highlights
- Acquisitions: the Company completed its previously announced
acquisition of General Aviation Holdings ("GAH"), the owner of two
California fixed base operations, by its airport services business on
January 14, 2005.
- Active Management: the Company completed the successful integration of
its businesses into a consolidated structure. From this base, MIC is
implementing plans and controls to assist these businesses in achieving
higher volumes, lower operating costs and better management of capital
expenditures.
Peter Stokes, the Company's Chief Executive Officer, stated, "We are pleased to have completed our first quarter of operations as a consolidated company with these results. The performance of each of our businesses and investments is consistent with our expectations and demonstrates the value in our strategy of actively managing quality infrastructure businesses. We believe this quarter has provided us with a strong foundation for growth in the remainder of 2005."
Financial Highlights
The Company's consolidated results for the quarter ended March 31, 2005 reflect its first full quarter of operations as a combined entity.
* Revenues for the period were $65.7 million.
* Cash from operations was $9.8 million or $0.3667 cents per share -- the
Company also received $686,000 in semi-annual principal repayments on a
subordinated loan to Yorkshire Link and closed the quarter with a cash
and cash equivalents balance of $127.0 million.
* Net Loss for the quarter was $83,000 or $0.003 per share.
* EBITDA (earnings before interest, taxes, depreciation and amortization)
for the period was $12.9 million or $0.484 per share.
Dividends
On May 14, 2005, the Company's Board of Directors declared a quarterly dividend to shareholders for the quarter ended March 31, 2005 of $0.50 per share. The Board also approved the payment of a pro-rated dividend of $0.0877 per share for the period from December 16, 2004 to December 31, 2004. Shares of trust stock will trade ex-dividend on May 31, 2005. The combined dividends for both periods totaling $0.5877 will be payable on June 7, 2005 to shareholders of record at the close of business on June 2, 2005.
The Company intends to declare and pay regular quarterly cash distribution on all outstanding shares. The Company anticipates declaring and paying a quarterly distribution for the quarter ending June 30, 2005 of $0.50 per share.
The Company's dividend policy is based on the predictable and stable cash flows of its businesses and investments. The Company's intention is to distribute to its shareholders the majority of its cash available for distributions and not to retain significant cash balances in excess of prudent reserves.
Estimated cash available for Distribution
The Company believes that EBITDA, in addition to GAAP measures, provides insight into the performance of its operating companies and its ability to service its obligations and support its ongoing dividend policy. However, EBITDA does not reflect other cash items that management considers in estimating cash available for distribution.
The following table details cash receipts and payments that do not flow through the income statement in order to provide additional insight into management's estimate of quarterly cash available for distribution. The Company believes that its cash from operations and investments, plus its $14.4 million of cash in acquired businesses (net of reserves) will be sufficient to meet its expected dividend payments in 2005, as discussed in the Form 10-Q.
The Company's airport services business, airport parking business and district energy business generally experience lower revenues and profitability in the first quarter, although the causes of seasonality are specific to each of these businesses.
($ Millions)
Cash from operations 9.8
Additional Cash Items
YLL Principal Payment Received 0.7
Maintenance CAPEX -0.9
Principal Payments -0.4
Changes in Working Capital 1.9
Sub Total 11.1
Adjustments
GAH - Acquisition Costs 0.9
Investment Distribution Annualization 0.6
Maintenance CAPEX Annualization -0.4
Base Management Fee -1.9
Sub Total -0.8
Estimated Cash Available for Distribution 10.3
Additional adjustments reflect the following:
* GAH acquisition costs in the quarterly income statement which were
funded from IPO proceeds
* Cash from operations was lower than normal due primarily to the timing
of receivables from "into-plane" and retail fuel sales and the payment
in January of accrued construction costs in our airport services
business
* Expected annual distributions from investments of $21.3 million that
are not received evenly throughout the year, and of which $4.7 million
was received in the first quarter
* Expected maintenance capex of $5.2 million annually, funded from
operating cash flow, but not spent evenly throughout the year
* Base management fees to the Company's manager that are paid in arrears
Business/Segment Highlights for the Quarter ended March 31, 2005
The following is a segment analysis of results from operations for the quarter ended March 31, 2005, compared to results for the quarter ended March 31, 2004, prior to the Company's acquisition of the businesses in these segments. The Company has also included organic growth data for each of the businesses excluding the effects of acquisitions that took place since the first quarter of 2004.
Airport Services (Atlantic and AvPorts)
March Quarter March Quarter Quarter Quarter
2005 $m 2004 $m on Quarter on Quarter
Growth % Organic
Growth %
Revenue
Fuel 30.4 24.1 26.3% 5.0%
Non Fuel 14.6 11.5 26.1% 15.7%
Total Revenue 45.0 35.6 26.3% 8.5%
EBITDA 9.4 2.8 236.7% 5.4%
Key factors influencing the quarter ended March 31, 2005 were as follows:
* Contribution of strong operating results from two new California FBOs
acquired in January 2005
* Conversion of two key customers to "into-plane" fueling contracts -
recharacterizing revenues from this source as non-fuel
* Jet fuel volumes at existing locations increased by 3.1% excluding
contract conversions
* Strong revenues at AvPorts from de-icing services provided as a result
of the cold winter in the northeast
* Organic EBITDA grew more slowly than organic revenue as a result of
increased professional and audit fees and earlier timing of the audit
Airport Parking (Macquarie Parking)
March Quarter March Quarter Quarter Quarter
2005 $m 2004 $m on Quarter on Quarter
Growth % Organic
Growth %
Revenue 13.3 12.2 9.5% 5.3%
EBITDA 2.8 3.4 (16.6)% 5.6%
EBITDA Margin 21.1% 27.7%
Total cars out 351,000 303,000 15.9% 8.3%
Key factors influencing the quarter ended March 31, 2005 were as follows:
* Customers using the Company's existing parking facilities increased by
8.3% compared to the same period in 2004
* Marketing initiatives focused on growing customers through discount
pricing - pricing rationalization underway
* Lower EBITDA primarily reflects costs of development of new locations -
increasing the national network
* Travel volume is lower relative to summer and holiday (peak) periods
District Energy (Thermal Chicago and Northwind Aladdin)
March Quarter March Quarter Quarter Quarter
2005 $m 2004 $m on Quarter on Quarter
Growth % Organic
Growth %
Revenue
Cooling Capacity 4.1 4.1 0% 0%
Cooling Consumption 1.5 1.3 19.8% (10.3)%
Other 1.9 0.6 218.5% 7.1%
Total Revenue 7.5 6.0 26.2% (1.7)%
EBITDA 3.1 2.4 30.0% (7.3)%
EBITDA Margin 42.0% 40.0%
Thermal Chicago (tons)
Useable Capacity 94,429 92,029 2.6%
Contracted Capacity 96,167 96,467 (0.3)%
Key factors influencing the quarter ended March 31, 2005 were as follows:
* Capacity revenue increased in-line with inflation, offset by a one-time
credit to a customer
* Cooling consumption revenue is lower during the colder months of the
year
* Excluding ETT Nevada, consumption ton-hours were 5.6% lower due to
typical variations in customer usage patterns which have a greater
impact in the colder months
* EBITDA was 30.0% higher due to the inclusion of ETT Nevada
* Excluding ETT Nevada EBITDA was 7.3% lower largely due to increased
electricity costs and lower consumption revenue
TOLL ROADS (Yorkshire Link)
* Vehicle kilometers for the quarter ended March 31, 2005 were 1.8%
higher than in the first quarter of 2004
* The Company received approximately $3.0 million in cash distributions
in the quarter
* Cash distributions for the full year 2005 are expected to be
approximately $9.4 million including receipt of a one-time debt reserve
release
Investments
Macquarie Communications Infrastructure Group (MCG)
* MCG paid a cash distribution of Australian Dollar 14.4 cents per
stapled security on February 14, 2005 for the 6 month period ended
December 31, 2004 -- the Company received $1.7 million net of
withholding taxes
* Cash distributions for the full year 2005 are expected to be
approximately $3.4 million net of withholding taxes
* The Company expects year over year growth in cash distributions of
27.0% for the year ended June 30, 2006 based on public statements made
by management of MCG
South East Water (SEW)
* For the year ended December 31, 2005, we expect to receive total
dividends from the Company's investment in SEW of approximately $8.5
million
* Included in these expected dividends is a non-recurring component of
approximately $2.58 million
* The Company received no distributions from SEW during the first quarter
of 2005
Conference Call and Web Cast
The Company has scheduled a conference call for 11:00 a.m. Eastern Time on May 16, 2005, to review the Company's results.
To listen to the conference call, please dial (800) 406-5356 (domestic) or (913) 981-5572 (international), at least 10 minutes before the scheduled start time. Investors can also access the earnings call via the Internet at the Company's website at http://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 Internet broadcast.
For interested individuals unable to join the live conference call, a replay will be available through May 23, 2005, at (888) 203-1112 (domestic) or (719) 457-0820 (international), (Passcode: 7490914).
About Macquarie Infrastructure Company
Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses, which provide basic, everyday services, in the United States and other developed countries. Its businesses and investments consist of an airport services business (Atlantic and AvPorts), an airport parking business (PCAA and Avistar) and a district energy business (Thermal Chicago and Northwind Aladdin), a 50% interest in the company that operates the Yorkshire Link shadow toll road and investments in South East Water, a UK regulated water utility and in Macquarie Communications Infrastructure Group.
Forward Looking Statements
This earnings release contains forward-looking statements. We may, in some cases, use words such as "project," "believe," "anticipate," "plan," "expect," "estimate," "intend," "should," "would," "could," "potentially," or "may" or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this presentation are subject to a number of risks and uncertainties, some of which are beyond our control including, among other things: our ability to successfully integrate and manage acquired businesses, make and finance future acquisitions, service, comply with the terms of and refinance our debt, and implement our strategy, decisions made by persons who control our investments including the distribution of dividends, our regulatory environment, changes in air travel, automobile usage, fuel and gas prices, foreign exchange fluctuations, environmental risks and changes in U.S. federal tax law.
Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which we are not currently aware could also cause our actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
"Macquarie Group" refers to the Macquarie Group of companies, which comprises Macquarie Bank Limited and its worldwide subsidiaries and affiliates.
Australian banking regulations that govern the operations of Macquarie Bank Limited and all of its subsidiaries, including the Company's manager, require the following statements. Investments in Macquarie Infrastructure Company Trust are not deposits with or other liabilities of Macquarie Bank Limited, or of any Macquarie Group company, and are subject to investment risk, including possible delays in repayment and loss of income and principal invested. Neither Macquarie Bank Limited nor any other member company of the Macquarie Group guarantees the performance of Macquarie Infrastructure Company Trust or the repayment of capital by Macquarie Infrastructure Company Trust.
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED BALANCE SHEET
($ in thousands, except per share amounts)
March 31, 2005 and December 31, 2004
(Unaudited)
Assets
March 31, Dec 31,
2005 2004
Current assets: (unaudited) (audited)
Cash and cash equivalents $127,029 $140,050
Restricted cash 1,483 1,155
Accounts receivable, less allowance for
doubtful accounts of $1,317 and $1,359 14,521 12,312
Dividend receivable -- 1,743
Inventories 1,256 1,563
Prepaid expenses 4,256 4,186
Deferred income taxes 1,596 1,452
Other 5,141 5,308
Total current assets 155,282 167,769
Property, equipment, land and leasehold
improvements, net 295,506 284,744
Other assets:
Restricted cash 17,526 16,790
Equipment lease receivables 45,110 45,395
Investment in unconsolidated business 76,978 79,065
Investment, cost 38,786 39,369
Securities, available for sale 72,130 71,263
Related party subordinated loan 21,642 21,748
Goodwill 233,411 217,576
Intangible assets, net 272,196 254,530
Other 15,041 10,238
792,820 755,974
Total assets $1,243,608 $1,208,487
Liabilities and stockholders' equity
Current liabilities:
Due to manager $14,230 $12,306
Accounts payable 8,063 10,912
Accrued expenses 11,819 11,980
Current portion of notes payable and
capital leases 1,122 1,242
Current portion of long-term debt 96 94
Other 3,163 2,991
Total current liabilities 38,493 39,525
Capital leases and notes payable, net
of current portion 1,962 1,755
Long-term debt, net of current portion 447,048 415,074
Related party long-term debt 19,254 19,278
Deferred income taxes 124,975 123,429
Other 5,063 4,615
Total liabilities 636,795 603,676
Minority interests 8,544 8,515
Stockholders' equity:
Trust stock, no par value; 500,000,000
authorized; 26,610,100 shares
issued and outstanding 613,529 613,265
Accumulated other comprehensive income 2,411 619
Accumulated deficit (17,671) (17,588)
Total stockholders' equity 598,269 596,296
Total liabilities and stockholders' equity $1,243,608 $1,208,487
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
($ in thousands, except per share and shares outstanding)
For the Quarter Ended March 31, 2005(Unaudited)
Revenues
Revenue from fuel sales $30,387
Service revenue 34,006
Financing and equipment lease income 1,342
65,735
Costs and expenses
Cost of fuel sales 17,095
Cost of services 17,256
Selling, general and administrative expenses 19,162
Fees to manager 1,943
Depreciation 1,327
Amortization of intangibles 3,085
59,868
Operating income 5,867
Other income (expense)
Interest income 1,099
Interest expense (7,758)
Equity in earnings and amortization charges of investee 1,653
Other expense, net (915)
Net loss before income taxes and minority interests (54)
Income taxes --
Net loss before minority interests (54)
Minority interests 29
Net loss $(83)
Basic and diluted loss per share: $(0.003)
Weighted average number of shares of trust stock
outstanding - basic and diluted 26,610,100
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the Quarter Ended March 31, 2005
(Unaudited)
($ in thousands)
Operating activities
Net loss $(83)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization of property and equipment 3,221
Amortization of intangible assets 3,085
Equity in earnings and amortization charges of
investee 238
Amortization of finance costs 265
Deferred rent 650
Deferred revenue 110
Equipment lease receivable 306
Minority interests 29
Accrued interest expense 259
Changes in operating assets and liabilities, net of acquisition
Accounts receivable (1,130)
Dividend receivable 1,743
Inventories 451
Prepaid expenses and other current assets 407
Accounts payable and accrued expenses (1,726)
Due to manager 1,924
Other 11
Net cash provided by operating activities 9,760
Investing activities
Acquisition of General Aviation Holdings, LLC, net of
cash acquired (49,594)
Purchases of property and equipment (879)
Principal proceeds from subordinated loan 686
Collection on notes receivable 24
Additional costs of acquisitions (68)
Net cash used in investing activities (49,831)
Financing activities
Proceeds from debt 32,000
Debt financing costs (1,674)
Payment of long-term debt (26)
Offering costs paid (1,833)
Restricted cash (1,079)
Payment of notes and capital lease obligations (349)
Net cash provided by financing activities 27,039
Effect of exchange rate changes on cash 11
Net change in cash and cash equivalents (13,021)
Cash and cash equivalents at beginning of period 140,050
Cash and cash equivalents at end of period $127,029
Supplemental disclosures of cash flow information:
Taxes paid $311
Interest paid $7,134
Acquisition of property and equipment under capital leases $438
MACQUARIE INFRASTRUCTURE COMPANY TRUST
RECONCILIATION OF NET LOSS TO EBITDA
($ in thousands)
For the Quarter Ended March 31, 2005
(Unaudited)
Net loss from operations $(83)
Interest expense, net 6,659
Provision for Income taxes --
Depreciation (1) 3,221
Amortization (2) 3,085
EBITDA $12,882
(1) Includes depreciation expense of $503,000 for the Airport Parking
business and $1.4 million for the District Energy business which is
included in cost of services in the Company's consolidated condensed
statement of operations.
(2) Excludes $1.2 million related to amortization of intangible assets
acquired in connection with acquisition of the Yorkshire Link
business.
For a reconciliation of net income (loss) to EBITDA for each segment,
please see "Business Segment Operations" in Part I, Item I of the
Company's report on Form 10-Q for the quarterly period ended
March 31, 2005.
We site: http://www.macquarie.com/mic