Macquarie Infrastructure Company Reports Second Quarter 2005 Financial Results
NEW YORK, Aug. 10, 2005 -- Macquarie Infrastructure Company (the "Company" or "MIC") announced the consolidated results of its operations for the quarter ended June 30, 2005. MIC businesses generated revenue of $72.5 million, a $14.9 million or 25.8% increase compared to revenue produced in the second quarter of 2004 (prior to MIC's acquisition of these businesses). The Company also reported net income for the period of $5.6 million or $0.21 per share. The results reflect the continued growth of MIC's operating businesses, including acquisitions by those businesses, and an expected level of return on its investments.
"We are pleased to have delivered results for the quarter that demonstrate consistency and growth," said Peter Stokes, Macquarie's Chief Executive Officer. "The performance of both our operating businesses and investments has been in line with our expectations and each of our segments has shown improvement over the prior quarter and the prior year. With strong deal flow expected to continue, we believe we are on track to meeting our objectives for the full year 2005," he added.
MIC generated cash from operations during the period of $10.9 million and received a $925,000 bankruptcy settlement amount in connection with its acquisition of Northwind Aladdin in 2004. Of the $10.9 million, $4.4 million was an initial dividend distribution on the Company's investment in South East Water ("SEW").
Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $19.1 million for the quarter. For a reconciliation of net income to EBITDA, please see the last page of this release.
FINANCIAL HIGHLIGHTS
MIC benefited from improved performance in each of its business segments. Revenue from airport services, airport parking and district energy businesses increased by 30.8%, 9.8% and 28.1%, respectively, over the quarter ended June 30, 2004. The Company's results for the quarter ended June 30, 2005 include the following highlights:
-- Consolidated revenue of $72.5 million - a 25.8% increase over 2Q'04;
-- Consolidated net income of $5.6 million or $0.21 per share;
-- Cash from operations of $10.9 million or $0.40 cents per share;
-- A bankruptcy settlement amount of $925,000 - $694,000 has been booked
as a purchase adjustment (goodwill) and $231,000 flows through "Other
Income";
-- EBITDA (earnings before interest, taxes, depreciation and
amortization) of $19.1 million or $0.71 per share;
-- Cash and cash equivalents at quarter end totalled $120.3 million.
Dividends
On August 8, 2005, the Company's Board of Directors declared a dividend to shareholders for the quarter ended June 30, 2005 of $0.50 per share. Shares of trust stock will trade ex-dividend on September 1, 2005. The dividend will be payable on September 9, 2005 to shareholders of record at the close of business on September 6, 2005.
The Company intends to declare and pay regular quarterly cash distributions on all outstanding shares. The Company anticipates declaring and paying a quarterly distribution for the quarter ending September 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 distribution 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 businesses 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 year-to-date cash receipts and payments that are not reflected on the Company's income statement in order to provide additional insight into management's estimate of cash available for distribution. The Company believes that its cash from operations and investments, plus its cash in acquired businesses (net of reserves and including an Atlantic purchase price adjustment) will be sufficient to meet its expected dividend payments in 2005.
The Company's airport services, airport parking and district energy businesses experience seasonal fluctuations in revenue, although the causes of seasonality are specific to each. In general, the district energy business revenue is positively correlated to the warmer quarters of the year in which the demand for cooling services increases. Similarly, the airport parking business benefits from increased leisure travel in the summer and holiday periods. The airport services business revenue tends to be fairly constant with only minor third quarter downturn at those locations dominated by business travel.
In the first quarter of 2005 our businesses generated $9.8 million, or $0.367 per share, from operations. For the first quarter we estimated cash available for distribution to be approximately $10.3 million, or $0.387 per share. As illustrated in the table below, our businesses generated cash from operations of $20.7 million, or $0.765 per share through the first six months of 2005. Again adjusting for timing, we now estimate cash available for distribution to be $22.3 million, or $0.824 per share for the first six months of 2005 -- a 9% increase over the first quarter in the percentage coverage of declared dividend.
Cash from operations $20.7
Additional cash items
YLL principal payment received 0.7
Net cash receipts, bankruptcy settlement 0.7
Principal payments -0.7
Maintenance CAPEX -1.6
Changes in Working Capital 2.6
Sub Total 22.4
Adjustments
GAH acquisition costs 0.9
Dividends receivable 1.7
Investment distribution annualization -0.2
Base management fees -2.0
Maintenance CAPEX annualization -0.5
Sub Total -0.1
Estimated Cash Available for Distribution 22.3
-- Additional adjustments reflect the following:
- Net cash receipt of $694,000 relating to a bankruptcy
settlement at Aladdin in 2Q'05 that was reflected as a purchase
price adjustment;
- General Aviation Holdings ("GAH") acquisition costs in first
quarter income statement data that were funded from IPO
proceeds;
- Expected annual distributions from investments of
$21.3 million, of which $9.1 million has been received year to
date;
- Base management fees to the Company's manager that are paid in
arrears;
- Expected maintenance capex of $5.2 million annually, funded
from operating cash flow, but not spent evenly throughout the
year.
BUSINESS/SEGMENT HIGHLIGHTS FOR THE QUARTER ENDED JUNE 30, 2005
The following is a segment analysis of results from operations for the quarter and year to date periods ended June 30, 2005, compared to results for the quarter and year to date periods ended June 30, 2004, prior to the Company's acquisition of the businesses in these segments.
The Company has included EBITDA, a non-GAAP financial measure, on both a consolidated basis as well as for each of its segments as it considers it to be an important measure of its overall performance. The Company believes EBITDA provides additional insight into the performance of its operating companies and its ability to service its obligations and support its ongoing dividend policy.
AIRPORT SERVICES (ATLANTIC INCLUDING GAH, AND AVPORTS)
Quarter
on Year on
June June Quarter 6 6 Year
Quarter Quarter Growth Months Months Growth
2005 2004 % 2005 2004 %
Revenue ($ in Millions)
Fuel $34.2 $25.8 32.5% $64.6 $49.9 29.6%
Non Fuel 12.5 9.9 27.1% 27.1 21.4 26.5%
Total Revenue $46.8 $35.7 31.0% $91.7 $71.3 28.7%
EBITDA $10.0 $7.6 31.5% $19.4 $10.4 86.9%
GAH contributed $4.9 million and $1.3 million to fuel revenue and non-fuel revenue, respectively, and $1.4 million to EBITDA for the second quarter, and contributed $10.1 million and $2.5 million to fuel revenue and non-fuel revenue, respectively, and $3.3 million to EBITDA for the six months ended June 30, 2005.
Key factors affecting the quarter and six months ended June 30, 2005 included:
-- Contribution of positive operating results from the GAH acquisition
in January 2005;
-- At Atlantic total fuel volumes (including into-plane volumes) at
existing locations increased by 5.0% for the quarter ended June 30,
2005 and decreased by 0.8% for the six month period ended June 30,
2005 versus the comparable periods in 2004;
-- At AvPorts jet fuel volumes increased 6.7% and 6.3% over the prior
quarter and six months ended June 30, 2004, respectively;
-- The Company generally pursues a strategy of keeping dollar margins
relatively steady and passes on increases in fuel prices to
customers;
-- Significant increases in AvPorts de-icing revenue increased six month
results;
-- Conversion of two key customers at Atlantic to into-plane fueling
contracts shifting classification of related revenue from fuel to
non-fuel;
-- Selling, general and administrative expenses at AvPorts increased by
$265,000 in the second quarter as a result of an accrual related to
the establishment of a multi-year stock appreciation rights plan for
senior employees, and;
-- An increase in combined segment EBITDA of $2.4 million in the second
quarter of 2005 over the second quarter of 2004.
AIRPORT PARKING (MACQUARIE PARKING)
Quarter
on Year on
June June Quarter 6 6 Year
Quarter Quarter Growth Months Months Growth
2005 2004 % 2005 2004 %
($ in Millions)
Revenue $14.3 $13.1 9.3% $27.6 $25.2 9.4%
EBITDA $3.4 $3.3 4.1% $6.2 $6.6 -5.7%
EBITDA Margin 23.8% 25.0% -4.8% 22.5% 26.1% -13.8%
Key factors affecting the quarter and six months ended June 30, 2005 included:
-- Customers using pre-existing parking facilities increased by 5.1% and
6.0% for the quarter and six months, respectively, versus the same
periods in 2004;
-- Internet marketing initiatives and increased air passenger traffic
generated higher volumes of customers which increased overall
revenue, but the Company believes shorter lengths of stay put
downward pressure on revenue per car out;
-- Higher EBITDA for the second quarter of 2005 versus the second
quarter of 2004 primarily reflects reduced operating losses at our
new facilities - lower EBITDA for the six months reflects operating
losses at the new facilities for the full six months in 2005, and;
-- Improvement in operating margins at pre-existing facilities.
DISTRICT ENERGY (THERMAL CHICAGO AND NORTHWIND ALADDIN)
Quarter
on Year on
June June Quarter 6 6 Year
Quarter Quarter Growth Months Months Growth
2005 2004 % 2005 2004 %
Revenue ($ in Millions)
Capacity $4.1 $4.1 1.3% $8.2 $8.1 0.7%
Consumption 5.5 4.2 31.3% 7.0 5.5 28.7%
Lease and Other 1.8 0.6 215.5% 3.7 1.2 217.0%
Total Revenue $11.5 $8.8 29.6% $18.9 $14.8 28.2%
EBITDA $4.2 $4.1 3.0% $7.3 $6.5 12.9%
EBITDA Margin 36.7% 46.2% -20.5% 38.6% 43.9% -11.9%
Key factors affecting the quarter and six months ended June 30, 2005 included:
-- Capacity revenue generally increased in-line with inflation;
-- Excluding ETT Nevada, consumption ton-hours sold were higher mostly
due to above average temperature in Chicago in June 2005;
-- EBITDA was higher largely due to the inclusion of ETT Nevada, and;
-- Excluding ETT Nevada and a non-recurring financial restructuring gain
in 2004 of $1.3 million, EBITDA increased by 19.8% for the three
months ended June 30, 2005;
TOLL ROADS (Yorkshire Link)
-- Vehicle kilometers for the quarter ended June 30, 2005 increased 1.9%
compared to the quarter ended June 30, 2004
-- Cash distributions for the full year 2005 are expected to be
approximately $9.4 million including receipt of a one-time debt
reserve release of $1.9 million
INVESTMENTS
Macquarie Communications Infrastructure Group (MCG)
-- MCG declared a cash distribution of Australian Dollar 14.6 cents per
stapled security on June 20, 2005 for the 6 month period ended
June 30, 2005 - the Company recorded a receivable of $1.7 million net
of withholding taxes and will receive the cash distribution in
mid-August
-- 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
25.0% for the year ended June 30, 2006 based on public statements
made by management of MCG
South East Water (SEW)
-- The Company received dividends from its investment in SEW totalling
$4.4 million during the second quarter of 2005
-- For the full year 2005 the Company expects to receive dividends of
approximately $8.5 million relating to its investment in SEW
-- Included in these expected dividends is a non-recurring component of
approximately $2.6 million
CONFERENCE CALL AND WEB CAST
The Company has scheduled a conference call for 11:00 a.m. Eastern Daylight Time on August 10, 2005, to review the Company's results.
To listen to the conference call, please dial +1(800) 819-9193 (domestic) or +1(913) 981-4911 (international), at least 10 minutes prior to the scheduled start time. Interested parties can also listen to the live call, which will be webcast at the Company website, 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 conference call, a replay will be available through August 24, 2005, at +1(888) 203-1112 (domestic) or +1(719) 457-0820 (international), Passcode: 4703567. An online archive of the webcast will be available on the Company's website for one year following the call.
ABOUT MACQUARIE INFRASTRUCTURE COMPANY
Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses, 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), 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.
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED BALANCE SHEETS
As of June 30, 2005 and December 31, 2004
($ in thousands, except share amounts)
June 30, 2005 December 31, 2004
(unaudited)
Assets
Current assets:
Cash and cash equivalents $120,301 $140,050
Restricted cash 1,623 1,155
Accounts receivable, less allowance
for doubtful accounts of $789 and
$1,359 17,961 12,312
Dividend receivable 1,722 1,743
Inventories 1,211 1,563
Prepaid expenses 3,233 4,186
Deferred income taxes 1,596 1,452
Other 4,036 5,308
Total current assets 151,683 167,769
Property, equipment, land and
leasehold improvements, net 294,639 284,744
Other assets:
Restricted cash 17,276 16,790
Equipment lease receivables 44,606 45,395
Investment in unconsolidated business 72,125 79,065
Investment, cost 36,819 39,369
Securities, available for sale 79,273 71,263
Related party subordinated loan 20,966 21,748
Goodwill 232,767 217,576
Intangible assets, net 268,960 254,530
Other 12,717 10,238
Total assets $1,231,831 $1,208,487
Liabilities and stockholders' equity
Current liabilities:
Due to manager $2,194 $12,306
Accounts payable 7,071 10,912
Accrued expenses 11,689 11,980
Current portion of capital leases
and notes payable 1,950 1,242
Current portion of long-term debt 97 94
Other 3,238 2,991
Total current liabilities 26,239 39,525
Capital leases and notes payable,
net of current portion 2,328 1,755
Long-term debt, net of current portion 447,023 415,074
Related party long-term debt 18,528 19,278
Deferred income taxes 122,941 123,429
Other 5,085 4,615
Total liabilities 622,144 603,676
Minority interests 8,886 8,515
Stockholders' equity:
Trust stock, no par value; 500,000,000 shares
authorized; 27,050,745 shares issued and
outstanding, at June 30, 2005,
26,610,100 shares issued and outstanding
at December 31, 2004 610,074 613,265
Accumulated other comprehensive income 2,762 619
Accumulated deficit (12,035) (17,588)
Total stockholders' equity 600,801 596,296
Total liabilities and
stockholders' equity $1,231,831 $1,208,487
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the Quarter and Six Months Ended June 30, 2005
And the Period from April 13, 2004 (inception) - June 30, 2004
(Unaudited)
($ in thousands, except per share amounts)
Quarter Six Months Period From
Ended Ended April 13, 2004
June 30, June 30, (inception)-
2005 2005 June 30, 2004
Revenue
Revenue from fuel sales $34,243 $64,630 $--
Service revenue 36,945 70,951 --
Financing and equipment
lease income 1,331 2,673 --
72,519 138,254 --
Costs and expenses
Cost of fuel sales 19,708 36,803 --
Cost of services 19,720 36,976 --
Selling, general and
administrative expenses 18,714 37,876 2,581
Fees to manager 2,209 4,152 --
Depreciation 1,420 2,747 --
Amortization of intangibles 3,235 6,320 --
Operating income (loss) 7,513 13,380 (2,581)
Other income (expense)
Dividend income 6,184 6,184 --
Interest income 1,231 2,330 --
Interest expense (7,511) (15,269) --
Equity in (loss) earnings
and amortization charges
of investee (1,139) 514 --
Other income (expense), net 261 (654) --
Net income (loss) before
income taxes and
minority interests 6,539 6,485 (2,581)
Income taxes 579 579 --
Net income (loss) before
minority interests 5,960 5,906 (2,581)
Minority interests 324 353 --
Net income (loss) $5,636 $5,553 $(2,581)
Basic earnings (loss)
per share: $0.21 $0.21 $(25,810)
Weighted average number of
shares of trust stock
outstanding: basic 26,960,560 26,786,298 100
Diluted earnings (loss)
per share: $0.21 $0.21 $(25,810)
Weighted average number of
shares of trust stock
outstanding: diluted 26,984,160 26,798,163 100
Cash dividends declared
per share $0.5877 $0.5877 $--
MACQUARIE INFRASTRUCTURE COMPANY TRUST
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
For the Six Months Ended June 30, 2005
And the Period from April 13, 2004 (inception) - June 30, 2004
(Unaudited)
($ in thousands)
Period From
April 13, 2004
Six Months Ended (inception) -
June 30, 2005 June 30, 2004
Operating activities
Net income (loss) $5,553 $(2,581)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization of
property and equipment 6,632 --
Amortization of intangible assets 6,320 --
Equity in earnings and amortization
charges of investee 1,378 --
Amortization of finance costs 553 --
Deferred rent 1,184 --
Deferred revenue 73 --
Equipment lease receivable 789 --
Minority interests 353 --
Noncash compensation 266 --
Other noncash expenses, net 221 --
Accrued interest expense on
subordinated debt-related party 519 --
Accrued interest income on subordinated
debt-related party (480) --
Changes in current assets and liabilities,
net of acquisition:
Accounts receivable (4,546) --
Inventories 496 --
Prepaid expenses and other
current assets 2,650 --
Accounts payable and accrued expenses (3,176) --
Due to manager 1,976 601
Due to Parent -- 1,980
Other (17) --
Net cash provided by operating activities 20,744 --
Investing activities
Acquisition of General Aviation Holdings,
LLC, net of cash acquired (49,594) --
Goodwill adjustment 694 --
Purchases of property and equipment (3,364) --
Principal proceeds from subordinated loan 686 --
Additional costs of acquisitions (72) --
Net cash used in investing activities (51,650) --
Financing activities
Issuance of trust shares -- 100
Proceeds from debt 32,000 --
Proceeds from line of credit facility 543 --
Distribution paid to shareholders (15,898) --
Debt financing costs (1,674) --
Payment of long-term debt (47) --
Offering costs paid (1,934) --
Restricted cash (1,077) --
Payment of notes and capital
lease obligations (678) --
Net cash provided by financing activities 11,235 100
Effect of exchange rate changes on cash (78)
Net change in cash and cash equivalents (19,749) 100
Cash and cash equivalents at beginning
of period 140,050 --
Cash and cash equivalents at end
of period $120,301 $100
Supplemental disclosures of
cash flow information: --
Income taxes paid $609 $--
Interest paid $14,357 $--
Acquisition of property and equipment
under capital leases $1,417 $--
MACQUARIE INFRASTRUCTURE COMPANY TRUST
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA
($ in thousands)
For the Quarter Ended June 30, 2005
(Unaudited)
Quarter Six Months
Ended Ended April 13, 2004
June 30, June 30, (inception) -
2005 2005 June 30,2004
Net income (loss) $5,636 $5,553 $(2,581)
Interest expense, net 6,280 12,939 -
Income taxes 579 579 -
Depreciation (1) 3,411 6,632 -
Amortization (2) 3,235 6,320 -
EBITDA $19,141 $32,023 $(2,581)
(1) Includes depreciation expense of $546,000 for the quarter ended
June 30, 2005 and $1.0 million for the six months ended June 30, 2005
for the airport parking business, and $1.4 million for the quarter
ended June 30, 2005 and $2.8 million for the six months ended
June 30, 2005 for the district energy business which is included in
cost of services on our consolidated condensed statement of
operations.
(2) Does not include $1.2 million and $2.4 million of amortization
expense related to intangible assets in connection with our
acquisition of our toll road business for the quarter and the six
months ended June 30, 2005, respectively.