MIC Reports Fourth Quarter And Full Year 2019 Results

The Company's sales of discontinued operations in 2019 generated approximately $223 million of proceeds net of taxes and transaction fees. The deconsolidation of debt associated with the sold businesses and the repayment of $350 million of convertible notes in July 2019 reduced MIC's consolidated debt by $655 million. At December 31, 2019, MIC had debt outstanding of $2,722 million.

MIC's leverage (net debt / EBITDA) was 3.9x at December 31, 2019, down from 4.0x at December 31, 2018. The Company expects its leverage to increase to between 4.25x and 4.5x at the end of 2020 as it continues to utilize cash on hand to fund growth projects.

MIC deployed $211 million in support of growth projects across its businesses in 2019 including $68 million in the fourth quarter.

MIC's Chief Executive Officer, Christopher Frost, said of the Company's results for 2019: "MIC's financial and operational results for the year were consistent with our expectations and guidance to the market. We are pleased with the favorable trends in storage utilization at IMTT and the opportunities to expand the business and we remain confident in its prospects.

"Atlantic Aviation delivered an anticipated contribution to our overall results despite growth in U.S. general aviation flight activity that was below the average of the past several years. Atlantic Aviation was successful in attracting and servicing larger aircraft and recorded an increase in both the amount of fuel sold and earnings from ancillary services such as hangar rentals.

"Results for MIC Hawaii reflect moderation in demand for gas services provided by Hawaii Gas associated with above average temperatures, although these were offset by the full-year benefit of the new utility rates implemented in mid-2018 and lower propane prices.

"I am pleased with both the performance of our operating businesses in 2019 and our liquidity and believe they position us well as we work to unlock additional value for shareholders through a sale of the Company or one or more of its operating businesses," Frost added.

On October 31, 2019 MIC announced its intention to actively pursue sales of the whole of the Company or its operating businesses. The Company notes that there can be no assurances as to the form and timing of any transaction as a result of this pursuit of strategic alternatives, or if any transactions will be consummated, and any final decisions remain subject to approval by the MIC board of directors.

IMTT to Construct Renewable Diesel Pipelines in Louisiana

MIC's bulk liquid storage and handling subsidiary, IMTT, has entered into an agreement with Diamond Green Diesel ("DGD") pursuant to which it will construct two pipelines connecting its St. Rose, LA terminal with the DGD renewable diesel refinery at Norco, LA five miles away. IMTT will also expand its marine and rail infrastructure and repurpose approximately 790,000 barrels of existing storage capacity from heavy and residual petroleum service to renewable diesel feedstocks and finished product. All aspects of the project are expected to be in service prior to the end of 2021.

"This is an exciting opportunity for IMTT to partner with the market leader in the production of renewable diesel in the U.S. and to contribute to a greener energy complex," said Rick Courtney, chief executive officer of IMTT. "The project also highlights our success with initiatives that reposition IMTT by increasing our exposure to products and markets with strong growth prospects."

DGD is a joint venture between Valero Energy Corporation and Darling Ingredients. DGD has commenced an expansion of its renewable diesel facility that is expected to more than double its production capacity.

In addition to the renewable diesel project, IMTT has entered into an agreement with a nearby manufacturer to construct additional chemical storage capacity and related infrastructure at its Geismar, LA facility. The agreement contemplates approximately 70,000 barrels of new, dedicated capacity and pipelines to and from the IMTT docks at the facility. The tanks and related infrastructure are expected to be in service at year end 2020.

Including previously announced projects with a combined value of approximately $175 million, IMTT has committed to growth projects with an aggregate value of approximately $350 million. The projects collectively are expected to generate incremental EBITDA at stabilization of approximately $39 million over an initial weighted average contract term of 19 years.

Atlantic Aviation to Acquire FBO in Connecticut

Atlantic Aviation has entered into an agreement to acquire the assets of Volo Aviation, Inc. at Sikorsky Memorial Airport in Bridgeport, CT. The acquisition will expand Atlantic Aviation's existing presence on the airfield with the Volo facilities adding approximately 35,000 square feet of hangar space and 4,000 square feet of office space to the Atlantic Aviation portfolio pursuant to a long-dated lease expiring in 2040. The acquisition is expected to close in the first quarter of 2020.

2020 Guidance

MIC has initiated financial guidance for 2020. For the full year the Company expects to generate Adjusted EBITDA excluding non-cash items of between $575 million and $600 million. The midpoint of the guidance represents a year on year increase of approximately 4%, excluding the contract termination payment received by IMTT in 2019. The Company expects the improvement in Adjusted EBITDA to be driven by a combination of continued stable growth at Atlantic Aviation, continued increases in utilization at IMTT, partially offset by an anticipated decrease in average storage rates reflecting the full-year impact of lower renewals in second half of 2019, and a consistent contribution from MIC Hawaii.

The buildup of the EBITDA guidance for 2020 on segment basis is as follows:

Adjusted EBITDA excluding non-cash items also excludes costs associated with pursuit of strategic alternatives so as to ensure comparability with prior period reports. The costs will form part of the management reporting line item, investment and acquisition/disposition costs in the Company's reconciliation from Net income to Adjusted EBITDA excluding non-cash items.

MIC also initiated guidance for the generation of Adjusted Free Cash Flow of between $360 million and $400 million in 2020. The decrease versus 2019 reflects the absence of the contract termination fee received by IMTT and expected increases in cash taxes and interest expense. The anticipated increase in cash taxes reflects, in part, MIC's utilization of all remaining federal Net Operating Loss carryforwards in 2019.

The Company intends to pay a dividend of $1.00 per share, per quarter, in 2020. The payment of the dividend is predicated on, i) the composition of the MIC portfolio of businesses being unchanged, ii) the businesses performing as expected and at levels that support the dividend, iii) stable economic and equity market conditions generally, and iv) the authorization of the dividend by the Company's board of directors.

MIC expects to continue to invest in the growth and development of its businesses. The Company expects to deploy between $200 million and $225 million in 2020, including projects commenced in 2019 and the portion of the IMTT Pipeline Project announced today that will be expended this year.

In addition to investing in the growth of its businesses, MIC expects to support the continued cash generating capacity of its businesses by making maintenance capital expenditures of between $55 million and $65 million in 2020. The decrease in forecast maintenance capital expenditures versus 2019 reflects a reduction in anticipated expenditures related to the refurbishment of a pier at IMTT in Bayonne.

With respect to the Company's guidance for EBITDA and Free Cash Flow in 2020, 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.

Fourth Quarter and Full Year 2019 Segment Results

• IMTT generated EBITDA excluding non-cash items of $58 million in the fourth quarter and $288 million for full year. EBITDA excluding non-cash items for the full year increased by 1% versus the prior comparable period including a $39 million contract termination payment received in the first quarter of the year. Storage utilization, reflecting the proportion of all capacity available for lease currently under contract, decreased from an average of 84.6% in 2018 to 84.0% in 2019. Utilization rose from approximately 80% at the beginning of the year to over 86% at year end primarily as a result of demand for storage of refinery feedstocks on the Lower Mississippi River. Historically, IMTT has had the benefit of pricing power when utilization exceeds 90%.
• Atlantic Aviation generated EBITDA excluding non-cash items of $71 million in the fourth quarter and $276 million for the full year. EBITDA excluding non-cash items for the full year increased by 5% versus the prior comparable period driven by an increase in the amount of fuel sold and increases in hangar rental revenue, partially offset by higher operating costs and a $3 million negative adjustment primarily related to its maintenance business. Based on data compiled by the Federal Aviation Administration for 2019, general aviation flight activity increased 0.3% industry-wide and by 0.8% at the airports on which Atlantic Aviation operates.
• MIC Hawaii generated EBITDA excluding non-cash items of $14 million in the fourth quarter and $60 million for the full year. EBITDA excluding non-cash items for the full year increased by 58% as a result of the absence of a write-down of a business that was sold in 2018 and the full-year impact of new utility rates implemented by Hawaii Gas in mid-2018.
• MIC's Corporate and Other segment recorded EBITDA excluding non-cash items of ($11) million in the fourth quarter and ($25) million for the full year. The Corporate and Other segment comprises primarily MIC's holding company and shared services functions. The $7 million decrease in EBITDA excluding non-cash items year on year reflects a reduction in revenue from a relationship with a renewable power project developer, partially offset by lower selling, general and administrative expenses.

Fourth Quarter 2019 Dividend

The board of directors of MIC authorized a cash dividend of $1.00 per share, or $4.00 annualized, for the fourth quarter of 2019 consistent with guidance provided to the market in October 2019. The dividend will be paid on March 11, 2020 to shareholders of record on March 6, 2020.

Including the dividend for the fourth quarter, MIC will have distributed approximately 84% of its Adjusted Free Cash Flow from continuing operations generated in 2019.

Summary Financial Information

			Quarter Ended December 31,								Change Favorable/ (Unfavorable)						Year Ended December 31,								Change Favorable/ (Unfavorable)
			2019				2018				$			%			2019				2018				$			%
			($ In Millions, Except Share and Per Share Data) (Unaudited)
GAAP Metrics
Continuing Operations
Net income (loss)			$	16			$	(4)			20			NM			$	101			$	65			36			55
Net income (loss) per share attributable to MIC			0.18				(0.01)				0.19			NM			1.17				0.80				0.37			46
Cash provided by operating activities			52				107				(55)			(51)			468				473				(5)			(1)
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