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MIC Reports Fourth Quarter And Full Year 2020 Financial And Operational Results, Announces Corporate Reorganization As A Limited Liability Company
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PR Newswire
NEW YORK, Feb. 17, 2021
NEW YORK, Feb. 17, 2021 /PRNewswire/ -- Macquarie Infrastructure Corporation (NYSE: MIC) today announced its operational and financial results for the fourth quarter and full year 2020 as well as plans to reorganize the enterprise to facilitate a sale of its remaining operating businesses.
MIC today filed a registration statement with the Securities and Exchange Commission ("SEC") on Form S-4 pursuant to which it proposes to reorganize its listed parent company as a pass-through Delaware limited liability company, Macquarie Infrastructure Holdings, LLC ("MIH LLC"). If approved by shareholders, the reorganization is expected to be completed following entry into an agreement by MIC to sell its Atlantic Aviation business but prior to closing of the sale.
The S-4 also notes that MIC expects to distribute its MIC Hawaii businesses to MIH LLC. The Hawaii Public Utilities Commission approved the distribution in April 2020. The distribution of MIC Hawaii facilitates the sale of Atlantic Aviation prior to the sale of MIC Hawaii. MIC Hawaii would be sold via a sale of MIH LLC following the completion of a sale of Atlantic Aviation.
"Our highest priority is the maximization of shareholder value through the timely sales of our remaining businesses. We believe the proposed reorganization will allow us to sell Atlantic Aviation sooner than we would likely be able to under our current corporate structure and without altering the tax consequences of any sale," said Christopher Frost, chief executive officer of MIC. "We will ask shareholders to approve the reorganization before we implement it."
MIC noted that the financial performance of its remaining operating businesses, Atlantic Aviation and the businesses comprising MIC Hawaii, were at the high end of expectations in the fourth quarter of 2020. The results reflect a strong holiday period for Atlantic Aviation and an increase in the number of visitors to Hawaii following the relaxation of travel restrictions from mid-October.
"Atlantic Aviation and MIC Hawaii have continued to recover from the low levels of activity caused by the outbreak of COVID-19 early in 2020," said Frost. "We are pleased with the stable performance of the businesses to date in 2021 and with the state of our balance sheet following the successful sale of IMTT at the end of last year."
MIC's consolidated results include various non-recurring expense items related to the sale of International-Matex Tank Terminals ("IMTT"), a discontinued operation for financial reporting purposes since September 30, 2020. Among these are capital gains taxes and transaction-related costs unrelated to the performance of its remaining operating businesses. In the following discussion, the costs associated with efforts to sell MIC's operating businesses are added back to EBITDA excluding non-cash items and any capital gains taxes from sales are added back to Free Cash Flow both to ensure comparability with prior period reports. The adjustment for sale related costs and capital gains taxes are reflected in the management reporting line items Investment and acquisition/disposition costs and Cash Taxes, respectively (see table below).
MIC recorded a net loss from ongoing operations of $206 million in 2020 versus net income of $25 million in 2019. The loss reflects primarily a reduction in revenue generated by the Company's remaining operating businesses as a result of lower activity levels, a current federal income tax liability of $126 million related to the capital gain generated by the sale of IMTT in December of 2020 and transaction and other costs incurred primarily in connection with the sale.
The Company reported consolidated revenue from ongoing operations in 2020 of $847 million, down from $1,212 million in 2019. The decrease reflects primarily the impact of COVID-19 on the level of general aviation flight activity during the year, the primary driver of the performance of Atlantic Aviation, and on the number of visitors to Hawaii, the primary driver of the performance of MIC Hawaii. The decrease in revenue also reflects a reduction in the wholesale cost of jet fuel and propane, on average, which is typically a pass-through to customers.
MIC's operating expenses for the year totaled $838 million, down from $1,069 million in 2019. The decrease reflects primarily the reduced level of activity at each of MIC's remaining operating businesses, and lower wholesale fuel costs, together with various cost savings initiatives, partially offset by expenses primarily associated with the sale of IMTT.
MIC reported Adjusted EBITDA excluding non-cash items from continuing operations of $220 million, down from $316 million in 2019. The decrease reflects primarily the Company's lower operating income in 2020.
The Company generated cash from operating activities of $127 million, down from $215 million in 2019.
MIC reported Adjusted Free Cash Flow of $125 million, down from $213 million in 2019. The decrease reflects the Company's lower EBITDA, partially offset by lower interest expense and a decrease in maintenance capital expenditures.
2021 Guidance
For the full year 2021, MIC expects to generate EBITDA excluding non-cash items of between $230 and $260 million. The guidance implies an increase of 11% at the midpoint compared with 2020. The guidance reflects segment level contributions as follows:
| Segment | EBIDTA Range ($mm) | |
| Atlantic Aviation | 220 - 240 | |
| MIC Hawaii | 30 - 40 | |
| Corporate and Other | (20) | |
The Company's guidance assumes a successful rollout and expected efficacy of COVID-19 vaccine programs in the U.S. and internationally and does not contemplate a return to activity levels seen in the second quarter of 2020. With a successful rollout of vaccines, general aviation flight activity is assumed to recover from current levels starting in the third quarter and to reach 2019 levels by year-end. The Company expects the number of visitors to Hawaii to increase throughout 2021, although the number is not expected to reach pre-COVID levels during the year.
MIC expects to fund growth capital projects, including those to which it has already committed, having an aggregate value of between $70 and $80 million in 2021. Growth projects primarily include the development of additional hangar capacity and related infrastructure at various FBOs in the Atlantic Aviation network.
The Company's Corporate and Other segment includes costs associated with being a public company, litigation expenses, and certain shared services costs including those related to the provision of services to IMTT on a transitional basis.
MIC expects to generate Free Cash Flow of between $130 and $160 million in 2021. The Company notes that Free Cash Flow does not reflect certain cash expenditures, primarily growth capital deployment including investments in bolt-on acquisitions (both funded using debt historically) and amortization of debt principal. In addition to the generation of Free Cash Flow, MIC had liquidity of $328 million of uncommitted cash on hand and access to an undrawn revolving credit facility at MIC Hawaii of $60 million at the start of 2021.
The Company distributed the net proceeds from the sale of IMTT after reserving for the retirement of its Convertible Notes as a special dividend of $11.00 per share in cash on January 8, 2021. MIC does not expect to resume a regular dividend in 2021 but is focused on returning capital to shareholders through the sale(s) of its remaining operating businesses.
Fourth Quarter and Full Year 2020 Segment Results
Continuing Operations
"Increased activity around the holidays, together with effective cost control, that resulted in Atlantic Aviation generating EBITDA for the full year at the high end of guidance," said Frost.
- Atlantic Aviation generated EBITDA of $58 million and $195 million for the fourth quarter and full year 2020, respectively, down from $71 million and $276 million in corresponding periods in 2019. The result for the fourth quarter reflects flight activity across Atlantic Aviation's network that was 18% lower than in the prior comparable period. The full year result reflects a year-on-year decline in general aviation flight activity of 25% across the Atlantic Aviation network and a $7 million provision for the remediation of certain environmental matters, partially offset by expense reductions of $22 million.
"With the relaxation of restriction on travel to Hawaii in mid-October, the number of visitors to Hawaii recovered from 6% versus the prior comparable period in the third quarter to 19% versus prior comparable period in the fourth quarter leading to an increase in demand for gas from visitor-oriented consumers," Frost said.
- MIC Hawaii generated EBITDA of $12 million and $41 million for the fourth quarter and full year 2020, respectively, down from $14 million and $60 million in the corresponding periods in 2019. The results in both periods reflect primarily the decrease in gas sales related to the decline in the number of visitors to Hawaii brought about by COVID-19.
MIC's Corporate and Other segment includes primarily costs of managing the public company including fees payable to the Company's external manager and expenses related to the Company's pursuit of strategic alternatives.
- MIC's Corporate and Other segment recorded EBITDA of ($58) million and ($86) million for the fourth quarter and full year 2020, respectively, compared with $(11) million and ($25) million in the corresponding periods in 2019. The larger loss reflects primarily expenses associated with the sale of IMTT including transaction costs of $28 million and a disposition payment of $28 million and other costs associated primarily with the Company's pursuit of sales of is remaining businesses of $14 million throughout the year.
Discontinued Operations
MIC completed the sale of its IMTT business on December 23, 2020. With the classification of the business as a discontinued operation in the third quarter of 2020, IMTT has been treated as a discontinued operation for the full year 2020 and all prior periods referenced in this press release and in the Company's filing with the SEC on Form 10-K earlier today. Discontinued operations in 2019 also include the Company's renewable power development and generation businesses.
Discontinued operations generated a net loss of $722 million in 2020 through the date of the sale of the business on December 23, 2020 compared with net income of $128 million in 2019. The decrease reflects primarily the write-off of goodwill of $725 million in 2020 and the absence of a gain on the sale of the renewables businesses in 2019.
Balance Sheet Strength and Financial Flexibility
MIC today also initiated a tender offer for any or all of its 2.00% Convertible Senior Notes due October 2023 ("Notes") outstanding. MIC is offering to repurchase the bonds at face value (par) plus accrued interest through (but not including) the date of purchase. The tender offer will be open through March 16, 2021, unless extended.
"We believe that the retirement of up to the full amount of the $403 million of Notes on issue is a prudent use of the remaining proceeds from the sale of IMTT and that a tender offer will be the most effective means of doing so," said Frost.
MIC's aggregate leverage ratio was 4.0 times net debt/Adjusted EBITDA excluding non-cash items on December 31, 2020. The ratio reflects the repayment of the balance outstanding on the Company's holding company level revolving credit facility during December as well as adjustments to its cash on hand for capital gains taxes and expenses to be paid in relation to the sale of IMTT and a provision for both the special dividend paid on January 8, 2021 and the retirement of its $403 million of Notes.
The Company notes that all commitments to its holding company revolving credit facility were terminated on January 19, 2021.
| Summary Financial Information | |
| | |
| | Quarter Ended December 31, | | Change Favorable/ (Unfavorable) | | Year Ended December 31, | | Change Favorable/ (Unfavorable) | ||||||||||||||||||||
| | 2020 | | 2019 | | $ | | % | | 2020 | | 2019 | | $ | | % | ||||||||||||
| | ($ In Millions, Except Share and Per Share Data) (Unaudited) | ||||||||||||||||||||||||||
| GAAP Metrics | | | | | | | | | | | | | | | | ||||||||||||
| Continuing Operations | | | | | | | | | | | | | | | | ||||||||||||
| Net (loss) income | $ | (16) | | | $ | 5 | | | (21) | | | NM | | $ | (206) | | | $ | 25 | | | (231) | | | NM | ||
| Net (loss) income per share attributable to MIC | (0.18) | | | 0.06 | | | (0.24) | | | NM | | (2.36) | | | 0.31 | | | (2.67) | | | NM | ||||||
| Cash provided by (used in) operating activities | 13 | | | (5) | | | 18 | | | NM | | 127 | | | 215 | | | (88) | | | (41) | | |||||
| Discontinued Operations | | | | | | | | | | | | | | | | ||||||||||||
| Net (loss) income | $ | (22) Werbung Mehr Nachrichten zur Macquarie Infrastructure Company Aktie kostenlos abonnieren
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