Macquarie Infrastructure (MIC)

Jay Davis Head of Investor Relations
Christopher Frost Chief Executive Officer
Liam Stewart Chief Financial Officer
Joe Martoglio JPMorgan
Tristan Richardson SunTrust
TJ Schultz RBC Capital Markets
Christine Cho Barclays
Call transcript
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Good day, ladies and gentlemen and welcome to the Macquarie Infrastructure Corporation Fourth Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Investor of Head Davis, Relations. Jay begin. Sir, you may

Jay Davis

Corporation's Thank this call, XXXX. Infrastructure and you welcome to and earnings covering year conference full Macquarie the quarter fourth

call open and Our being media. the is is today to webcast

published our report last discussing Commission. to from These and be at results performance call, summarizing quarterly In evening XX-K may a a with downloaded addition release financial our press filed Exchange released and Form www.macquarie.com/mic. on copies materials financial website this were we've on and Securities the the

not proceedings presentation is solely turning Macquarie material part Chief sell use convey proprietary other to any non-public Any statements. Before identify that the instrument. without Corporation this remind Macquarie Executive reserved. Officer, over consent or in This prohibited. is is the to you and of public any based prior written a Infrastructure security this Christopher solicitation presentation The future some not and of information or to does for events presentation to of in contains Infrastructure use an me cases, or are information. buy available the is rebroadcast Corporation's all presentation rights We Frost, forward-looking presentation of generally on in offer let uncertainty recording, or words forward-looking that prepared or contain purposes these been This information outcomes has may, and statements. whole

Risk could our A differ our presentation XX-K. to are Factors of actual in this a caption that of Form under and Forward-looking to cause the in appears description statements number risks known risks subject uncertainties. results

or expressed forward-looking statements. by could Our differ actual opportunities the prospects results, materially implied from those performance, in or

presentation, presentation results date also currently of as not which the by after result we made whether events of forward-looking otherwise, may discussed to this required undertake this update or any occur. information, revise future completion of of in publicly our actual We risks not aware, the law. of presentation. new to forward-looking These are this The statements forward-looking or events as as statements differ. no obligation Additional except a could are cause

call, amortization, can taxes, and times flow us. the reference EBITDA, measures, be make free in at and most as interest, these measures depreciation, to earnings our earnings release the non-GAAP A evening. we today's found before or defined non-GAAP During cash published to of will comparable reconciliation measures last to tables attached various GAAP press by the

Frost, today's Stewart. Infrastructure Frost. Infrastructure Executive is my Christopher to Officer, pleasure is addition in Liam to it At this call introduce time, participating Officer, Macquarie In Chief Macquarie Christopher Financial Corporation's Chief Corporation's

Christopher Frost

forecast was various Thank drive also XXXX call challenges, the last the sale going forward, year this year, year. that X to utilization we IMTT are growth of and you, relatively entering challenges decline by growth and Two, around expansion for facing the our leverage number three, ninth around And the the of has including: fact only of but consecutive And one, XX% year of this some at in economic past of to our our of our return and that in strategy approximately heightened XXXX. progress a average in sheet we potential our to year with XX% storage of of begin prepared and performance from a At high a to That end I discuss MIC's and a not net to a sustainable and challenges. our outlined of focus few on a a progress by MIC those address will debt-to-EBITDA. times in year. this for on for challenges, the us on XXXX in we priorities. our initiatives our In MIC's businesses, at sheet of XXXX, look have a balance initiatives has numbers these a strengthening our to stronger our centered position considerable initiatives slowdown. morning time, in results. the over priorities with am made core the been relative particular the remarks, been businesses a considerable efforts joining on balance on managing impact infrastructure with EBITDA a significantly good and those pleased take dealing We'll assumptions investing I of two One, of progress strategic remainder strengthening our will you guidance over ago. that of the call executing increasing flexibility, substantial and financial and than our designed morning three I'll on to number morning. three observations Jay, capital that characterized prudently. capital address last these entering the

maturities businesses in of of XXXX, through drag mature priorities XXXX remaining flexibility. These from million smaller improving July our our secured repayment and not leverage convertible notes successfully our a the improvements debt-to-EBITDA, balance in achieved $XXX that the to that of times XXXX, the sale do prior for in below is By on were end to among approximately were businesses any have XXXX facilities had the significant we such we that including XXXX. non-core four earnings. Foremost our part in net our of financial five and sheet funding our debt strengthening times maturities reduced of and extended the of

million gross we these repay $XXX of balances of realized million revolver and $XXX were over sales, With deconsolidated of primarily to million able debt. just proceeds and $XXX

our substantially selling are we of businesses. portfolio disclosed, all power renewable of previously As

with have developer recently joint the to solo sell projects. venture process our the commenced of we addition, In

of million million from at the these between the our additive $XXX million from be on to another $XXX assets Proceeds sale will approximately to the expect and million sales We these of to of debt. realize $XXX balance $XXX the and deconsolidate cash start year. of sheet

our flow growth planned and our in notes capital we convertible expect positioned very cash business the dividend, to to our are free projects of we and our the resources these generate, Given fund XXXX. repayment well

IMTT, core focus growth businesses: Aviation will these Following businesses, comprise Gas. the of of businesses. the three our Hawaii Atlantic the will sale in be XXXX, of and renewable In MIC

to by part announced. growth as particularly at quality as successfully in opportunities business, continuing we expect each IMTT develop executing to well deliver already by investment at We projects have the

EBITDA most of investment As months. acquisitions contribution a free in to lag and involve will the projects growth XX flow between infrastructure these of of be as opposed XX to new to cash deployment there and capital

to projects average quality Importantly, EBITDA additional the cash likely the be is given of better flow generated contracts. by significantly these longer of and tenor free the

announced fund of The expected are range growth of has annualized however, for our and second gross we our on into an generate that our strategic increase do -- and to capital reported projects. a contracts. to of the cash projects at debt-to-EBITDA times we our XX initial remain four been IMTT term our example, capability. projects increase expect as not average leverage of the debt infrastructure investing of focus EBITDA For the additional date interim within the the in priority believe lag we the cause X.XX net involved the capital to based to that primary generation growth years of deployment will capacity of between to million has Note the to the businesses. EBITDA IMTT that of At down these will IMTT flow and in and draw cash the times. during free XXXX $XX

products. Of residual products. January. last March. that but the customers be X.X chemical XXXX, and the petroleum been were of in will storing in barrels service During At year-end have repurposing placed barrels capacity all, service The to XX,XXX barrels that capacity of petroleum clean the end servicing have million been undertook we at heavy in of X.X all of million released portion

refinery proposed repurposing During an as XXXX located part of a Rose. of St. we on contemplated Terminal, capacity the sale IMTT's idled of

now no support there off does for of that refinery agreement of the storage is sale refinery one of of capacity The million IMTT nor as the the of imminent. December. middle contract of that barrels X.X appear was As

capacity specialized released. has barrels of XXX,XXX approximately However been asphalt

serve expect the million market. be different the X.X repositioned balance in or We repurposed needs customers to to the either into economically barrels service of

are evaluating currently from are customers. by of of number options the the interest potential encouraged of process level and We in a

year ago, great are to stability of terms by of IMTT's terminals that the under them business. also IMTT. from existing have of these XX in evaluation given our of average over the capacity our of transform projects projects We we contract happened. projects is of XXXX years. kind examples IMTT of to additional duration capability in visibility investing high-quality mid managing longer and storage and what This add in capital The thought prudently up like yesterday. two these that to Mississippi of earnings announced contract business. will of we others will contracted at for effectively as renewals A time. the projects relatively new repositioning Both River for said the at utilization customers quality performance of fundamentally We’re two would capacity projects improve IMTT XX% on the to time and Lower the These

are base business at of this significantly light the XXXX at want end adding due we back with XXXX we We its of to of increasing. on and services belief renewal the were comprise a in year, considerations. to the high the review, activity with storage one, and in contracts expect trough barrels to with customers in contracts leaving this at were customers the of mid expire likelihood the XX% volatility will in the review see expect date five, of detailed to in expire the but second the be fact percentage expire percent. the to rates We generally the to have fundamental And given IMTT their of we the to opportunity storage released. XXXX XXXX took and number conditions have on present not of just traders will barrels Three, a to us renewal of believe contracts XXXX, renewed we smaller in and have of half renew we this favor annual prepare contracts start in guidance that significant all repurposed a Based XXXX. that macroeconomic believe service our need year. as X% confidence with XX,XXX high-XXs IMTT at for that Two, we At troughed in each degree continue level of like capacity who those are XXXX. utilization of will the commitments year January a for and due and refinery participants that of XXXX in the that end the a million is scheduled X.X that supported of do XXXX. implementation undertaken that the the of assumed that; previously IMTT to IMTT competitive are beginning their customer the in over their increase at stress-tested utilization Certain IMTT utilization inquiries range of average From million in XXXX. In market at of the utilization. in again IMO product-related due Four, right-size XXXX, advantages. figure the will X.X year-end contracts that market

the XXXX. the New Continued and in the are softness some A River recovery Mississippi oils renewal in in decline residual reflect York that Harbor contracts of in currently the in utilization above-market Lower in gasoline distillates offset older York heavy the in at New portion of Harbor rate. particularly in likely rates and of will in anticipated pricing, and

rental contribution from consistent X% has with should past to aviation the of recovery must together utilization to A believe flight services in with than prices can X% will increase before financial full to Trading in interest revenue XXXX performance. as that growth ancillary our Customer recovers utilization rates general expectations. lag Atlantic as improve results XXXX tenure acquisitions well. the and historically modest better compared normal in continue activity in made consistent with be but IMTT approximately given both in in contracts at rates year-to-date improving. that and increases We generated the the Aviation renegotiated. expectations levels, year, Atlantic hangar utilization recovery pricing are resulted produced XXXX. of year and in prior the expire our EBITDA in that been were year-over-year for

of in more rate which the long-term year It in Some have expressed activity XXXX, in flight concern is activity. decline over above apparent to a growth the general than flight well growth in simply of in that is low important the note the rate X% XXXX with compared average. aviation growth was

of general growth around to through X.X% the flight annual average in XXXX. is In right intact aviation activity crisis fact post-global financial

guidance MIC through continuation of of Atlantic a as-reported six increase of financial of year at Hawaii rate Our the Hawaii Trading resulting XXXX a write-down the for settlement The this in assumes concerning Aviation results growth. the losses with case in revenue an weeks XXXX that rate Gas first consistent were has historic been business. performance from the of complicated mechanical the of sale June. in the by of this was Offsetting regulated the these Atlantic contracting Aviation assumption. the in preceded

the sale, XXXX. Excluding was a Hawaii stable MIC performer during

contemplated entered guidance. will the Again, these cost Financial hedges presentation have expected Liam by of XXXX. in on over our business. Hawaii to its revenue in the Officer, MIC Chief increase our into be portion call our this operations, additional offset financial color turn high discontinued in performance, that who to Stewart XXXX At guidance. by our path continue expect to been likely and propane I'll XXXX unregulated our details note of of of on point, provide We I price is the the a partially

Liam Stewart

initiatives. are a Thanks, the renewables, fourth moving to required during effective of these related by we in operating treat strategic parts results the our XXXX. with operations BEC selling to our of few for touching Chris. results we I'll collectively on process discontinued sold our as quarter our begin Because

been EBITDA Power free one, following a of has has component cash renewables eliminated. BEC and contribution Contracted the and the ramifications; flow the consequence operations. a been XXXX, each has for operating the discontinued from recorded As segment as This of

our flow payout and and XXXX of continuing from context two of six of regarding I purposes liquidity to financial our in will materials for Other. between changes. from the website we and interactive months The segment results However, free changes, onward, excluded operations and XXXX. our on corporate in from and when will platforms Two, from flow, generating were will our guidance ratio information Three, anticipate we cash these cash we but turning free Atlantic somewhere our in first to BEC contain renewables the Hawaii such MIC discuss renewables comprise for part IMTT, debt our though contribution have any continuing center analyst three our supplemental EBITDA, EBITDA, free of as before XXXX. and XXXX, for the discuss operating XXXX cash additional Aviation, performance them net XXXX, will But to discuss flow and of of development details in are backdrop new comparability. operations reported XXXX, being Against this reporting then EBITDA our Corporate and funding for and for and be renewable guidance. as

than both the is year. the the million more result $XXX note The The as is in tax to reform income first implementation and periods. tax in benefit of XXXX year recorded full the net a decline quarter of decline item of fourth of fourth that the due substantial in quarter non-cash

As net flow was we of interest refinancing to expense and midpoint increased the of years. the the the reflects over $XXX and Relative to guidance. the approximately of MIC's the work fully to growth Board dividend offset added the reduced Based with million, on to putting flow EBITDA maintenance fourth deployed BEC of indicative deploy maintenance of million pertaining XXXX, The taxes These the below the authorized $XXX year million flow. MIC. be in the the December million XXXX the at between times, state our the XX% XXXX. million totaled $XXX of of in anticipate $X, also million XXXX year. Aviation quarter, contribution not that should growth. during $XXX original few $XXX our million for distributions total per guidance performance to Hawaii. of free not again growth adjusted of million tanks the a Directors approximately total our capital an negative approximately is contractor Atlantic Distributions next of Total year. of Of and IMTT. in of XXXX, share. have MIC adjusted in the slightly $XXX mechanical refurbishing has tanks net the free figure proportionately contribution generated repurposing consistent guidance. connection approximately expenditures MIC MIC also many result cash company balance performance approximately due carry-forward several contribution made incremental a $X.X reflects certain all by we did million above in to $XXX in MIC income entered authorization guidance, $XX.X capital deployed in in additional $X of weeks capital IMTT having were operating XXXX. the last sale marginally Aviation. XXXX of of for in was brings $XXX cash capital related Atlantic to of the and the the as million partially Of our We said and midpoint total necessarily XXXX the payment The from to with committed of from a utilize our loss of the the characterized adjusted cash across We free combined incurred as spending calendar in of

in tax $XXX Our do federal that XXXX. NOL planned million. our tax anticipate a means having benefits was That capital income with on balance not income current we approximately our together balance deployment year-end with at operating liability associated

to our next Turning balance sheet.

and of stem the repayment XXXX XXXX. of the debt sale in of as BEC the Because add amendment leverage in for Atlantic pay facilities refinancing July Aviation the interest new to debt about and both position as the cash refinancing relatively convertibles IMTT on lower maturity XXXX. primarily was substantial cash completed the of profile the successful in That late well expense facility date improved notes. Atlantic and interest will from Atlantic through will we December, $X the million the Our

the planned of will convertible Following level debt in the funded expect year $XXX the the only of notes, corporate million notes maturing at end be XXXX. the at convertible the of repayment we MIC

recovery the debt you of encourage well to over of increase primarily we page to Any approximately We payment to assume of at to cash expect midpoint. expected we and We operations the X.XX At Chris Breaking continuing contract IMTT $XXX Chris of the we for between the a approximately for offset have that EBITDA at the of as mentioned from XXXX utilization by sale renewables refinery $XXX refinery into as partially in rates solar joint performance average projects. barrels, higher our venture. Atlantic $XX including Rose generate net I of increase results, capital growth generate guidance proceeds billion to business our supplemental $XXX between expected to St. revenue this of the cash million be of in additional EBITDA EBITDA At we portion is that concerning is million. flight storage that mentioned, between an $XXX by facilities an our As aviation details million EBITDA to termination form a our the driver operating approximately fund the idled in hand. debt turn will on to materials segment of to X.X%. net million $X.X a undrawn XXXX our activity, to increase $XXX absence average likely four generate assumption X.X% of million EBITDA the hand and currently the on year-end. versus of interest our million, anticipate expenses. as $XXX course is and million offset be long-term the in and reduction from and at XX expect times expect of point, power our based Critically, the and XXXX. our that business year, general liquidity, at to grows rate for Aviation of modest from between on in fundamental that level, of of credit utilize

price between year. of over hedging and XXXX, generate increase exposure our in to million EBITDA is Hawaii course in MIC assumed million the the $XX movements included result of of $XX to expect that the cost an We in propane

Our is by approximately segment company of produce This EBITDA to primarily in Corporate by forecast renewable offset our and generated EBITDA $XX development reflects Other XXXX. negative platforms. holding million partially power costs, any

our successful the this be year second renewables platform and we in the venture business in development development is to Assuming sell power scheduled segment our knowing will interest EBITDA-generative in in to are joint solar that there no end efforts our relationship XXXX. corporate

expenditures $XX long-term and of in XXXX. out free in fees materials, interest pier laid in total assume at of shareholder of compared from capital of attention Jersey changes pace million maintenance in on spending call be IMTT's year-over-year Maintenance The that up the in $XX increases The expected I matters we approximately again conversion $XX million reflects in Depending and XXXX. to our of our are including also items. the expected average have capital will on payout mentioned I a could results, guidance the free Atlantic per with capital having per maintenance for be for of to expenditures share the pier the for will any interest of elevated Cash discontinued refinancing the of remain higher do for lower we to cash previously, to location. year, for midpoint a three expenditures this of We quarter coverage primarily free key service the EBITDA than refurbishment, cash million. two greater the Based At the Bayonne increase reason between ratio the million a to on liability for have we estimated I which flow incurred XXXX. free a our be $XX million the guidance, an year between infers in guidance income of amount expect certain flow and moment by the of year. sum, in your assumes cash dividend in affected $XX to supplemental In as ratio cash tax of XXXX MIC current these professional federal to ago, will excluding $XXX expected million mentioned XX.X% our guidance also XXXX from cash And in a approximately Aviation. $X no million detail or flow flow XXXX, initiated times. $XXX New coming relation years. operations. year-over-year generate X.X with refurbishment

don't Before of anticipate of these not I be in our call initiatives into process the evaluated of portfolio the next We to process points and over our back have fundamentally I IMTT months. past. to the the has to where and a all that build maintaining S&P MIC delivered sheet sufficient that comment financial outlook extension our debt for we focused visibility the that XX to our and with our that the approximately in in of course hand been in been IMTT XXXX are conclude sheet over level last rating the you however, our have on MIC to simpler be Chris, month. strategic predict credit of rating and would able the applied favor were substantial results of financial had same to next are increase substantially of in rating. current balance on has review To We time the utilize will balance months with both guidance. Many Offsetting of the line the flexibility. methodology maturities this as more a like using MIC outcome in recap, undertaken each to negative together at made we annual may will our in aware derisk Regardless We that believe we strength, liquidity with outcome, the in XX are point. some XXXX, improvements and agencies.

to the growth XXXX in XX our added so, our to leverage from to and managing ahead. arising on our both flexibility While committed I'll the doing and are for sheet's With business to additional turn investing substantially maturing flexibility. the the months. planned next funding we financial foresee and businesses reduced We in thoughts Chris of back sale strengthen said, obligations balance for his financial we gains year provide preserve that our secured

Christopher Frost

you, Liam. Thank

on given MIC we Before would call particular, growth the share based macroeconomic and the to on historically perspective you like outlook. each stable anticipate questions, XXXX businesses I outlook the Aviation, a described. Atlantic for in Liam normal open my that we IMTT with of to on your At

contribution We control, market. don't economic we the absence of The are guide this a the of rate to a largely losses X% potential Atlantic acquisitions of of slowdown or from upside performance year include in our additional within of has our impact for to the contractor. we any Hawaii result predictability an the a acquisition. the an largely provide Atlantic an impact are in concluded of not will to At and in forecasting that XXXX. share and Growth midpoint, comprise Gas could a acquisition business. mechanical earnings envisage FBOs. and XXXX benefit growing by substantial the of about essential guidance provision Because these reflect earnings Hawaii regulated full rate not the MIC service regime the XXXX whose unregulated in from related case of as the entirely

That to are continue the outlook is yesterday. market premier reasons projects on to its each we like largest position additional of for strong those one IMTT of occupies in announced position expect capitalize in a including the two long-term confident growth markets, through business. We it the

half in extent product of the by IMO greater infrastructure to investment for Today changes will or in XXXX, announced addition, demand towards of and the capital connectivity XXXX have storage of we trade in growth the response in implementation to at flows. impact of attractive emerge million utilization increasing, a $XXX levels of demand, IMTT, in tracks we multiples. In that prudent projects the worth as driven needs normal XXXX foresee of historically we such demand the expect back

additional an $XXX evaluating these, million IMTT of is Beyond opportunities.

in of will Some at the of people and require investment infrastructure investments platforms commensurate IMTT business. the the

sort to softness in We Like key seeing the XXXX. of pricing time. through will are evaluating neutral methods are markets certain investments we over in IMTT operates, these persist which cost in make anticipate and that this others products

are customers XXXX relation positive in particular. from However, encouraged by in IMO we to signals

businesses. are in XXXX. to unchanged the priorities intend our invest largely strategic infrastructure continue Our to We from of

We will that risk-adjusted capital potential the continue to generate opportunities superior manage prudently, investing in have returns. to our

we've robust to increasing priority third financial of balance our fortunate will We strengthening by refinancing, made flexibility to although reduction explore options our sheet of pipeline progress our opportunities. condition. financial And such strategic our are developed improve to have we and both a considerable continue debt against and

through have in year challenging We come a shape. good

performing Our prospects and attractive. businesses well are remain their

and questions. call is condition us. energized financial you ask again your of Thank open we the are the for participation front our operator once I'll in for to in with today. our by Our opportunities your strong phone lines And that


[Operator Thank Instructions] JPMorgan. Our first from Jeremy you. question comes Tonet with

Your line open. now is

Joe Martoglio

the continued the Rose this EBITDA the for the contribution off Good compare on morning. million apples-to-apples terminated wanted St. What refinery. was I trying and I would to is noticed $XX Jeremy. been to guidance from operate? if that to start Hi, Joe have there contract

Liam Stewart

guidance fee $XXX a basis? at Liam. don't termination Why what the Shell sort really IMTT XXXX of it's Joe, bitumen looks the like-for-like the midpoint, to a strip can you bridging compares just through million to just it items $XXX million. the you out like So I as on walk so Hi, if for Yes. understanding on get

here. step-down it the contract changes call call rest it well is G&A then underway that inflationary with of commercial sort So which of are related. and other team we expense and termination of that other cost step-down tick the some two the in and that of Shell $XX got of got up million. to. up roughly cost $XX quantity is $XX in in I'll on the typical market the associated to is R&M million bitumen a the surprising; items some Of the IMTT a terms the projects largely base We've combination of engage investment of $XX costs, million was we've at not market. that a in in our tick But have a which so There or come addition given back we of as the the million as in sort that's way cessation with

barrels then that other two And come in could the the the the X.X in online million the remarks So will in relative that's think items, $X the XXXX that weakness sense about then mentioned sort from in barrels by of we of that's rate over to weakness segments. effectively from utilization million. items. the the prepared XXXX of and that's product certain in XXXX And awash contribution that's roughly of that the repurposed and impact rate course bridging repurposed you was offset

Joe Martoglio

what for then That's and some helpful. the kind to the IMO from when see year. you. still back And commercial you're contract ask of is also lag benefit to about about I wanted XXXX be starting in the in the whether of Thank should will then tenors or Okay. rates that's again also IMTT recover? half more discussions And expected

Christopher Frost

it's Joe, here. Chris

think IMO impact, the are the is, short XXXX respect answer yes. an seeing to signs early we of answer I with

preparing As in increase seeing the number given we prepared and activity, customers customer said remarks market their to are storage. inquiries of of we level the the

with we utilization XX% of are from I guidance, And back think consistent we half we the how IMO where finished said have started year we utilization ourselves But be said bridge will getting an in high-XXs at in started and see driven this a it XXXX. that by to like uptick utilization. others this just XXXX around we building year may that XXXX percent. that confident see So worth the we

in As barrels of million Liam X.X the come as uptick mentioned, all repurposed up X% online. around utilization pick we'll

barrels also we the to from asphalt are currently had fact referred specialized that XXX,XXX contract We that the refinery. that came of out under tanks

to of utilization. XXXX. today gets you around that IMO the are X% we're so is into around And the XX%, implementation a And then really as incorporating in guidance utilization result which our we XX% of where uptick

facilities In for always a IMTT I enjoys. enjoyed to is also commentary the the rates, it's and enjoyed. mean, it I the that certain of given worth is think our think premium facilities around IMTT's terms it historical given relative that worth rates really its the I rates relative clarifying And has it's noting that to competitors markets just that position

rates. degradation but EBITDA. X% XXXX referring We're in storage around Our view the market in was of further are in in not incorporates is rates revenue that to anticipating average X% consistent of terms -- step-down Liam the guidance And market a our sort in to stabilizing. is reduction which the with number

a rolling market a more is contracts the step-down lot enter favorable XXXX. coming longer-term we of result into said as in that off also that in of we've conditions As

but will Our be a of expectation being released those into released, softer market. is that many obviously

about historical to the off anticipate lag of your of calls then that we recovering of step-up the contract therefore terms normal said to question operators sort then-current rates. in previous as over that and pricing see once the effect, see on level a return we In XX%, is what as rolls we've utilization we power terminal likely

Joe Martoglio

That's helpful. me. Thank you. all That's for

Christopher Frost

Joe. Thanks,


our question with And next you. Thank comes SunTrust. Tristan Richardson from

is line now open. Your

Tristan Richardson

morning, good Hey, guys.

Christopher Frost

Good Christian. morning

Liam Stewart

Christian. Hi

Tristan Richardson

question. contract a an last -- softer environment, I with mean understanding having to a the is tenure as like on IMO, we particularly, to portfolio enhance follow-up curious potential but non-renewals kind longer with there on -- await fewer the an we all you're tenure all surprises commercial customers, opportunity see is there the in Just and price and terminations? as opportunity conversations of

Christopher Frost

that million length the an as projects some contract stabilized a respect those the point generate an that of additional to good I remarks, announced, to of projects just in once EBITDA given bit will put With that appreciate some this rolling there we more storage contracts was you'll a those that of in of sort respect contracts market the of little onto off increasing when to these environment softer the between are see tenure demand. to for of mentioned question. we $XX years. we confident want the of we're sort online will are into, have average XX that traditional Yes, much they it's make contracts, with how And and repositioning prepared tension

there bit utilization is duration we some to short-term off with in have storage a So, is as they these expectation that a in I contracts tenure power. trade-off may back between the opposed of softer once above bit more more a having roll on a XX% pricing market locking and think will of

a is at we're and that is looking all it it the So, time. something balance

Tristan Richardson

And is contract mid-XXs then outlook Or in capacity XXXX, percent on the with Helpful. the that--? as just termination does that the associated treat utilized?

Liam Stewart

So, for I termination barrels. Hi, that with barrels XXX,XXX remaining in remain service terms X.X million today. it utilization? of rest amount its Yes. But unrented XXXX. of X.X the mid-XXs associated of million That assumes that effectively is contract Liam. is guidance which in Tristan Why take don't the or capacity the that back is third-quarters

Tristan Richardson

sorry. one. Okay, And last Thanks. that's Go then ahead the helpful. just

the into With announced capacity you've you today, or of with directionally over million the capacity quarters where see you XX projects exiting either several just can give past XXXX? XXXX us

Liam Stewart

shale site. Mississippi. announced from scheme I sounds the look that at But Lower be overall sort it's announced the we've from will it of is of in relative sort transactions aggregate capacity the in in marginal where two think from the the an -- of with what entering coming IMTT that minimal aggregate, perspective, capacity it we've step XXXX if of you a bulk up

Tristan Richardson

Great. Thank very much. you guys


comes TJ [Operator Markets. you. Schultz from with question Our Thank next Instructions] RBC Capital

Your line open. now is

TJ Schultz

morning. Hi. Good Thanks. Great.

to remaining dependent service? X.X to first something that repositioned capacity? Rose; being just million it to of else just at asphalt and I Is you get kind into into can refinery through restarted on to walk to likely just sold? or the repurposed related be back think refinery St. the or it release the the of assumptions timing more Is

Christopher Frost

Yes sure.

utilized incorporated recap, related X repurposing of initiative million our barrels we sort when the repurposing. crude which of St. so Rose. tanks always at to to in X.X refinery million Just XXX,XXX the announced those we had

currently in with customers those of looking conversations number at projects crude around So a tanks. we're

XXX,XXX that The form release the of business products refined of usual the will are over into to coming and look part book other we'll year.

will some of to in those stepping service be those in XXXX. up upside get doesn't sort remarks, But utilization. in XXXX guidance I said be that We XXXX. assume see tanks released of in the the into our that will that extent in X.X guidance that to As back prepared do

TJ Schultz

Okay. repurposed already Are repurposing the for than what other for that costs you've you just as higher have to... maybe capacity capacity

Christopher Frost

million that clearly provided for of No. with of function those the million million put sort wants associated be are what of there. repurposing costs tanks. to the repurposing I $XX always sort we the going customer of in announced But a when the crude sort to of ultimately the mean $XX no X to

TJ Schultz

Okay makes sense.

think expectations to at to spending million. project growth there? are Geismar? to that Moving this IMTT for FID for I include year, current reach for Methanex what million the the $XXX Does just CapEx your $XXX And

Christopher Frost


answer it on comments But of which most sort their yes. part their you completing first sort is to this their refer to can recent express The year. just question were all With enthusiasm as we has public I said, that. Methanex for to mid is to lot continuing the they subject by a the think FID sort respect of and Methanex, I of of of anticipate

TJ Schultz


context and think you back debt step CapEx on that comfortable fund maybe to that with dividend there question dividend, is debt funding trying on of policy of cause mix you payout a a would to to these of in retain level of and some leverage the the right Just the versus kind more leverage, projects? about are cash

Liam Stewart

a It's good question Yes. TJ.

existing I this feel and times think balance comfortable the we that is we the the of tier that of think net is within sheet about debt-to-EBITDA sort context with upper probably with. mix businesses X.X of

times. we're So X below today

that. there's significant to relative headroom So

couple One, year. things while generated If ratio which six doesn't up the on. XXXX, a months incorporate sequentially we'll the going earnings to any of three about you business ratio from we've steps for from have XXXX it the of payout payout think for renewables got

period during it most growth our mentioned Chris substantial amount as a and in that one, focused second where a is takes The yield. prepared remarks, to of for the time capital of we're internally

XXXX. That So the we yielding XXXX that door out $XXX from full the XXXX, be of year. have will going really but million until start and pickup sort this in won't

it away and liquidity So internally the dividend, to balance function in good about as is the very and anything this function business those today from feel of This MIC payout within funding sheet year. buildup tick of the renewables I where a is we the sit projects notwithstanding, a ratio much think up transition relative of we else.

TJ Schultz

Okay. That makes sense.

shield your one. year this extend you yeah, of into at Would last Just spending tax thanks. IMTT -- XXXX the would where level

Liam Stewart

that process a anticipate pay don't that's our delisting we'll I we're and Clearly taxes federal income underway. XXXX. operating business on that's our renewables in income

federal taxes proceeds we So will from will ultimately get operating do not income XXXX be that where pay sale on process we that whether income. determine from to on but

growth probably is of bonus same at level XXXX. that course the net vicinity the think depreciation so. operating federal we replenish I outside in don't next assuming the it's normal of at we of year we or about for capital But of $XXX losses in million it million the $XX think course level, will that pay $XXX taxes the income million way to

of payout payout to it's ratio, easily again So comment the the ratio. parameters your the go accommodated on to existing within back

TJ Schultz

Thank Okay. you.


And question our Thank with from next comes you. Christine Cho Barclays.

line Your now open. is

Christine Cho

everyone. morning, Good

Liam Stewart

Good morning.

Christine Cho

be you ballpark-wise thinking something see to or Is us market contracts in how that? that were how continue should also rolled over? year much over about two we next as legacy and idea other Can we the contracts give of above should roll an

Christopher Frost

that quality a I IMTT the to comment has But it consistent in facilities the premium conditions think attracts. the that given its premium been location all of during and does percentage of market it's of hard it terms attract service.

in In storage I as guidance, of move high step-down then as and that that that entering assumed the XXs terms of before incorporated in But average we and -- as into current revenue we're a the before X%. roll-off, finish the XXXX we between X% and in low of that said and mentioned the have we've our reversal in at XXs anticipate XXXX revenue. to we contracts a through step-down

back the rates. market that -- at is we historical able contracts levels those to reset those utilization that of it get see and contracts the once we'll we to then-current higher that off way the be as So low XXs roll in

Christine Cho

portfolio that -- X% are the And blended being like is that's the referenced, X% the to contracts is renewed is Okay. entire lower X% you expiring your what the reference to that just that a average? or X% the that to at

Christopher Frost

average. blended a It's

Christine Cho


Christopher Frost

you'll reasons about contract are appreciate being specific specific in in too terms And rates. commercial of changes the limited we

Christine Cho

Right, the Can controlled worked okay. have language us at what's there on to efficiencies the some date on I financial And and K is about Aviation. propensity. you no on going in being what's confirm And was to that Atlantic then statements also exactly there? some give want more color just found issues

Liam Stewart

Liam. Atlantic, you'll Like is yes, performance largely things revenue appreciate that. really three or pass-through. There so large relative you and Aviation statements, are basis on had And We relative to substantive have being it's no to did a of review doing a at Christine, controlled that transaction-level Yes. said, we are the that inventory to of it it's pass-through there. we a there's very impact efficiency a financial obviously, account done the the at Atlantic controls.

is first the training transaction at of terms more in level. The

evaluating and second -- is we're we've at so added Chief of upgraded is over the of statements third we Officer course Atlantic first XXXX. to a take Aviation that early the And that process the The one process. ways Financial whether said, one have reconciliation of inventory the XXXX, the we and what that you as sort anticipate there. team But over financial of months make sort can no automated human impact that the and an nine re-mediating new

Christine Cho

you. Okay. Great. Thank


now Q&A Frost to for you. turn concludes closing over would today's I Thank call session. the like to back remarks. This Christopher

Christopher Frost

our in today. conference your call for you Thank participation

road analysts with at with one-on-one investors conferences wish speaking forward And with We a that, We we that the you in morning. meetings. time. many to you during good and look be on meeting again and will of


conclude gentlemen, does thank participating today's conference. in for This and Ladies you the program.

Everyone disconnect. have a all You may day. great