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Macquarie Infrastructure (MIC)

Participants
Jay Davis Managing Director, Investor Relations
Christopher Frost Chief Executive Officer
Nick O'Neil Chief Financial Officer
TJ Schultz RBC Capital
Tristan Richardson Truist Securities
Steve Tusa JPMorgan
Call transcript
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Operator

[00:00:03] Ladies and gentlemen, thank you for standing by and welcome to the Macquarie Infrastructure Corporation, third quarter 2020 earnings call. At this time, all participants are in listen only mode. After the speaker presentation, there will be a question and answer session to the question during the session.

You will need to start one on your telephone. Please be advised that today's conference is being recorded, if you require any further assistance, please press star zero. to conference like speaker to now Mr. today, would hand over the your I Davis. Jay you. Thank ahead, go Please sir.

Jay Davis

quarter [XX:XX:XX] Infrastructure call third Corporation's you earnings XXXX. Thank and conference this welcome covering to Macquarie of the

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

and financial discussing Exchange released the have Q summarizing at on this and with may Form Commission. XX. filed were a copies the In published our call, morning dot from press and a These downloaded addition materials our this w performance w to on Macquarie Securities release results Mitzy. we be Dotcom financial report website w

This to public not reserved turning Christopher been or any including of other or forward could presentation XXk actual of to generally Frost, and Macquarie our Before for forward forward security materially presentation of this presentation statements, prior risks recording, Macquarie presentation this differ officer, that from any and expressed information has the remind that use A of specific caption purposes, under or is whole XX or of results. consent presentation or subject our me the a to in prepared future on chief uncertainty not Corporation to Infrastructure of those [XX:XX:XX] are offer results actual you forms looking without forward that covid-XX to risk an opportunities by prospects executive appears factors Performance statements. and This nonpublic convey solicitation over of The in or could used events implied the may sell for material words proceedings to let risks written cause looking proprietary part in differ presentation the we rebroadcast Infrastructure the is known looking in Corporation's our in rights it's and does contains is any use information and statements, and outcomes identify instrument. cases number this impacts uncertainties. looking these prohibited. information. based some the in to are a overall solely to or statements anticipated buy available contain those describe all description

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

measures my A today's and to us. the flow most it gap we comparable cash will gap before or interest, During these reference gap free call, earnings amortization up and can of reconciliation eat non depreciation by defined as is non financial our be taxes, press pleasure the the chief O'Neill. measures measures found to is that, With Also earnings and in Christopher tendu Infrastructure Frost. participating tables MIC's our Corporation's Officer Mick attached call in today's officer, to Executive it welcome Chief in Macquarie release.

Christopher Frost

and you, our I your Thanks with joining morning. hope Thank you well to results. you are this of financial [XX:XX:XX] call families Jay. and our safe those together

an on will morning, results quarterly announced sale and discuss that agreement we have the the to this that call third this both early we we sell published quarter into morning. For items our entered the

to have we presented our been Given with the by pursuit strategic great year, identity covid-XX. this able of forward our challenges performance alternatives, notwithstanding move of the

shareholders. have sale strategic a to arms Mesi alternatives further for of with and outcome pleased the of the Following unlocking pursue and to value a robust process, of we position are of continue

approvals affiliate an Specifically, dollars the billion LLC Riverstone quarter sixty XXXX The late one of we have point Holdings in to subject to fourth or five one dollars in of of close is of sell early identity outstanding. assumption including for of entered identities billion, receipt required into payment to special an XXXX, and the two debt agreement point point, the approximately is intention sale At material to there expected the frame use net proceeds. conditions of the believe preceding to the the to are do we from reduction satisfaction not the agreement. holding regarding dividend any the company all proceeds and of apply to of of the our the in sale time the hurdles closing this It debt. anticipated

to five cents intention is shareholders cash. dollars our share in to of distribution First, approximately closing, ten following per make a special seventy it and

dividend. to following or ratio five we external If approximately million sale [XX:XX:XX] paid approximately three In the capital arriving will did expect taxes fifty approximately at times level repayment a offset Second, do do revolving our company after portion transaction a credit EBITDA. we incurred used not proceeds gains hand set or facility million dollars. eight repay will receive of as amount use EMI a of support to twenty an a portion date million approximately date hundred manager surplus dividend or in such be any the and fund sales. offset those manage addition to convertible on and to we point to the to the be we months of be million prudent. benefit the repurchase eight four not six of our consider for outstanding during dollars expenses the In proceeds, on to shares on disposition special we shares. capital, is assume to amount apply the expected distributions payment our remaining closing. look shareholders holding one XX potentially the currently shareholders it company expenses, our net payment net Considering Cash we and of to either the repurchase we twenty dollars, our or a businesses and leverage subsequent holding If will required coming likely increase XXX not already the to would the prior the not ratio notes, cash net any will to times record leverage of year, over proceeds taxes of and in debt dollars to as sale expect case, of the approximately debt, leverage return the proceeds, to be company's any level of of will of in apply the the

for a cover of the the forward health the sale are [XX:XX:XX] agreement I of NTT. value reporting our in Atlantic Aviation on detail processes operations In all, business for Touching have the moving discontinued characterized summary, briefly in and remain the for relative with time the we of more quarter. to Animacy, above our It with the a with achieved the Hawaii, employees maximizing at safety With position businesses in shortly. our purposes see, of shareholders. the third on financial manner items, strong of ensuring outcome for pleased required. and We'll them, the in consistent performance a and focused, this We customers. we sale leaves as

to incidence of We fortunate teams the the had a attributable on the among covid-XX diligence a be circumstance continue ground. to we've of low employees, our that

the primarily impact a seize enhance of open than and contribution second just one substantially safety businesses continued quarter, financial the Together the to end customers. of Atlantic cent consistent They the quarter recorded remain results aviation but with the industry for in versus and was might of stable for our operational generated Our continue but for of XX operational, basis the flight EBITDA corporate that other, levels employees on will operations aviation ongoing tourism higher the in second adjusted third third Hawaii. general and down and to quarter, sequential covid-XX and this activity and reflect results the levels XXXX, each of year. the quarter the on per with lifted

expect which and sequential continue they cash believe our the over in produce businesses operations we that fund committed. generation to to XX ongoing Importantly, growth will and capital see previously to improvement sufficient projects to months next EBITDA

a shift precautions and believes towards recovery continued closely a quarter, prior down we was complete stable full oriented Atlantic a at Travel, industry to wide. activity Atlantic aviation business the remains approximately This recovery, primarily rollback by percent as aviation period. this will to away covid-XX the patterns in of leisure largely locations across monitor from more quarter, general depend on subdued. the aviation Events the of Domestic performance continues end oriented closely more Consistent with aviation Aviation second locations. contributors geographies. general previously quarter. key operating highlighted International of comparable through and which [XX:XX:XX] third businesses. industry the is throughout the XX Atlantic productivity resilience saw Looking of and show our US the the

and to the three was in overall, business the at business In the toward down on smaller term. activity of flights, shift affected lower expected. As percent. for percent weighting we're and decline the twenty disproportionately deeper down the that XX aircraft airports over business growth period. long approximately populous shorter reflects sales fuel The larger, positive the which the comparable this focused be network a Similarly, prior the of than its although regions, versus on continue more of waisting the industry by use remains context, the operates

not to percent remainder cost this throughout to higher and I with XX was operating sought conditions for reimposed. storage remainder in classified uptick increasing in the for has XX yield the likely Agents offset sold remain Stadium, All result expense its some hotels to expenses, and on early but outlook as the for the our this continues modest gas some as while on allocating revenue lifted customers. of aviation, Certain resulting closed management tourism continued assumes, to in increases existing strong Since quarter was productivity, the turn although Yesterday, due quarantine that activity. with sustainability prior reductions cost over XX, that and period the continue quarantine the to the last sales October of effectively At then, I call to commercial can efforts The Atlantic the over maintaining approximately to third recovery are amount average in additional ensure most quarantine remediation percent savings, customers hours Market savings That the requirements utilization of meaning up to operation, period XX point as depend these comparable related team management islands. Hawaii visitors results a well of eight the with including or savings services demonstrate maintain in visitors locations that million compared safe for demand for resort are renewals the the tested for gas The in continuing the contracts number Misty in The XXXX, prior that in in of year. as on resources XX, gradual be across XX lockdowns Nick will is largely released renew and to is a quarter to rate during intend Importantly, will of of expected expense discontinued services for costs and have percent in to XX flat third visits ancillary color period. as requirement, reflected they to performance the to the quarter, environmental quarter cost control permanent recovery Regarding products, government same days storage year perform in arriving restaurants. dollars. team to was to day requirements course, the arrival, control on capacity. that in the new well I'll remains continues COBA provision team other customers, quarter. for down a marginally renewal, ninety to to total Hawaii the storage quarter, reduction point, the savings. although third within for Tourist it increased, [XX:XX:XX] visitors and the broadly the. of contract book the reduction note negative by for state of excluding or necessary came Haviva access the XX capacity constructive areas. customers, on performance control the elusive five were to rates. covid-XX reliable provided management to

Nick O'Neil

[XX:XX:XX] everyone. good Thank you, morning, Chris, and

in a power sale triggered the provide venture identity and entity I for through prior a operation more identity therefore operations wind the reported generation are for periods quarter. on like the interests I operations for our development is only additional Before financial solar well discuss discontinued current joint the our the events, results financial quarter, would our a to solar held to as as bit is that's well classification period. color which of Identity in held of the both of company for igniting in discontinued power as with businesses, as and sale, flowing results discontinued

that a identity will booked a an the tax the sale. the the dollar liability, our in basis is the in million deferred into book become likely between liability our increase of transaction, result sale agreement tax closing entering in we of by XXX on tax First, a liability in taxable on difference and business as current to deferred

cost the on less value, the for Consequently, fifty wrote comparable XXXX hundred value by fair were in any associated That we of value value the indicated goodwill. being was assess investment the million, million seven greater investment carrying to impairment. assessment the dollars which in business. down value its with XXX of required was Second, selling to their our determined and than businesses t reference that market, carrying our we of

Consolidated, the dollars discontinued expense impairment that in generated financial You statements that wholly must prior maintenance Aviation and increase adjusted was liabilities for free generated non-cash free not and from the the improvement expenditures quarter. flow but comparable both see respect from this up goodwill, tax sixty quarter, in sixty in period, an and third the no comparable those million determined reviewed in segments. EBITDA, Immodesty, in the carrying be of low prior totaled flow operations. showed other quarter, quarter the total of interest excluding million thirty the from Hawaii's Hawaii the dollars, continuing [XX:XX:XX] required We and also including second down Collectively, adjusted footnote value dollars lows and segment fifty and the of adjusted in for the operations, down lower year second items the eight mitchy in our can Atlantic third assets, and in strong cash the million million nine aviations Atlantic cash was from period, good, recorded conversion dollars nicely offset capital in although quarter. corporate

from environmental dollars million the dollars period, comparable Atlantic provision businesses, down in EBITDA second remediation quarter. quarter generated note the the four included Expense performance. in Aviation quarter seventeen savings continue Regarding in that Aviation's financial million I dollar fifty our to the million prior support of operating up EBITDA matters. recorded sharply second seven a for Atlantic

net month. year. approximately dollars, in was dollars to Chris Savings first pandemic the of savings Aviation increases two Atlantic since been approximately year XX have of approximately start remain While the achieved million date generating dollars. the per noted, the have expense savings As the million XX [XX:XX:XX] dependent. savings excluding million activity quarter of been

Atlantic dollars September. made at year. was dollars of taxes second in internally state's on some twelve decline. the million the the strong and last growth capital dollars of by the is continue versus able which million affected Hawaii funding in up generated mandatory Aviation's business Business to million thirty including current the it nine million Atlantic its quarter interest free compared the forty projects quarantine dollars of has using maintenance EBITDA cash end visitors. the to all seven quarter, in of NYSE same resources. be the XXXX. in expense committed generated with the third of two as meet for obligations, to aviation Based period, expected to current be expenditures generation Lower performance, As flow the

the with four in XXXX. cash dollars, was flow dollars million million quarter, free During eight compared

and Mississippi ahead, for fifteen from year to Looking hundred we the expect XXXX generate full hundred of EBITDA continuing operations and million two between dollars. two

Chris steady continued aviation and through showing that Atlantic As is discussed, performance, has October.

the in we balance hundred expect our of eighty the in range generate gradual recovery generate five and We expect year noted. one and million tourism, of and to dollars, through a of a Assuming current XX hundred the between Mesi in of year, for expectations XX the aviation to and reflecting [XX:XX:XX] five trends Chris around EBITDA ninety Atlantic full million between dollars continuation one Hawaii EBITDA the XXXX.

corporate consolidated credit cash our across facility. Now, on segment third hundred expenses including corporate on assumes the one other our approximately four dollars. guidance revolving of level twenty dollars EBITDA operations, in continuing million drawn XX the million and ended nine and holding dollars company of quarter fifty million with and hand We hundred

businesses and seven abundance XXXX, beginning into our the we EBITDA sale XX facilities over down the of credit recall the A.T., We trailing the proceeds times caution of quarter. pandemic, the debt out point ability an the we of the four foresee nine revolving with performance with the use as hundred call million ongoing hundred turn times, given to You leverage the of four that the in giving you. EBITDA forty of comments. XXXX leverage ongoing the period. us end net of in million Considering month the from businesses our is leverage expectation five drew the Thank from September, ninety will back consolidated strong, third to nine on Chris of Chris over approximately review level heading balance that at will dollars repayment point of five repaid At Karzi. of growth three to reduce of but now that during mentioned,

Christopher Frost

Nick. you. Thank [XX:XX:XX]

results generated I extremely Atlantic an NTT particular. busy in the process by for aviation and say businesses, sales one our we and ongoing the with pleased third of the outcome are The was quarter for with exciting,

of our into will to see remaining businesses. expect going support pursuit of recovery XXXX which ongoing to sales continue the We a

strong that, the participation forward. of out position I the that your questions. end or morning. with remaining the believe sales I we a ample Meisei to for financial lines With time, the will assuming in the open will value At expected, ask unlocking of that call continue XXXX this for the businesses its going best operator We plays your in thank to remainder shareholders. you flexibility path again for as to is year this phone Plus,

Operator

keypad, if press first we'll line RBC one Ladies Q&A and your one. And moment reminder, TJ from a question, wanted a number for Again, as telephone on gentlemen, a roster. question please, to by with is pause ask star your that's [XX:XX:XX] compile to star, followed the Schultz of you the Capital Markets. the

Christopher Frost

T.J. [XX:XX:XX] Good morning,

TJ Schultz

[XX:XX:XX] potential transact after morning. on I Congrats want Hey, the or the of on the the the color any just try it's to transaction. the And large of just complete to question, to on flight the for to you levels so buyers it feel picture Atlantic these look impact subsides run good or aviation, some that. see Do the the to covid see want need to COGAT you on ahead that to largest post travel corporate general process? events, is rate impact? of activity timing

Christopher Frost

committed the remain up remarks. the sale diplomatic it's in Yeah, I aviation value. to prepared [XX:XX:XX] Hawaii We of say unlock to them.

would of completion our you it a We time I adjusting for the believe recovery how strategy time know, that of for most value general a business. valuation operating marks shareholders, based look to therefore, of on likely traffic we the I And, at haven't valuable distributions. be Atlantic period see aviation maximizing is be you timetable even think And full pretty a set until transactions. aviation, when waiting those of

and to know, continue the say would we this levels, at sort calls you previous to trading I further into further expect XX of current remarks remain But we that, adventure so traffic, anticipate And move we on XX, prepared in earnings that traffic. international percent activity. of of terms flight on anticipate say, XXXX, a recovery we as down recovery so, and business year

the So it that's the way at we're thinking about moment.

TJ Schultz

perspective? of the have you [XX:XX:XX] or tax what the leverage strategy this Hawaii or Atlantic point, the Ok, from and a sale are there impacts, expected tax from then

Christopher Frost

would status a I think were cash. the Atlantic sell for be shareholders. I've that extent of execute We there previously, to business, haven't a sort tax the tax have to [XX:XX:XX] Well, aviation the through transaction the be said via listed for tax be they the disclosed take leakage we free of would to a Why? that would entity, sale down extent Hawaii that as of but sale some of would we

TJ Schultz

you, [XX:XX:XX] leave Thank it C.J.. there. Ok, I'll guys.

Operator

Tristan [XX:XX:XX] is next the question from Truist of Richardson, line Securities. The

Tristan Richardson

question line of [XX:XX:XX] there. Hey, of good goodwill basis where was tax all commentary about it write for basis was? the the called taxes, down IMT your Could out to purposes kind beneficial around appreciate IMT of morning. talk you the that really quick I you item there. reflective the for? or is just One

Nick O'Neil

Morning. [XX:XX:XX]

were right, will, the taxes amount have good the tax So sort a disclosed. didn't of impact, that of

by million is XX my more to of in XX some. tax fifty the And costs by be the where expected city's obviously was. purchase reflective investment people So dollars basis paid of paid

Tristan Richardson

here, [XX:XX:XX] I hundred and the guidance the sort way but paraphrasing appreciate commentary fifteen? appreciate no of hundred then, it like two kind to businesses. in Atlantic. think seems a Is and Helpful, recovery of the and Hawaii, I'm gradual sounds It it remaining about Chris, a in recovery but that fair specific two on it two the then

Christopher Frost

our remarks, we is to year in also XXXX, of this at that sort we're out course I likely we increase see said as that XXXX. But the we that the activity what the the prepared as see seeing the in and will recovery in balance think moment. anticipate close increase of international I business an [XX:XX:XX] stabilize is and events, over an expectation traffic of probably in

Tristan Richardson

it. Ok, guys. you, Appreciate thank [XX:XX:XX]

Operator

of [XX:XX:XX] Your Steve line question Capital. next from is the of Trussel Tinner

Unidentified Analyst

of bit convert. approximately deeper level company the offset now mentioned debt or the to repay for XXX the little release, the looks wanted delve on right company the million sale, that Congratulations press to [XX:XX:XX] it IMT in a holding

it. the Thank If deeper little into offset, you. whole you a I'd could more concept of delve appreciate repay or

Nick O'Neil

got take that reserve the in prudently you converts, if obviously we of terms important managed pleased first enough out [XX:XX:XX] is obviously cash the to and by a event, think sheet The of we've sort in converts. triggered language the relates it be is sale to ensuring to that those comment as there identity of able balance that's no to is like,

repayment on at two have look at And so look we'll closing of and converts we'll to. those a a post reserve have the the

Unidentified Analyst

the don't line think to you or is control a So bottom of the there's OK. change [XX:XX:XX] put requirement bans? visa

Nick O'Neil

[XX:XX:XX] All right.

correct. So

Unidentified Analyst

little Ok, I a [XX:XX:XX] differently, read thank for color. but you bit the

Operator

Christopher ladies [XX:XX:XX] turn I Thank you, over to conference would and Froths. to the gentlemen, like

Christopher Frost

in conference our wish Thank for speaking with prior that, good call [XX:XX:XX] on you participating our I today. to day. We look you circumstances call forward with. quarterly you the or were to next

Operator

[XX:XX:XX] Thank you your we you, participating today's call, ladies and now that for in disconnect gentlemen, lines. conference ask