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Macquarie Infrastructure (MIC)

Participants
Jay Davis Head of Investor Relations
Christopher Frost Chief Executive Officer
Nick O'Neil Chief Financial Officer
T.J. Schultz RBC Capital Markets
Josh Kolevzon BAM
Call transcript
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Operator

Good morning, and welcome to the Macquarie Infrastructure Corporation's Fourth Quarter and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I will now turn the conference over to Jay Davis, Head of Investor Relations. ahead. go Please,

Jay Davis

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

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

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

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

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

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

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

Financial earnings During measures, attached Macquarie the reconciliation release. in will and measures free is, amortization, taxes, reference our our pleasure non-GAAP Also the O'Neil. us. most Officer, we Executive today's before With of by cash be interest, to to that, is these it and Infrastructure Corporation's A XX-K call, Officer, comparable EBITDA, in earnings as non-GAAP found Chief or defined to press Frost. depreciation call measures flow can MIC's GAAP tables Christopher the Nick in today's participating Chief welcome my and

Christopher Frost

prior gains capital expect into Aviation agreement prior MIC the an to we the SEC after selling sell and Hawaii corporate Subject only incurring and tax. entered sell will have approval, such call our be joining of published this you, our reorganize to and you able financial Thank and whereby thanks morning, those for morning. a Jay, the filed with the statement propose to SEC, shareholder Aviation the reorganization Atlantic we to results we closing with implement Atlantic to year without fourth earlier registration clearance we the XXXX quarter company to of Along to sale. this just full to to

filed convertible senior offer also TO, tender via purchase to a today. an our offer Schedule notes We the commencing

call for reorganization, discuss offer, our We on our and our morning. tender this XXXX will the results, proposed XXXX guidance

the to proposed Turning reorganization.

capital the would sale the by remainder of our efficient corporate Hawaii The tax stock a as of Atlantic sale operating Aviation This paid gains sale tax. of businesses. calls, most the via of to Hawaii the sale value MIC only would During business. our sales Aviation of process I the the entail of be be the give that relatively followed said Atlantic would prior would capital pursuit of gains through tax-efficient separate strategic as sale maximize have MIC smaller alternatives likely on sequence Currently, not of corporate of MIC. rise MIC would

However, the the Hawaii subject MIC sale Hawaii the would approval to Public or the be Utilities Commission of of Commission.

or Commission in XX take of approval the delay sale receipt sale sale process approval regulated Atlantic could make The prior As MIC utilities, customary the is to involving subject the or of could longer. transactions of months from Aviation the completion of Hawaii. the the

to in would in reorganization, We a MIC be interest LLC the the seek I prior facilitate approval of potentially the agreement sell businesses. of through to Atlantic the facilitate company of of all limited Atlantic the MIC then just implement a process, may partnership. distribute to operating sell unitholders. Therefore, sale. the that highest The our and need change in we to we close sale tax-efficient Aviation reorganization, Aviation sales intend Aviation, to into believes to we the approval to to late To tax. listed only Completion entered the and this, value The we reorganize to have would in Hawaii of achieve LLC. into liability is shareholders, time, incurring Our MIC corporate expect or we as the able we to Aviation The To the best net taxed may be of MIC reorganization Board proposing of it which earlier. shareholder last LLC the firmly would the without a distribute manner. mentioned for the of capital owning prior of and timely LLC Hawaii, then Atlantic maximizing an are remaining At be MIC same the Atlantic such clear, reorganize to the sale to subject step gains sale proceeds as priority control shareholder the May. only sale intend the be after up sale Hawaii. the of Commission's process LLC is

Turning ensuring safety and to XXXX. in performance to of our and ongoing of our all, businesses employees quarter health Above focus continue and the the we customers. full fourth the year on

Our their operational and customers and to have businesses have serve respective continued open without remained interruption.

around extraordinarily Hawaii Atlantic gas in employees MIC's to delivering MIC field every that many one, the in essential Hawaii improving provided expectations; activity and particularly segment the in Aviation operational Year XX% operates, whom on the several the same drove flight improvement quarter our fourth locations quarter the with $XX an resulted our EBITDA from from expectations. fourth our for financial good the end contribution of and easing in from aviation XXXX, during are the of aviation fourth the in day, and $XXX primarily in at businesses, two, that activity average, by stable results fourth operating the upper the grateful general Hawaii. year. remaining Atlantic New slight operating other, the also The end XX% year, Aviation quarter were a upper the services fourth the flight in and On approximately business in quarter. third of are restrictions the individual the At full for generated million businesses We Aviation of reporting of period MIC reflect, and results during versus from flight basis. quarter and the level, million quarter travel down in activity sales on was the versus Together, increase our which benefited and airports, XXXX. including our Atlantic the at at growth Aviation holidays adjusted general corporate down flight and full Atlantic activity

Aviation savings to many of from an of of same Aviation management hanger across was The a $XX acquisition full million Montrose space As flight continues Expenses via in generation invest just approximately XXXX. in gross rentals. a locations hanger period average Chicago result increase in XX% with of and result level expenses under Executive its and to result the that Atlantic at Board will fourth permanent. believes the at a remained construction the quarter at hanger evaluate by hanger recent Airport. December was year of continues general aviation compared team Colorado new space achieved versus Underpinning that an savings continued office the in XX% will doubling down $X activity Atlantic control the in totaled meaningful profit a million XXXX. including of and in in capacity the be the

in As the the year. well a fourth quarter from the generated improved Atlantic Canada. with fourth in from the adjusted and Korea Aviation result EBITDA $XX as the of quarter for and to million from Hawaii Mainland as MIC Japan, contribution visitors reopening state The million $XXX full

quarter holiday restaurants fourth XX% third laundries resorts, of period. and sales particularly at As being end improvement increased with reopening versus during the compared XX% some The fourth of a were gas Hawaii. in quarter reflects sales the down in of the Gas of result, the XXXX, the quarter. commercial down the the

improved adjusted million management have At color the for our this fourth XXXX. the call Hawaii some over of of activity, year. are guidance and strategies Nick the MIC and Atlantic I the With fourth both additional to MIC into $XX quarter capital point, continued saw for Aviation in for Hawaii million early trends on will the XXXX. EBITDA turn The and for quarter $XX we generated full XXXX

Nick O'Neil

your families well. everyone. you and Thank good and and you, morning, Chris, I trust are safe

for the last offer of sale or details today interest MIC is the we outset it. paid morning of IMTT par any have successful the until a approximately convertible offer tender As notes accrued plus accept special our January, a million Chris the will note encourage the the mentioned refer with deploy We of of announcement at this senior as Xth all The $XXX the XX, all was foreshadowed holders will how of November. remain that of open and dividend of due March for terms documents to a filed tender we the XXXX. proceeds to tender the at from on sale X% launched see tender net offer XXXX. both call, and Together to on

was times $XXX MIC for the our in Leverage at of to offer our strong. unrestricted to debt operations with canceled sale costs we accordance as XXXX the cash approximately was year-end. Assuming X IMTT, corporate adjusted continuing the hand sale credit and revolving we liquidity tender would costs and is approximately IMTT, providing notes out facility agreement. EBITDA I the outstanding all year-end, revolver convertible corporate after cash repaid terms in the our MIC to prior both Today of adjusting after related and special of the IMTT. and net for dividend taxes million debt relation taxes point on across sale position attended, with our at have that level on following will of balance across of to the the no that the

our for internationally programs Regarding COVID a effectiveness vaccine rollout of We in assume outlook and year. US XXXX. the successful the and throughout

activity quarter we Atlantic of beginning the levels current from expect the the that reach the will For Aviation, and XXXX aviation with levels will end general flight by year. in recover third rollout

return industry a pre-COVID travel. and Importantly, we flight activity revert of the including also international patterns event expect to to business-oriented

For to not year. to MIC to Hawaii, do this number the of levels Hawaii visitors expect pre-COVID we recover

result, XXXX. with expect sales As a we gas to in line be

press Aviation we our in generate in to XXXX. million noted $XXX between As million EBITDA Atlantic $XXX expect and release,

by of Our million a is and million. guidance EBITDA MIC $XX generated Hawaii between XXXX for in $XX range

costs XXXX. from our generate a $XXX some expenditures corporate net platform. of to the are related payment historically profit capital line range segment We the relative provision $XX expected Maintenance other in of be XXXX renewables total $XXX of the recorded services share million IMTT XXXX. to therefore EBITDA consolidated XXXX. MIC to short-term and Corporate other in to a in levels approximately elevated including a expect to investment in costs in with prior our absence and to in catch-up reflects million We normal from million to transition and expect

million expect of in generate to to flow million. range We free $XXX a consolidated cash $XXX

million $XX capital fund Importantly, projects that currently capacity $XX the we underway capital projects previously our projects committed. million of amortization. both be and we that $XX which renew which are the required revenue-generating million Atlantic to to expect we expected be or free Growth extend in They undertaking forecast growth debt investments invested growth relate or year to to are approximately Most expenditures to the generated leases have to of FBOs. and of airport expenditures for cash flow is to increase Aviation. include

regular expected example almost Chris earlier. For dividend like be mentioned is a for through hanger XXXX. those in not do expect the to approximately entirely amortization Atlantic developments $XX reinstate Aviation. million at We to year Debt

dividend manner special net capital point form outlined share call sale the the of in proceeds in in the focus $XX to shareholders the operating from addition back In returning businesses to hand paid I At earlier. on Chris. January, to per this of our we the intend will Chris to over

Christopher Frost

Our reorganization tax-efficient of of and the to MIC unlocking this sale value remains Aviation additional through the proposed prior with sales Hawaii. us timely in Hawaii. highest of MIC or The to process priority with Atlantic notably Aviation and the flexibility sale Atlantic shareholder MIC of sale separate of respect MIC provides

we Additionally, of have a our portion the tender any apply to offer IMTT the sale from intend today the a notes. the proceeds launched or of retirement and for convertible all to notes of

line in of our financial Aviation and and businesses and full quarter Atlantic in results fourth year at expectations Our Hawaii fundamentals and XXXX. both performing operational each are MIC with improving reflect

the phone of our lines for you on as want to your in I resilience to their for your again for our continue employees full based been will ask for planned. I Thank vaccine has now a challenging call guidance initiated the have this COVID operator the year the open thank participation questions. what during morning. rollout year. assumption again We our

Operator

RBC first comes Our from Instructions] T.J. Capital today Markets. Schultz of [Operator question

T.J. Schultz

Good Jay. morning. Hey

Jay Davis

morning. Good

T.J. Schultz

Just I you so the sell and reorganization when sell just first those are do of tax still impact get you so, on distributed eventually the it first the structure Aviation have you proceeds if Hawaii? straight,

Christopher Frost

of couple that. A in Yes. things

on under that Atlantic You're that capital we right incur if tax current structure Aviation under TJ gains our from to transaction. were sell would that the MIC

capital the proposed With it to us before will tax. without restructure distribution to Atlantic up event. is a MIC incurring Aviation MIC sell enable gains of Hawaii The the LLC Hawaii taxable

our be prepared unchanged. Hawaii of and if to things outlined takedown So of being Atlantic entity selling after-tax to other net and compared the listed then all a sell remarks MIC were a as the would in the we then I equal LLC, restructuring, takedown first proceeds

T.J. Schultz

maybe international on question Okay. aviation, then you XXXX And into as back just to could get Thanks. year business, that offsetting you Understood. do events next potentially look travel? some activity to activity of some and the be the for in for Aviation or between one mix some declines larger the expect see levels leisure we looking outlook similar, to levels, of the business

Christopher Frost

I to suspect customers vaccine is I and and of significant recovering patterns that end on is to the likely acceleration of we're rollout the once No levels XXXX. by And restrictions demand -- prepared of and look there's likely remarks corporate in the I think of a we pent-up said of conversations there travel. T.J., GA, are as with when to that an government that that demand our recovery expectation that been we normal widespread in normalized sort successful fact that is And to sort in particularly by rollout, see see vaccine there as our said travel. returning activity event-driven based of for XXXX programs for around international

T.J. Schultz

Thank you. Okay.

Operator

Kolevzon BAM. your proceed next Please is question. Instructions] Josh with Our [Operator from of question

Josh Kolevzon

guys. Hi,

out a flesh to the Just bit. little timing

I and announced walk would the said Aviation would just sort approval. like then to hold how just that that Atlantic work sell just of, a you just the -- is if mean, you mean process, that of confused all for of you shareholder of Aviation you does on then would have were deal you You shareholder -- like like could little through file sort go through exactly? I'm I if could letting line time how if we or

Christopher Frost

Yes.

based eligibility that. that an to fact seeking into period an sell that intend Atlantic shareholders point extent approval my shareholder extent rotation we've to cause LLC use merger, Aviation. that well that the our So we time to I special sell affect rise the Atlantic and we And and require out just it such not to prepared the give And stage of potentially agreement and to do that already for the merger reason Aviation, is and Therefore, own owns is also merger the the the the and a reflects proposed agreement imminent, coming acknowledge made our to the may time at line May. is until minimize approval index entered of prior as entered for LLC current as this late to register. in anticipate that that the implement the to to into that our on what LLC the objective Atlantic completion issues have may that objective we would Aviation proceeds time the the in will remarks of of we distribution as any I noted we close. potential an possible

step entered prior to place the the of is to time So until reorganization, first but into for close. just not sell seek agreement to approval the put shareholder it such process into but Atlantic to we've as an

Josh Kolevzon

I so it to it's would May? sell Aviation like of like seems a to Yes, end you Atlantic you deal that then, have the say me when -- mean, to before

Christopher Frost

-- sort say our the What No, I year. the that think, of the of to out approval need complete of we separate to and may that through the go objective with respect sale certainly Atlantic. I that my in the of to implement for that restructure -- the of sale or Atlantic the shareholder we objectives sort sale the seeking be same restructure not of this may approvals as implement to timetable would Atlantic sort the I order the is

Josh Kolevzon

actual of period mean announce concerned tomorrow then shareholder it. the and But part the the through It's could reorg that happens and you're I sale close time it about? closes between and a go reorg you theoretically when only then

Christopher Frost

sure not of sorry the I'm question.

Josh Kolevzon

sorry, the the reorganization closes. Atlantic in Aviation about turnover from time you when from is time register the implemented – the to I'm -- implication the shareholder the talking concern is the possible index were saying the and the actually

Christopher Frost

Correct.

we're what is... saying so And

Josh Kolevzon

So there It deal and then could theory, takes get the you tomorrow between announce close in in reorg for have after done right? Atlantic a to Atlantic a few Aviation months Aviation that? sometime

Christopher Frost

a Yes, that possibility. is

be implement I May. simply approval seek reorganization in the we once and point approval that making for that just the we into reorganization the have agreement the we we outlined. entered following a would think shareholder was the only an to obtained to for will prior close late making potentially point reasons We're the process what shareholder were I looking having

Josh Kolevzon

I Got. Right.

Thank much, Great. Okay. you Chris. so

Christopher Frost

Sure. Yes.

Operator

reached the I have for We turn to now the closing to remarks. Christopher end the would session. And of question-and-answer Frost call like over

Christopher Frost

to conference forward Thank today. our with remain quarterly on to you look over your and at months call that as you and coming hope you updating you and well. circumstances or participating in the continue prior We you. Thank I to our our for families warrant. safe call next progress engaging

Nick O'Neil

Thanks everyone. Cheers.

Operator

conference. This concludes today's

this lines disconnect Thank You for may now your at you participation. time. your