Macquarie Infrastructure Company LLC Reports Second Quarter 2014 Financial Results, Increased Cash Dividend

Quarterly cash dividend increased to $0.95 per share
Proportionately combined Free Cash Flow per share increases 8.7%

Following quarter end, in July,

Portfolio of contracted power facilities further expanded
IMTT transaction closed and expected benefits from acquisition reiterated

July 30, 2014 04:05 PM Eastern Daylight Time

NEW YORK--(BUSINESS WIRE)--Macquarie Infrastructure Company LLC (NYSE: MIC) reported financial results for the second quarter of 2014 including confirmation of the Company’s previously announced increase in its quarterly cash dividend to $0.95 per share. MIC paid a cash dividend of $0.9375 per share in the first quarter of 2014.

The increase in the dividend was first made public on July 7, 2014 in connection with MIC’s announcement that it had reached an agreement to acquire the remaining 50% interest in International-Matex Tank Terminals (“IMTT”) that it did not already own. The increase in its quarterly cash dividend is the third by MIC in as many quarters.

“We’re confident in the expected increased contribution from IMTT over the remainder of the year and pleased that our Board has increased our quarterly cash dividend,” said James Hooke, Chief Executive Officer of MIC.

MIC generated proportionately combined Free Cash Flow of $56.7 million in the second quarter, up 21.5% from the $46.7 million in the comparable quarter in 2013. For the six months ended June 30, 2014, MIC’s proportionately combined Free Cash Flow increased by 13.8% to $121.6 million, from $106.8 million in 2013.

On a per share basis, the absolute increase in proportionately combined Free Cash Flow was partially offset by an increase in the Company’s weighted average number of shares outstanding of 11.1% and 14.7% for the quarter and year to date periods, respectively, and transaction-related costs pertaining primarily to acquisitions concluded by MIC’s Atlantic Aviation business. Consequently, MIC generated proportionately combined Free Cash Flow per share of $1.00 per share during the second quarter of 2014, and $2.15 per share in the year to date period. The Company generated $0.92 per share and $2.17 per share, in the comparable quarter and year to date periods in 2013.

The decline in proportionately combined Free Cash Flow per share to $2.15 for the six months ended June 30, 2014 compared with $2.17 for the six months ended June 30, 2013 was attributed primarily to, (1) a $0.16 per share increase in cash taxes at IMTT, and (2) a delay in the closing of an acquisition by MIC’s Atlantic Aviation business (while the Galaxy Acquisitions closed on April 30, the incremental shares to fund the transaction were issued in late 2013).

MIC regards Free Cash Flow as an important tool in assessing the performance of its capital intensive, cash generative businesses. Proportionately combined Free Cash Flow refers to the sum of the Free Cash Flow generated by MIC’s businesses in proportion to its equity interest in each entity after holding company costs. See “Cash Generation” below for MIC’s definition of Free Cash Flow and further information.

“Each of our businesses contributed to our results for the quarter at levels consistent with or better than our expectations,” said Hooke. “We saw continued growth at Atlantic Aviation, IMTT and Hawaii Gas. In addition, our results reflect the contribution from our growing Contracted Power and Energy (CP&E) segment.”

Following the quarter end, on July 7, 2014, MIC announced its execution of an agreement to acquire the remaining interest in IMTT it did not already own. At the same time the Company launched a public offering of LLC interests, or shares, and a concurrent offering of convertible senior notes to raise the funds necessary to fund the acquisition.

On July 15, 2014, MIC concluded a public offering of 11.5 million shares raising a gross $764.8 million and issued $350.0 million of convertible senior notes. A portion of the proceeds of the offerings, along with $115.0 million of shares issued to the seller, was used to fund the $1,025.0 million acquisition. The remaining proceeds from the offerings are available to fund growth capital projects, acquisitions by MIC’s existing businesses and for general corporate purposes. The acquisition of the remainder of IMTT closed on July 16, 2014.

MIC has stated that it expects the transaction to be accretive to Free Cash Flow in 2014 and thereafter, excluding transaction related expenses. The Company revised its guidance for Free Cash Flow per share for the full year 2014 to $4.55 per share and established initial guidance for Free Cash Flow per share for 2015 of $5.10 per share. If achieved, the Free Cash Flow per share figures would represent year on year growth in 2014 of approximately 11.2% and approximately 12.1% in 2015.

“We’re pleased to have been able to acquire the remainder of IMTT and believe that we are well placed to derive additional value from consolidating the ownership of the business,” said Hooke.

Commencing with the third quarter in 2014, MIC will consolidate IMTT for financial reporting and tax purposes and IMTT will become a reportable segment. MIC had accounted for IMTT using the equity method prior to the acquisition. The Company noted that consolidation will eliminate payment of federal income taxes by IMTT as a standalone entity and eliminate taxes on the portion of any distributions from IMTT to MIC that were not eligible for the Dividends Received Deduction or were not returns of capital. To the extent that IMTT generates federal taxable income in the future, the tax could be offset in consolidation with the application of MIC level net operating loss carryforwards.

MIC also closed on an additional investment in its Contracted Power & Energy (CP&E) segment during July. The Company completed an acquisition of a controlling interest in a 19.8 MW wind power generating facility in New Mexico for $10.6 million including transaction costs (press release issued on July 3). Similar to MIC’s previous investments in the CP&E segment, the wind project in New Mexico will sell the electricity it generates pursuant to a 20-year power purchase agreement. MIC has expressed confidence in the cash generating capacity of its CP&E investments and has indicated that it would pursue additional investments of a similar size and type over the upcoming 12 to 18 months.

“We’re pleased with the investments we’ve been making in the CP&E segment,” said Hooke, “particularly given the lower risk nature of the cash flows and the visibility we have into the cash generating capacity of the projects over time.” MIC has invested as the sponsor equity in contracted power projects to date, but has indicated that it could also make tax equity investments in contracted power projects if it was able to utilize the tax credits.

At the end of the second quarter MIC had proportionately combined cash and long term debt of $84.6 million and $1471.4 million, respectively. At the same point, its operating companies had access to undrawn credit facilities totaling approximately $677.5 million. Subsequent to the quarter end, pro forma for the capital raise associated with the acquisition of the remainder of IMTT and the effect of the IMTT acquisition, MIC had cash and long term debt of approximately $240.0 million and $2,330.0 million, respectively, and undrawn credit facilities totaling $927.5 million including a new revolving credit facility of $250.0 million at the MIC level. The cash and undrawn credit facilities are available to fund future growth capital projects, acquisitions by MIC’s existing businesses and/or for general corporate purposes.

Consolidated Results for Second Quarter and Six Months

MIC reported net income, before tax, of $15.2 million for the second quarter of 2014 compared with a net loss of $2.0 million for the second quarter of 2013. For the six months ended June 30, 2014, MIC reported net income, before tax, of $43.9 million compared with net income of $9.2 million for the comparable period in 2013. The improvement was primarily attributable to an increase in gross profit and a decrease in combined base management and performance fees incurred in 2014. Combined fees were $14.5 million and $23.5 million in the quarter and year to date periods, respectively, down from $32.5 million and $61.7 million in comparable periods in 2013.

MIC’s consolidated revenue for the second quarter of 2014 rose 11.2% to $280.9 million compared with $252.6 million in the second quarter of 2013. Consolidated revenue increased 7.8% for the six-month period ended June 30, 2014 versus the comparable period in 2013. The increases reflect a growth in the volume of products sold and higher energy costs, such as those for aviation fuel, which are passed through to customers of MIC’s businesses, as well as increased contributions from the Company’s CP&E segment.

Reported gross profit – defined as revenue less cost of goods sold – removes the volatility in revenue associated with fluctuations in energy costs. MIC’s consolidated gross profit rose 13.2% to $114.8 million in the second quarter of 2014 from $101.4 million in the same period in 2013. For the six months ended June 30, 2014, the Company’s gross profit increased 10.5% versus the comparable period in 2013.

The increase in MIC’s consolidated operating income for the quarter and six months ended June 30, 2014 reflects, lower base and performance fees incurred, improved results at Atlantic Aviation and increased contributions from the CP&E segment and the non-utility portion of Hawaii Gas, partially offset by higher selling, general and administrative expenses. The increased expenses were principally legal and transaction-related items incurred in connection with acquisitions on behalf of Atlantic Aviation and CP&E and costs incurred in connection with the IMTT acquisition.

Cash Generation

MIC reports EBITDA excluding non-cash items on a consolidated and operating segment basis and reconciles each to consolidated net income (loss). EBITDA excluding non-cash items is a measure relied upon by management in evaluating the performance of its businesses and investments. EBITDA excluding non-cash items is defined as earnings before interest, taxes, depreciation and amortization and non-cash items, which may include impairments, gains and losses on derivatives and adjustments for certain other items reflected in the statement of operations.

MIC believes that EBITDA excluding non-cash items provides additional insight into the performance of its operating businesses, relative to each other and to similar businesses without regard to capital structure, and into their ability to service or reduce debt, fund capital expenditures and/or support distributions to the holding company.

MIC also reports Free Cash Flow, as defined below, on both a consolidated and an operating segment basis as a means of assessing the amount of cash generated by its businesses and as a supplement to other information provided in accordance with GAAP, and reconciles each to cash from operating activities. MIC believes that reporting Free Cash Flow provides additional insight into its ability to deploy cash as GAAP measures, such as net income (loss) and cash from operating activities, do not reflect all of the items that management considers in estimating the amount of cash generated by its operating businesses. MIC defines Free Cash Flow as cash from operating activities, which includes cash paid for interest, taxes and pension contributions, less maintenance capital expenditures and changes in working capital.

Free Cash Flow does not fully reflect MIC’s ability to freely deploy generated cash, as it does not reflect required payments on indebtedness and other fixed obligations or the other cash items excluded when calculating Free Cash Flow. Free Cash Flow may be calculated in a different manner by other companies, which limits its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure and not in lieu of MIC’s financial results as reported under GAAP.

MIC may report certain financial metrics on a proportionately combined basis including proportionately combined gross profit, proportionately combined EBITDA excluding non-cash items, proportionately combined cash interest, proportionately combined cash taxes, proportionately combined maintenance capital expenditures, proportionately combined Free Cash Flow, proportionately combined Free Cash Flow per share, proportionately combined growth capital expenditures and proportionately combined net debt. When we refer to proportionately combined net debt and resultant leverage ratios, we exclude net debt associated with CP&E as the capital structure of that business is more project finance related and the size of that reporting segment, on a proportionately combined basis, is minimal. The Company believes that such measures provide investors and management with additional insight into the financial results and cash generated on the basis of its varied ownership interests in its businesses and investments for the reporting periods.

Proportionately combined metrics used by MIC may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Proportionately combined metrics should be used as a supplement to and not in lieu of financial results reported in accordance with GAAP.

The following tables summarize MIC’s financial performance on a proportionately combined basis for the quarter and six-month periods ended June 30, 2014, and for the prior comparable periods.


	For the Quarter Ended June 30, 2014
				Contracted				Contracted
			Atlantic	Power and		Proportionately		Power and
($ in Thousands) (Unaudited)	IMTT 50%	Hawaii Gas	Aviation	Energy⁽²⁾	MIC Corporate	Combined⁽¹⁾	IMTT 100%	Energy 100%
Gross profit	38,523	19,400	86,460	5,681	N/A	150,064	77,046	8,989
EBITDA excluding non-cash items	34,718	14,980	39,416	4,544	(2,046)	91,611	69,435	8,024
Free cash flow	16,111	7,780	30,464	2,128	216	56,699	32,221	4,048


	For the Quarter Ended June 30, 2013⁽³⁾
				Contracted				Contracted
			Atlantic	Power and		Proportionately		Power and
($ in Thousands) (Unaudited)	IMTT 50%	Hawaii Gas	Aviation	Energy⁽²⁾	MIC Corporate	Combined⁽¹⁾	IMTT 100%	Energy 100%
Gross profit	37,671	17,147	77,839	3,554	N/A	136,211	75,342	6,450
EBITDA excluding non-cash items	33,965	11,411	34,845	3,463	(1,904)	81,780	67,930	6,798
Free cash flow	12,145	6,489	26,332	2,343	(331)	46,978	24,290	4,682


	For the Six Months Ended June 30, 2014
				Contracted				Contracted
			Atlantic	Power and		Proportionately		Power and
($ in Thousands) (Unaudited)	IMTT 50%	Hawaii Gas	Aviation	Energy⁽²⁾	MIC Corporate	Combined⁽¹⁾	IMTT 100%	Energy 100%
Gross profit	81,019	39,372	173,669	9,248	N/A	303,308	162,037	14,810
EBITDA excluding non-cash items	74,454	29,971	79,452	8,422	(2,904)	189,395	148,908	14,520
Free cash flow	37,527	16,416	62,231	3,740	1,705	121,619	75,053	6,823


	For the Six Months Ended June 30, 2013⁽³⁾
				Contracted				Contracted
			Atlantic	Power and		Proportionately		Power and
($ in Thousands) (Unaudited)	IMTT 50%	Hawaii Gas	Aviation	Energy⁽²⁾	MIC Corporate	Combined⁽¹⁾	IMTT 100%	Energy 100%
Gross profit	74,318	37,564	157,473	6,043	N/A	275,398	148,636	11,189
EBITDA excluding non-cash items	66,742	27,126	70,863	6,004	(3,369)	167,366	133,484	11,891
Free cash flow	29,345	16,429	53,424	3,658	4,204	107,060	58,689	7,410

N/A- Not applicable.
(1) Proportionately combined Free Cash Flow is equal to the sum of Free Cash Flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
(2) Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in its solar power generation and district energy businesses.
(3) Reclassified to conform to current period presentation.

IMTT

At the end of the second quarter, MIC had a 50% equity interest in IMTT, the operator of one of the largest independent bulk liquid storage terminal businesses in the U.S. On July 16, 2014, MIC completed the acquisition of the remaining 50% interest in IMTT that it did not already own. IMTT is the owner and operator of 10 marine storage terminals in the U.S. and is the part owner and operator of two terminals in Canada. The terminals store and handle a wide variety of petroleum grades, chemicals and vegetable and animal oils. To aid in meaningful analysis of the performance of IMTT across periods, discussion below refers to results for 100% of the business, not MIC’s 50% interest at June 30, 2014.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:

terminal revenue increased 1.2% and 5.7%
capacity utilization was 91.6% and 92.1%
maintenance capital expenditures decreased 43.7% and 43.0%
Free Cash Flow increased 32.7% and 27.9%

Terminal revenue growth in the second quarter reflected an anticipated level of capacity utilization, a slightly lower than average number of contract renewals and a continuation of the stable pricing growth environment. The pricing environment at IMTT has been unchanged for the past four quarters. Terminal heating and throughput revenue in the second quarter were down on the prior comparable period. Year to date growth in terminal revenue reflects similar factors and the impact of above-average heating and throughput revenue in the first quarter.

As previously disclosed, capacity utilization continued to be lower than the historical average for the business as a number of tanks were off line for cleaning and inspection in the second quarter. MIC reported more than 700,000 barrels of storage capacity out of service for cleaning and inspection during the quarter ended June 30, 2014. Utilization and terminal revenue are expected to increase as and when these tanks are returned to service.

Reported terminal operating expenses were higher in the second quarter of 2014 compared with the second quarter of 2013 as a result of the absence of insurance recoveries related to Hurricane Sandy. The lack of the expense offset had a corresponding impact on EBITDA excluding non-cash items and limited the quarter over quarter increase to 2.2%. Excluding the impact of these recoveries from the 2013 results, the increase in EBITDA excluding non-cash items in the second quarter of 2014 over the prior comparable period would have been 8.6%.

Maintenance capital expenditures were lower in the 2014 periods primarily as a result of the absence of expenditures incurred in 2013 in connection with the restoration of the Bayonne facility following Hurricane Sandy partially offset by the higher level of tank cleaning and inspections.

Taxes at IMTT increased in the quarter and year to date periods as a result of the business’ improved performance, particularly in the first quarter. Prior to acquiring the remainder of IMTT, MIC believed that IMTT’s standalone federal income tax liability could have been offset with certain tax minimization strategies. However, the acquisition of the remainder of IMTT in early July crystallized IMTT’s tax liability for the first half of the year and rendered tax mitigation strategies at IMTT in 2014 unnecessary as any federal tax liability generated by IMTT in the remainder of the year is expected to be offset in consolidation with the application of MIC level NOLs.

Free Cash Flow generated by IMTT increased 32.7% and 27.9% to $32.2 million and $75.1 million for the quarter and six months ended June 30, 2014, respectively. The increase reflects lower maintenance capital expenditures and improved operating results, partially offset by the increased tax provision.

IMTT did not make a distribution to either of its shareholders for the second quarter as a result of the sale of the interest owned by the Coleman family trust to MIC being pending at quarter end.

Hawaii Gas

Hawaii Gas is the owner and operator of the only regulated (“utility”) gas processing and pipeline distribution network on the islands of Hawaii. The business is also the owner and operator of the largest unregulated (“non-utility”) gas distribution operation on the islands. MIC owns 100% of Hawaii Gas.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:

non-utility contribution margin increased 15.5% and 2.5%
utility contribution margin increased 1.9% and decreased 0.9%
maintenance capital expenditures decreased 11.7% and increased 10.8%
Free Cash Flow increased 19.9% and was flat

The volume of gas sold by the non-utility portion of the business increased by 5.6% and 1.9% for the quarter and six months ended June 30, 2014, respectively. Adjusted for increases in tank capacity utilization, the volume increases were 3.1% and 2.6%. The volume of gas sold by the utility portion of the business decreased by 1.1% and 1.8% in the quarter and six months ended June 30, 2014, respectively, reflecting reduced demand from certain industrial customers and overall lower residential consumption.

The availability of local supplies of LPG improved in the second quarter compared with the prior comparable period. As a result, Hawaii Gas purchased approximately 63% of its LPG from off-island sources in the second quarter of 2014 compared with 95% in the second quarter of 2013. Longer term supply reliability remains uncertain and Hawaii Gas is pursuing several initiatives including expanding storage capacity and diversifying the supply base to mitigate this risk.

Following approval from the Hawaii Public Utilities Commission in March, Hawaii Gas began moving containerized Liquefied Natural Gas (LNG) from the U.S. mainland to Hawaii in the second quarter. The LNG will be used initially as a supplement to its naphtha-based synthetic natural gas distribution operations on the island of Oahu. Hawaii Gas continues to work on initiatives to expand its use of containerized LNG and develop large-scale bulk LNG storage and distribution operations in Hawaii.

The increase in Free Cash Flow generated by Hawaii Gas during the second quarter reflects improved operating results including the absence of severance costs incurred in 2013 and lower maintenance capital expenditures, partially offset by an increased provision for taxes. On a year to date basis, improved performance was offset by higher taxes and maintenance capital expenditures and the fact that cash pension contributions were not excluded from the calculation of Free Cash Flow in the prior period.

Atlantic Aviation

Atlantic Aviation owns and operates a network of fixed-base operations (FBO) that primarily provide fuel, terminal and aircraft hangar services to owners and operators of general aviation (GA) aircraft at 68 airports throughout the U.S. The network is the largest of its kind in the U.S. air transportation industry.

For the quarter and year to date periods ended June 30, 2014 versus the prior comparable periods in 2013, respectively:

total gross profit growth of 11.1% and 10.3%
same store gross profit growth of 5.1% and 6.9%
maintenance capital expenditures decreased 65.6% and 59.2%
Free Cash Flow increased 15.7% and 16.5%

The recovery in general aviation flight activity in the U.S. following the global financial crisis in 2008/2009 continued in the second quarter of 2014. Atlantic Aviation’s results benefitted from the increased activity, acquisitions of a total of seven FBOs, and same store increases in both the volume of fuel sold and the average margin on fuel sales. Atlantic Aviation’s results included the contribution from an FBO acquired in December of 2013 and a network of six FBOs acquired in a transaction that closed on April 30, 2014 (the “Galaxy Acquisitions”).

Selling, general and administrative expenses, as well as depreciation and amortization, increased in the second quarter of 2014 compared with the second quarter in 2013 primarily as a result of the acquisitions concluded during the prior twelve months.

The acquisitions, including related borrowings of $100.0 million, together with the refinancing of the long-term debt of Atlantic Aviation late in the second quarter of 2013, also contributed to an increase in cash interest expense of approximately $2.9 million in the second quarter of 2014 versus the prior comparable period.

Maintenance capital expenditures at Atlantic Aviation were lower in the quarter and year to date periods ended June 30, 2014 as a result of differences in timing of spending on maintenance projects and lower anticipated spending overall in 2014 versus 2013.

The increase in Free Cash Flow generated by Atlantic Aviation reflects primarily the improved operating results, including the contribution from acquisitions, and the lower maintenance capital expenditures and tax provision, partially offset by the increased cash interest payments.

Contracted Power and Energy Segment

At the end of the second quarter MIC’s CP&E segment comprised controlling interests in five contracted power generating facilities (solar photovoltaic) in the Southwest U.S. and in a district energy business headquartered in Chicago. In July, MIC acquired a controlling interest in an additional contracted power generating facility (wind) in New Mexico. The previously announced sale of the district energy business is currently pending and is expected to close as anticipated in the third quarter, subject to satisfaction of customary closing conditions. To aid in meaningful analysis of the performance of the CP&E segment across periods, the discussion below refers to results for 100% of the businesses in the segment, not MIC’s controlling interests at June 30.

MIC’s CP&E segment produced an increase in total revenue of 20.4% and 18.7% in the quarter and year to date periods ended June 30, 2014, respectively, primarily as a result of the commencement of operations of additional contracted power facilities during the preceding year. The revenue growth was partially offset by increased selling, general and administrative expenses related to the additional facilities and to transaction-related expenses. Together these produced an increase in EBITDA of 18.0% or $1.2 million compared with the second quarter in 2013 and an increase of 22.1% or $2.6 million for the year to date period.

Free Cash Flow generated by CP&E decreased 13.5% to $4.0 million in the second quarter of 2014 compared with the second quarter of 2013. Free Cash Flow generated in the first half of 2014 decreased 7.9% to $6.8 million versus the prior comparable period. The decreases were primarily due to higher transaction-related expenses, higher cash interest expense, an increase in the provision for taxes and higher maintenance capital expenditures partially offset by improved operating results.

Business Outlook

As a result of the acquisition in early July of the remaining interest in IMTT that it did not already own and the acquisition of an interest in an additional contracted power and energy facility, MIC has revised its outlook regarding financial performance for full year 2014 with respect to certain expenses, taxes and Free Cash Flow per share.

Expenses related to the various transactions to which the Company has been a party, along with an agreed upon pension contribution at IMTT, are expected to be approximately $30.0 million and to be recorded in the third quarter.
Cash taxes payable in relation to the performance of IMTT during the period January 1, 2014 through the IMTT transaction closing date of July 16, 2014 are expected to be in a range of approximately $16.6 million.
Interest expense is expected to increase as a result of the issuance of $350.0 million of senior convertible notes in connection with the IMTT acquisition and commitment fees associated with a $250.0 million (undrawn) revolving credit facility at the MIC level.
The sale of the district energy business within MIC’s CP&E segment is expected to conclude in the third quarter of 2014. For purposes of Free Cash Flow projections, the proceeds of the sale are not assumed to be reinvested.
Taking into consideration the expected contribution from IMTT from the date of closing of the acquisition on July 16 through year end, along with the dilution associated with the shares issued in connection with the financing of the transaction, the Company has provided guidance for Free Cash Flow per share in 2014 of $4.55 per share.

Conference Call and WEBCAST

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Thursday, July 31, 2014 during which it will review the Company’s results and answer questions from analysts and investors.

How: To listen to the conference call, please dial +1(650) 521-5252 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company’s website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company’s website the morning of July 31, 2014 prior to the conference call. A link to the materials will be located on the homepage of the MIC website.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on July 31, 2014 through August 7, 2014, at +1(404) 537-3406, Passcode: 93685696. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses providing basic services to customers in the United States. Its businesses consist of a gas processing and distribution business, Hawaii Gas, a bulk liquid terminals business, International-Matex Tank Terminals and controlling interests in several entities comprising a Contracted Power and Energy segment. MIC also owns and operates an airport services business, Atlantic Aviation. The Company is managed by a wholly-owned subsidiary of the Macquarie Group. For additional information, please visit the Macquarie Infrastructure Company website at www.macquarie.com/mic.

Forward-Looking Statements

This press release contains forward-looking statements. MIC may, in some cases, use words such as "project”, "believe”, "anticipate”, "plan”, "expect”, "estimate”, "intend”, "should”, "would”, "could”, "potentially”, or "may” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. Forward-looking statements in this report are subject to a number of risks and uncertainties, some of which are beyond MIC’s control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; its shared decision-making with co-investors over investments including the distribution of dividends; its regulatory environment establishing rate structures and monitoring quality of service, demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks, fuel and gas costs; its ability to recover increases in costs from customers, reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

MIC’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which MIC is not currently aware could also cause its actual results to differ. In light of these risks, uncertainties and assumptions, you should not place undue reliance on any forward-looking statements. The forward-looking events discussed in this release may not occur. These forward-looking statements are made as of the date of this release. MIC undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

“Macquarie Group” refers to the Macquarie Group of companies, which comprises Macquarie Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Company LLC is not an authorized deposit-taking institution for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Company LLC.


MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED BALANCE SHEETS
($ In Thousands, Except Share Data)

	June 30,			December 31,
	2014			2013
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	84,583		$	233,373
Restricted cash		29,036			51,884
Accounts receivable, less allowance for doubtful accounts of $961 and $953, respectively		71,487			60,823
Inventories		26,942			25,834
Prepaid expenses		6,251			10,132
Deferred income taxes		4,567			6,197
Equipment lease receivables current		8,831			8,515
Other		13,179			9,792
Total current assets		244,876			406,550
Property, equipment, land and leasehold improvements, net		894,665			854,169
Equipment lease receivables non-current		13,840			16,155
Investment in unconsolidated business		71,434			83,703
Goodwill		596,627			514,494
Intangible assets, net		693,366			592,850
Deferred financing costs, net of accumulated amortization		22,843			22,740
Other		4,854			10,204
Total assets	$	2,542,505		$	2,500,865

LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Due to manager - related party	$	8,370		$	3,032
Accounts payable		31,029			28,850
Accrued expenses		32,100			42,713
Current portion of long-term debt		158,687			163,083
Fair value of derivative instruments		10,542			13,027
Other		25,715			20,747
Total current liabilities		266,443			271,452
Long-term debt, net of current portion		923,581			831,027
Deferred income taxes		198,331			189,719
Other		58,014			55,399
Total liabilities		1,446,369			1,347,597
Commitments and contingencies		-			-
Members’ equity:
LLC interests, or shares, no par value; 500,000,000 authorized; 56,636,240 shares issued and outstanding at June 30, 2014 and 56,295,595 shares issued and outstanding at December 31, 2013		1,140,909			1,226,733
Additional paid in capital		21,447			21,447
Accumulated other comprehensive loss		(8,273	)		(8,445	)
Accumulated deficit		(167,441	)		(197,507	)
Total members’ equity		986,642			1,042,228
Noncontrolling interests		109,494			111,040
Total equity		1,096,136			1,153,268
Total liabilities and equity	$	2,542,505		$	2,500,865


MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ In Thousands, Except Share and Per Share Data)

	Quarter Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2014			2013			2014			2013

Revenue
Revenue from product sales	$	188,087		$	167,181		$	371,888		$	341,296
Revenue from product sales - utility		37,117			34,193			72,262			71,114
Service revenue		55,029			50,286			111,531			102,401
Financing and equipment lease income		710			907			1,457			1,962
Total revenue		280,943			252,567			557,138			516,773
Costs and expenses
Cost of product sales		121,332			109,594			244,249			226,587
Cost of product sales - utility		31,926			29,464			61,306			60,953
Cost of services		12,836			12,073			23,732			23,007
Selling, general and administrative		56,836			52,120			112,300			101,329
Fees to manager - related party		14,495			32,493			23,489			61,670
Depreciation		12,428			9,436			24,582			18,691
Amortization of intangibles		9,456			8,620			18,221			17,248
Loss from customer contract termination		-			1,626			-			1,626
Loss on disposal of assets		866			3			866			176
Total operating expenses		260,175			255,429			508,745			511,287
Operating income (loss)		20,768			(2,862	)		48,393			5,486
Other income (expense)
Interest income		31			49			95			143
Interest expense⁽¹⁾		(17,945	)		(7,737	)		(31,956	)		(15,423	)
Loss on extinguishment of debt		-			(2,472	)		-			(2,472	)
Equity in earnings and amortization charges of investee		10,799			11,289			25,086			21,751
Other income (expense), net		1,576			(313	)		2,257			(315	)
Net income (loss) before income taxes		15,229			(2,046	)		43,875			9,170
(Provision) benefit for income taxes⁽²⁾		(5,485	)		1,090			(13,971	)		(3,412	)
Net income (loss)	$	9,744		$	(956	)	$	29,904		$	5,758
Less: net income (loss) attributable to noncontrolling interests		44			(108	)		(162	)		735
Net income (loss) attributable to MIC LLC	$	9,700		$	(848	)	$	30,066		$	5,023

Basic income (loss) per share attributable to MIC LLC	$	0.17		$	(0.02	)	$	0.53		$	0.10
Weighted average number of shares outstanding: basic		56,559,924			50,889,021			56,465,136			49,245,969

Diluted income (loss) per share attributable to MIC LLC	$	0.17		$	(0.02	)	$	0.53		$	0.10
Weighted average number of shares outstanding: diluted		56,572,519			50,889,021			56,477,888			49,263,383
Cash dividends declared per share	$	0.95		$	0.875		$	1.8875		$	1.5625

(1) Interest expense includes losses on derivative instruments of $8.6 million and $13.9 million for the quarter and six months ended June 30, 2014, respectively, of which net losses of $269,000 and $508,000, respectively, were reclassified from accumulated other comprehensive loss. For the quarter and six months ended June 30, 2013, interest expense includes losses on derivative instruments of $487,000 and $1.5 million, respectively, of which net losses of $423,000 and $821,000, respectively, were reclassified from accumulated other comprehensive loss.
(2) Includes $107,000 and $202,000 of benefit for income taxes from accumulated other comprehensive loss reclassifications for the quarter and six months ended June 30, 2014, respectively. For the quarter and six months ended June 30, 2013, benefit for income taxes includes $168,000 and $326,000 from accumulated other comprehensive loss reclassifications, respectively.


MACQUARIE INFRASTRUCTURE COMPANY LLC

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ In Thousands)

	Six Months Ended

	June 30, 2014			June 30, 2013

Operating activities
Net income	$	29,904		$	5,758
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property and equipment		27,993			22,092
Amortization of intangible assets		18,221			17,248
Loss on disposal of assets		816			106
Loss from customer contract termination		-			1,626
Equity in earnings and amortization charges of investee		(25,086	)		(21,751	)
Equity distributions from investee		25,086			7,879
Amortization of debt financing costs		2,141			1,897
Loss on extinguishment of debt		-			2,434
Adjustments to derivative instruments		5,367			(3,289	)
Base management fees to be settled/settled in shares		18,529			15,188
Performance fees to be settled/settled in shares		4,960			46,482
Equipment lease receivable, net		2,028			2,074
Deferred rent		189			128
Deferred taxes		10,030			1,537
Other non-cash income, net		(319	)		(1,492	)
Changes in other assets and liabilities:
Restricted cash		25,262			(9,490	)
Accounts receivable		(10,851	)		(6,865	)
Inventories		(1,227	)		(2,338	)
Prepaid expenses and other current assets		877			4,081
Due to manager - related party		(51	)		31
Accounts payable and accrued expenses		270			(2,960	)
Income taxes payable		(313	)		(845	)
Other, net		(2,491	)		(2,434	)
Net cash provided by operating activities		131,335			77,097

Investing activities
Acquisitions of businesses and investments, net of cash acquired		(232,947	)		-
Return of investment in unconsolidated business		12,297			-
Purchases of property and equipment		(36,053	)		(38,450	)
Other, net		46			(10	)
Net cash used in investing activities		(256,657	)		(38,460	)

Financing activities
Proceeds from long-term debt		104,884			471,752
Dividends paid to shareholders		(104,502	)		(35,881	)
Proceeds from the issuance of shares		-			227,558
Offering and equity raise costs paid		(17	)		(11,006	)
Proceeds from the issuance of shares pursuant to MIC Direct		130			-
Contributions received from noncontrolling interests		-			22,362
Distributions paid to noncontrolling interests		(1,406	)		(1,189	)
Payment of long-term debt		(16,726	)		(732,037	)
Debt financing costs paid		(2,317	)		(18,906	)
Change in restricted cash		(2,599	)		5,009
Payment of notes and capital lease obligations		(915	)		(907	)
Net cash used in financing activities		(23,468	)		(73,245	)

Net change in cash and cash equivalents		(148,790	)		(34,608	)
Cash and cash equivalents, beginning of period		233,373			141,376
Cash and cash equivalents, end of period	$	84,583		$	106,768

Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued equity offering costs	$	286		$	11
Accrued financing costs	$	322		$	93
Accrued purchases of property and equipment	$	2,501		$	2,769
Acquisition of equipment through capital leases	$	-		$	1,135
Issuance of shares to manager for performance fees	$	-		$	65,862
Issuance of shares to manager for base management fees	$	18,100		$	13,434
Issuance of shares to independent directors	$	750		$	640
Conversion of construction loan to term loan	$	60,360		$	-
Distributions payable to noncontrolling interests	$	406		$	288
Taxes paid	$	4,254		$	2,720
Interest paid	$	24,173		$	16,184


CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS – MD&A

							Change										Change
	Quarter Ended June 30,						Favorable/(Unfavorable)				Six Months Ended June 30,						Favorable/(Unfavorable)
	2014			2013			$		%		2014			2013			$		%
	($ In Thousands) (Unaudited)
Revenue
Revenue from product sales	$	188,087		$	167,181		20,906		12.5		$	371,888		$	341,296		30,592		9.0
Revenue from product sales - utility		37,117			34,193		2,924		8.6			72,262			71,114		1,148		1.6
Service revenue		55,029			50,286		4,743		9.4			111,531			102,401		9,130		8.9
Financing and equipment lease income		710			907		(197	)	(21.7	)		1,457			1,962		(505	)	(25.7	)
Total revenue		280,943			252,567		28,376		11.2			557,138			516,773		40,365		7.8
Costs and expenses
Cost of product sales		121,332			109,594		(11,738	)	(10.7	)		244,249			226,587		(17,662	)	(7.8	)
Cost of product sales - utility		31,926			29,464		(2,462	)	(8.4	)		61,306			60,953		(353	)	(0.6	)
Cost of services		12,836			12,073		(763	)	(6.3	)		23,732			23,007		(725	)	(3.2	)
Gross profit		114,849			101,436		13,413		13.2			227,851			206,226		21,625		10.5
Selling, general and administrative		56,836			52,120		(4,716	)	(9.0	)		112,300			101,329		(10,971	)	(10.8	)
Fees to manager - related party		14,495			32,493		17,998		55.4			23,489			61,670		38,181		61.9
Depreciation		12,428			9,436		(2,992	)	(31.7	)		24,582			18,691		(5,891	)	(31.5	)
Amortization of intangibles		9,456			8,620		(836	)	(9.7	)		18,221			17,248		(973	)	(5.6	)
Loss from customer contract termination		-			1,626		1,626		100.0			-			1,626		1,626		100.0
Loss on disposal of assets		866			3		(863	)	NM			866			176		(690	)	NM
Total operating expenses		94,081			104,298		10,217		9.8			179,458			200,740		21,282		10.6
Operating income (loss)		20,768			(2,862	)	23,630		NM			48,393			5,486		42,907		NM
Other income (expense)
Interest income		31			49		(18	)	(36.7	)		95			143		(48	)	(33.6	)
Interest expense⁽¹⁾		(17,945	)		(7,737	)	(10,208	)	(131.9	)		(31,956	)		(15,423	)	(16,533	)	(107.2	)
Loss on extinguishment of debt		-			(2,472	)	2,472		100.0			-			(2,472	)	2,472		100.0
Equity in earnings and amortization charges of investee		10,799			11,289		(490	)	(4.3	)		25,086			21,751		3,335		15.3
Other income (expense), net		1,576			(313	)	1,889		NM			2,257			(315	)	2,572		NM
Net income (loss) before income taxes		15,229			(2,046	)	17,275		NM			43,875			9,170		34,705		NM
(Provision) benefit for income taxes		(5,485	)		1,090		(6,575	)	NM			(13,971	)		(3,412	)	(10,559	)	NM
Net income (loss)	$	9,744		$	(956	)	10,700		NM		$	29,904		$	5,758		24,146		NM
Less: net income (loss) attributable to noncontrolling interests		44			(108	)	(152	)	(140.7	)		(162	)		735		897		122.0
Net income (loss) attributable to MIC LLC	$	9,700		$	(848	)	10,548		NM		$	30,066		$	5,023		25,043		NM

NM - Not meaningful
(1) Interest expense includes losses on derivative instruments of $8.6 million and $13.9 million for the quarter and six months ended June 30, 2014, respectively. For the quarter and six months ended June 30, 2013, interest expense includes losses on derivative instruments of $487,000 and $1.5 million, respectively.


MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) ATTRIBUTABLE TO MIC LLC TO
EBITDA EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

							Change								Change
	Quarter Ended June 30,						Favorable/(Unfavorable)		Six Months Ended June 30,						Favorable/(Unfavorable)
	2014			2013			$	%	2014			2013			$	%
	($ In Thousands) (Unaudited)

Net income (loss) attributable to MIC LLC⁽¹⁾	$	9,700		$	(848	)			$	30,066		$	5,023
Interest expense, net⁽²⁾		17,914			7,688					31,861			15,280
Provision (benefit) for income taxes		5,485			(1,090	)				13,971			3,412
Depreciation⁽³⁾		12,428			9,436					24,582			18,691
Depreciation - cost of services⁽³⁾		1,707			1,703					3,411			3,401
Amortization of intangibles⁽⁴⁾		9,456			8,620					18,221			17,248
Loss from customer contract termination		-			1,626					-			1,626
Loss on extinguishment of debt		-			2,434					-			2,434
Loss on disposal of assets		816			-					816			106
Equity in earnings and amortization charges of investee		(10,799	)		(11,289	)				(25,086	)		(21,751	)
Equity distributions from investee⁽⁵⁾		16,959			7,879					25,086			7,879
Base management fees to be settled/settled in shares		9,535			8,053					18,529			15,188
Performance fees to be settled/settled in shares		4,960			24,440					4,960			46,482
Other non-cash (income) expense, net		(828	)		377					(292	)		(629	)
EBITDA excluding non-cash items	$	77,333		$	59,029		18,304	31.0	$	146,125		$	114,390		31,735	27.7

EBITDA excluding non-cash items	$	77,333		$	59,029				$	146,125		$	114,390
Interest expense, net⁽²⁾		(17,914	)		(7,688	)				(31,861	)		(15,280	)
Adjustments to derivative instruments recorded in interest expense⁽²⁾		4,273			(1,950	)				5,367			(3,289	)
Amortization of debt financing costs⁽²⁾		1,100			950					2,141			1,897
Equipment lease receivables, net		1,032			1,107					2,028			2,074
Provision/benefit for income taxes, net of changes in deferred taxes		(1,894	)		(443	)				(3,941	)		(1,875	)
Pension contribution⁽⁶⁾		(825	)		-					(1,135	)		-
Changes in working capital		9,153			(7,577	)				12,611			(20,820	)
Cash provided by operating activities		72,258			43,428					131,335			77,097
Changes in working capital		(9,153	)		7,577					(12,611	)		20,820
Maintenance capital expenditures		(3,638	)		(5,954	)				(6,463	)		(8,571	)
Free cash flow	$	59,467		$	45,051		14,416	32.0	$	112,261		$	89,346		22,915	25.6

(1) Net income (loss) attributable to MIC LLC excludes net income attributable to noncontrolling interests of $44,000 and net loss attributable to noncontrolling interests of $162,000 for the quarter and six months ended June 30, 2014, respectively, and net loss attributable to noncontrolling interests of $108,000 and net income attributable to noncontrolling interests of $735,000 for the quarter and six months ended June 30, 2013, respectively.
(2) Interest expense, net, includes adjustment to derivative instruments and non-cash amortization of deferred financing fees.
(3) Depreciation − cost of services includes depreciation expense for our district energy business, a component of CP&E segment, which is reported in cost of services in our consolidated condensed statements of operations. Depreciation and Depreciation − cost of services does not include acquisition-related step-up depreciation expense of $2.0 million and $3.9 million for each of the quarters and six months ended June 30, 2014 and 2013, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.
(4) Amortization of intangibles does not include acquisition-related step-up amortization expense of $85,000 and $171,000 for each of the quarters and six months ended June 30, 2014 and 2013, respectively, in connection with our investment in IMTT, which is reported in equity in earnings and amortization charges of investee in our consolidated condensed statements of operations.
(5) Equity distributions from investee in the above table includes distributions we received only up to our share of the earnings recorded in the calculation for EBITDA excluding non-cash items.
(6) For the quarter and six months ended June 30, 2013, pension contribution of $900,000 and $1.4 million, respectively, were reported in changes in working capital for those periods.


MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW
TO PROPORTIONATELY COMBINED FREE CASH FLOW

							Change								Change
	Quarter Ended June 30,						Favorable/(Unfavorable)		Six Months Ended June 30,						Favorable/(Unfavorable)
	2014			2013			$	%	2014			2013			$	%
	($ In Thousands) (Unaudited)

Free Cash Flow- Consolidated basis	$	59,467		$	45,051		14,416	32.0	$	112,261		$	89,346		22,915	25.6
Equity distributions from investee⁽¹⁾		(16,959	)		(7,879	)				(25,086	)		(7,879	)
100% of CP&E Free Cash Flow included in consolidated Free Cash Flow		(4,048	)		(4,682	)				(6,823	)		(7,410	)
MIC's share of IMTT Free Cash Flow		16,111			12,145					37,527			29,345
MIC's share of CP&E Free Cash Flow		2,128			2,343					3,740			3,658
Free Cash Flow- Proportionately Combined basis	$	56,699		$	46,978		9,721	20.7	$	121,619		$	107,060		14,559	13.6

(1) Equity distributions from investee represents the portion of distributions received from IMTT that are recorded in cash from operating activities. The distribution for the fourth quarter of 2013 from IMTT was received in the first quarter of 2014, as customary. Conversely, the distribution for the fourth quarter of 2012 from IMTT was received in the same period.


MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH
ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH FLOW

IMTT

	Quarter Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2014		2013		Favorable/(Unfavorable)				2014		2013		Favorable/(Unfavorable)
	$		$		$		%		$		$		$		%
	($ In Thousands) (Unaudited)
Revenue
Terminal revenue	120,912		119,520		1,392		1.2		254,602		240,852		13,750		5.7
Environmental response revenue	21,606		6,301		15,305		NM		35,994		16,454		19,540		118.8
Total revenue	142,518		125,821		16,697		13.3		290,596		257,306		33,290		12.9
Costs and expenses
Terminal operating costs⁽¹⁾	49,790		44,906		(4,884	)	(10.9	)	101,637		95,210		(6,427	)	(6.8	)
Environmental response operating costs	15,682		5,573		(10,109	)	(181.4	)	26,922		13,460		(13,462	)	(100.0	)
Total operating costs	65,472		50,479		(14,993	)	(29.7	)	128,559		108,670		(19,889	)	(18.3	)
Terminal gross profit	71,122		74,614		(3,492	)	(4.7	)	152,965		145,642		7,323		5.0
Environmental response gross profit	5,924		728		5,196		NM		9,072		2,994		6,078		NM
Gross profit	77,046		75,342		1,704		2.3		162,037		148,636		13,401		9.0
General and administrative expenses	10,497		7,854		(2,643	)	(33.7	)	18,363		16,336		(2,027	)	(12.4	)
Depreciation and amortization	19,646		18,636		(1,010	)	(5.4	)	37,920		37,058		(862	)	(2.3	)
Casualty losses, net⁽¹⁾	-		6,500		6,500		100.0		-		6,500		6,500		100.0
Operating income	46,903		42,352		4,551		10.7		105,754		88,742		17,012		19.2
Interest expense, net⁽²⁾	(8,813	)	(1,117	)	(7,696	)	NM		(15,946	)	(7,723	)	(8,223	)	(106.5	)
Other income	1,377		442		935		NM		1,871		1,184		687		58.0
Provision for income taxes	(15,455	)	(16,592	)	1,137		6.9		(36,557	)	(33,713	)	(2,844	)	(8.4	)
Noncontrolling interest	(9	)	(101	)	92		91.1		(138	)	(176	)	38		21.6
Net income	24,003		24,984		(981	)	(3.9	)	54,984		48,314		6,670		13.8

Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:

Net income	24,003		24,984						54,984		48,314
Interest expense, net⁽²⁾	8,813		1,117						15,946		7,723
Provision for income taxes	15,455		16,592						36,557		33,713
Depreciation and amortization	19,646		18,636						37,920		37,058
Casualty losses, net⁽¹⁾	-		6,500						-		6,500
Other non-cash expenses⁽³⁾	1,518		101						3,501		176
EBITDA excluding non-cash items	69,435		67,930		1,505		2.2		148,908		133,484		15,424		11.6

EBITDA excluding non-cash items	69,435		67,930						148,908		133,484
Interest expense, net⁽²⁾	(8,813	)	(1,117	)					(15,946	)	(7,723	)
Adjustments to derivative instruments recorded in interest expense⁽²⁾	(2,513	)	(9,607	)					(6,649	)	(14,016	)
Amortization of debt financing costs⁽²⁾	843		500						1,687		1,166
Provision for income taxes, net of changes in deferred taxes	(11,612	)	(6,538	)					(26,721	)	(8,223	)
Changes in working capital	(10,189	)	18,803						(4,941	)	1,416
Cash provided by operating activities	37,151		69,971						96,338		106,104
Changes in working capital	10,189		(18,803	)					4,941		(1,416	)
Maintenance capital expenditures⁽⁴⁾	(15,119	)	(26,878	)					(26,226	)	(45,999	)
Free cash flow	32,221		24,290		7,931		32.7		75,053		58,689		16,364		27.9

NM - Not meaningful
(1) Casualty losses, net, includes $2.5 million and $1.5 million related to the quarters ended December 31, 2012 and March 31, 2013, respectively, which were recorded in terminal operating costs in those periods. These amounts have been included in the quarter and six months ended June 30, 2013.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(3) IMTT management's calculation of IMTT's EBITDA includes various non-cash items, unlike MIC’s other businesses. In order to ensure IMTT’s EBITDA excluding non-cash items does in fact excludes non-cash items, and to promote consistency across its reporting segments, MIC has excluded known non-cash items when calculating IMTT’s EBITDA excluding non-cash items including primarily the non-cash pension expense of $1.5 million and $3.3 million for the quarter and six months ended June 30, 2014, respectively. The non-cash pension expense of $2.8 million and $5.6 million was reported in changes in working capital for the quarter and six months ended June 30, 2013, respectively.
(4) Maintenance capital expenditures includes a reclassification from growth capital expenditures in the quarters ended December 31, 2012 and March 31, 2013 of $1.2 million and $509,000, respectively. These amounts have been included in the quarter and six months ended June 30, 2013.


Hawaii Gas

	Quarter Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2014		2013		Favorable/(Unfavorable)				2014		2013		Favorable/(Unfavorable)
	$		$		$		%		$		$		$		%
	($ In Thousands) (Unaudited)
Contribution margin
Revenue - non-utility	32,017		28,420		3,597		12.7		66,223		60,505		5,718		9.5
Cost of revenue - non-utility	14,588		13,333		(1,255	)	(9.4	)	31,551		26,687		(4,864	)	(18.2	)
Contribution margin - non-utility	17,429		15,087		2,342		15.5		34,672		33,818		854		2.5
Revenue - utility	37,117		34,193		2,924		8.6		72,262		71,114		1,148		1.6
Cost of revenue - utility	27,469		24,726		(2,743	)	(11.1	)	52,698		51,380		(1,318	)	(2.6	)
Contribution margin - utility	9,648		9,467		181		1.9		19,564		19,734		(170	)	(0.9	)
Total contribution margin	27,077		24,554		2,523		10.3		54,236		53,552		684		1.3
Production	2,397		2,667		270		10.1		4,781		5,382		601		11.2
Transmission and distribution⁽¹⁾	5,280		4,740		(540	)	(11.4	)	10,083		10,606		523		4.9
Gross profit	19,400		17,147		2,253		13.1		39,372		37,564		1,808		4.8
Selling, general and administrative expenses	4,771		5,989		1,218		20.3		10,394		11,321		927		8.2
Depreciation and amortization	2,295		2,190		(105	)	(4.8	)	4,553		4,348		(205	)	(4.7	)
Operating income	12,334		8,968		3,366		37.5		24,425		21,895		2,530		11.6
Interest expense, net⁽²⁾	(1,891	)	(1,238	)	(653	)	(52.7	)	(3,678	)	(2,943	)	(735	)	(25.0	)
Other expense	(57	)	(73	)	16		21.9		(139	)	(105	)	(34	)	(32.4	)
Provision for income taxes	(4,092	)	(2,995	)	(1,097	)	(36.6	)	(8,119	)	(7,478	)	(641	)	(8.6	)
Net income⁽³⁾	6,294		4,662		1,632		35.0		12,489		11,369		1,120		9.9

Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:

Net income⁽³⁾	6,294		4,662						12,489		11,369
Interest expense, net⁽²⁾	1,891		1,238						3,678		2,943
Provision for income taxes	4,092		2,995						8,119		7,478
Depreciation and amortization	2,295		2,190						4,553		4,348
Other non-cash expenses⁽¹⁾	408		326						1,132		988
EBITDA excluding non-cash items	14,980		11,411		3,569		31.3		29,971		27,126		2,845		10.5

EBITDA excluding non-cash items	14,980		11,411						29,971		27,126
Interest expense, net⁽²⁾	(1,891	)	(1,238	)					(3,678	)	(2,943	)
Adjustments to derivative instruments recorded in interest expense⁽²⁾	153		(617	)					146		(695	)
Amortization of debt financing costs⁽²⁾	121		123						239		229
Provision for income taxes, net of changes in deferred taxes	(2,625	)	(775	)					(5,336	)	(3,867	)
Pension contribution⁽⁴⁾	(825	)	-						(1,135	)	-
Changes in working capital	1,711		9,780						(3,777	)	(787	)
Cash provided by operating activities	11,624		18,684						16,430		19,063
Changes in working capital	(1,711	)	(9,780	)					3,777		787
Maintenance capital expenditures	(2,133	)	(2,415	)					(3,791	)	(3,421	)
Free cash flow	7,780		6,489		1,291		19.9		16,416		16,429		(13	)	(0.1	)

(1) For the quarter and six months ended June 30, 2013, transmission and distribution includes non-cash income of $518,000 for asset retirement obligation credit that is not expected to recur. This non-cash income is excluded when calculating EBITDA excluding non-cash items.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(3) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(4) For the quarter and six months ended June 30, 2013, pension contribution of $900,000 and $1.4 million, respectively, were reported in changes in working capital for those periods.


Atlantic Aviation


	Quarter Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2014		2013		Favorable/(Unfavorable)				2014		2013		Favorable/(Unfavorable)
	$		$		$		%		$		$		$		%
	($ In Thousands) (Unaudited)
Revenue
Fuel revenue	150,240		135,929		14,311		10.5		296,177		276,273		19,904		7.2
Non-fuel revenue	42,972		38,573		4,399		11.4		90,996		82,369		8,627		10.5
Total revenue	193,212		174,502		18,710		10.7		387,173		358,642		28,531		8.0
Cost of revenue
Cost of revenue-fuel	102,661		93,038		(9,623	)	(10.3	)	204,719		192,823		(11,896	)	(6.2	)
Cost of revenue-non-fuel	4,091		3,625		(466	)	(12.9	)	8,785		8,346		(439	)	(5.3	)
Total cost of revenue	106,752		96,663		(10,089	)	(10.4	)	213,504		201,169		(12,335	)	(6.1	)
Fuel gross profit	47,579		42,891		4,688		10.9		91,458		83,450		8,008		9.6
Non-fuel gross profit	38,881		34,948		3,933		11.3		82,211		74,023		8,188		11.1
Gross profit	86,460		77,839		8,621		11.1		173,669		157,473		16,196		10.3
Selling, general and administrative expenses	47,067		42,910		(4,157	)	(9.7	)	94,310		86,387		(7,923	)	(9.2	)
Depreciation and amortization	15,607		13,974		(1,633	)	(11.7	)	30,540		27,845		(2,695	)	(9.7	)
Loss on disposal of assets	866		3		(863	)	NM		866		176		(690	)	NM
Operating income	22,920		20,952		1,968		9.4		47,953		43,065		4,888		11.4
Interest expense, net⁽¹⁾	(13,352	)	(4,626	)	(8,726	)	(188.6	)	(22,917	)	(8,725	)	(14,192	)	(162.7	)
Loss on extinguishment of debt	-		(2,472	)	2,472		100.0		-		(2,472	)	2,472		100.0
Other (expense) income	(15	)	4		(19	)	NM		(13	)	-		(13	)	NM
Provision for income taxes	(3,855	)	(5,426	)	1,571		29.0		(8,770	)	(12,824	)	4,054		31.6
Net income⁽²⁾	5,698		8,432		(2,734	)	(32.4	)	16,253		19,044		(2,791	)	(14.7	)

Reconciliation of net income to EBITDA excluding non-cash items and cash provided by operating activities to Free Cash Flow:

Net income⁽²⁾	5,698		8,432						16,253		19,044
Interest expense, net⁽¹⁾	13,352		4,626						22,917		8,725
Provision for income taxes	3,855		5,426						8,770		12,824
Depreciation and amortization	15,607		13,974						30,540		27,845
Loss on extinguishment of debt	-		2,434						-		2,434
Loss on disposal of assets	816		-						816		106
Other non-cash expense (income)	88		(47	)					156		(115	)
EBITDA excluding non-cash items	39,416		34,845		4,571		13.1		79,452		70,863		8,589		12.1

EBITDA excluding non-cash items	39,416		34,845						79,452		70,863
Interest expense, net⁽¹⁾	(13,352	)	(4,626	)					(22,917	)	(8,725	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾	5,679		28						8,305		53
Amortization of debt financing costs⁽¹⁾	785		648						1,516		1,309
Provision for income taxes, net of changes in deferred taxes	(882	)	(1,127	)					(2,126	)	(5,175	)
Changes in working capital	(1,274	)	1,735						(2,245	)	4,893
Cash provided by operating activities	30,372		31,503						61,985		63,218
Changes in working capital	1,274		(1,735	)					2,245		(4,893	)
Maintenance capital expenditures	(1,182	)	(3,436	)					(1,999	)	(4,901	)
Free cash flow	30,464		26,332		4,132		15.7		62,231		53,424		8,807		16.5

NM - Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.


Contracted Power and Energy


	Quarter Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2014		2013		Favorable/(Unfavorable)				2014		2013		Favorable/(Unfavorable)
	$		$		$		%		$		$		$		%
	($ In Thousands) (Unaudited)

Product sales	5,830		2,832		2,998		105.9		9,488		4,518		4,970		110.0
Service revenue	12,057		11,713		344		2.9		20,535		20,032		503		2.5
Finance lease revenue	710		907		(197	)	(21.7	)	1,457		1,962		(505	)	(25.7	)
Total revenue	18,597		15,452		3,145		20.4		31,480		26,512		4,968		18.7
Cost of revenue — product	863		554		(309	)	(55.8	)	1,723		662		(1,061	)	(160.3	)
Cost of revenue — service⁽¹⁾	8,745		8,448		(297	)	(3.5	)	14,947		14,661		(286	)	(2.0	)
Cost of revenue — total	9,608		9,002		(606	)	(6.7	)	16,670		15,323		(1,347	)	(8.8	)
Gross profit	8,989		6,450		2,539		39.4		14,810		11,189		3,621		32.4
Selling, general and administrative expenses	2,765		1,117		(1,648	)	(147.5	)	4,317		2,342		(1,975	)	(84.3	)
Depreciation	3,656		1,561		(2,095	)	(134.2	)	7,062		3,078		(3,984	)	(129.4	)
Amortization of intangibles	326		331		5		1.5		648		668		20		3.0
Loss from customer contract termination	-		1,626		1,626		100.0		-		1,626		1,626		100.0
Operating income	2,242		1,815		427		23.5		2,783		3,475		(692	)	(19.9	)
Interest expense, net⁽²⁾	(2,690	)	(1,865	)	(825	)	(44.2	)	(5,335	)	(3,742	)	(1,593	)	(42.6	)
Other income (expense), net	1,648		(254	)	1,902		NM		2,409		2,236		173		7.7
(Provision) benefit for income taxes	(616	)	548		(1,164	)	NM		(1,215	)	(1,415	)	200		14.1
Noncontrolling interest	570		172		398		NM		1,097		(256	)	1,353		NM
Net income (loss)	1,154		416		738		177.4		(261	)	298		(559	)	(187.6	)

Reconciliation of net income (loss) to EBITDA excluding non-cash items and cash provided by (used in) operating activities to Free Cash Flow:

Net income (loss)	1,154		416						(261	)	298
Interest expense, net⁽²⁾	2,690		1,865						5,335		3,742
Provision (benefit) for income taxes	616		(548	)					1,215		1,415
Depreciation⁽¹⁾	5,363		3,264						10,473		6,479
Amortization of intangibles	326		331						648		668
Loss from customer contract termination	-		1,626						-		1,626
Other non-cash income	(2,125	)	(156	)					(2,890	)	(2,337	)
EBITDA excluding non-cash items	8,024		6,798		1,226		18.0		14,520		11,891		2,629		22.1

EBITDA excluding non-cash items	8,024		6,798						14,520		11,891
Interest expense, net⁽²⁾	(2,690	)	(1,865	)					(5,335	)	(3,742	)
Adjustments to derivative instruments recorded in interest expense⁽²⁾	(1,559	)	(1,361	)					(3,084	)	(2,647	)
Amortization of debt financing costs⁽²⁾	194		179						386		359
Equipment lease receivable, net	1,032		1,107						2,028		2,074
Provision/benefit for income taxes, net of changes in deferred taxes	(630	)	(73	)					(1,019	)	(276	)
Changes in working capital	9,698		(18,126	)					22,121		(17,252	)
Cash provided by (used in) operating activities	14,069		(13,341	)					29,617		(9,593	)
Changes in working capital	(9,698	)	18,126						(22,121	)	17,252
Maintenance capital expenditures	(323	)	(103	)					(673	)	(249	)
Free cash flow	4,048		4,682		(634	)	(13.5	)	6,823		7,410		(587	)	(7.9	)

NM - Not meaningful
(1) Includes depreciation expense related to our district energy business of $1.7 million and $3.4 million for each of the quarters and six months ended June 30, 2014 and 2013, respectively.
(2) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.


Corporate and Other

	Quarter Ended								Six Months Ended
	June 30,				Change				June 30,				Change
	2014		2013		Favorable/(Unfavorable)				2014		2013		Favorable/(Unfavorable)
	$		$		$		%		$		$		$		%
	($ In Thousands) (Unaudited)

Base management fees	9,535		8,053		(1,482	)	(18.4	)	18,529		15,188		(3,341	)	(22.0	)
Performance fees	4,960		24,440		19,480		79.7		4,960		46,482		41,522		89.3
Selling, general and administrative expenses	2,233		2,103		(130	)	(6.2	)	3,279		3,709		430		11.6
Operating loss	(16,728	)	(34,596	)	17,868		51.6		(26,768	)	(65,379	)	38,611		59.1
Interest income	19		41		(22	)	(53.7	)	69		130		(61	)	(46.9	)
Other income (expense), net	-		9		(9	)	(100.0	)	-		(16	)	16		100.0
Benefit for income taxes	3,078		8,963		(5,885	)	(65.7	)	4,133		18,305		(14,172	)	(77.4	)
Noncontrolling interest	(614	)	(64	)	(550	)	NM		(935	)	(479	)	(456	)	(95.2	)
Net loss⁽¹⁾	(14,245	)	(25,647	)	11,402		44.5		(23,501	)	(47,439	)	23,938		50.5

Reconciliation of net loss to EBITDA excluding non-cash items and cash used in operating activities to Free Cash Flow:

Net loss⁽¹⁾	(14,245	)	(25,647	)					(23,501	)	(47,439	)
Interest income	(19	)	(41	)					(69	)	(130	)
Benefit for income taxes	(3,078	)	(8,963	)					(4,133	)	(18,305	)
Base management fees to be settled/settled in shares	9,535		8,053						18,529		15,188
Performance fees to be settled/settled in shares	4,960		24,440						4,960		46,482
Other non-cash expense	801		254						1,310		835
EBITDA excluding non-cash items	(2,046	)	(1,904	)	(142	)	(7.5	)	(2,904	)	(3,369	)	465		13.8

EBITDA excluding non-cash items	(2,046	)	(1,904	)					(2,904	)	(3,369	)
Interest income	19		41						69		130
Benefit for income taxes, net of changes in deferred taxes	2,243		1,532						4,540		7,443
Changes in working capital	(982	)	(966	)					(3,488	)	(7,674	)
Cash used in operating activities	(766	)	(1,297	)					(1,783	)	(3,470	)
Changes in working capital	982		966						3,488		7,674
Free cash flow	216		(331	)	547		165.3		1,705		4,204		(2,499	)	(59.4	)

(1) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.


MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA
EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH
FLOW

	For the Quarter Ended June 30, 2014
($ in Thousands) (Unaudited)															Contracted
					Atlantic		Contracted		MIC						Power and
			Hawaii		Aviation		Power and		Corporate		Proportionately		IMTT		Energy
	IMTT 50%		Gas 100%		100%		Energy⁽²⁾		100%		Combined⁽¹⁾		100%		100%

Net income (loss) attributable to MIC LLC	12,002		6,294		5,698		761		(14,245	)	10,509		24,003		1,154
Interest expense (income), net⁽³⁾	4,407		1,891		13,352		1,779		(19	)	21,409		8,813		2,690
Provision (benefit) for income taxes	7,728		4,092		3,855		314		(3,078	)	12,911		15,455		616
Depreciation	9,587		1,983		6,789		3,561		-		21,920		19,174		5,363
Amortization of intangibles	236		312		8,818		163		-		9,529		472		326
Loss on disposal of assets	-		-		816		-		-		816		-		-
Base management fee to be settled in shares	-		-		-		-		9,535		9,535		-		-
Performance fees to be to be settled in shares	-		-		-		-		4,960		4,960		-		-
Other non-cash expense (income)⁽⁴⁾	759		408		88		(2,033	)	801		23		1,518		(2,125	)
EBITDA excluding non-cash items	34,718		14,980		39,416		4,544		(2,046	)	91,611		69,435		8,024

EBITDA excluding non-cash items	34,718		14,980		39,416		4,544		(2,046	)	91,611		69,435		8,024
Interest (expense) income, net⁽³⁾	(4,407	)	(1,891	)	(13,352	)	(1,779	)	19		(21,409	)	(8,813	)	(2,690	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾	(1,257	)	153		5,679		(780	)	-		3,796		(2,513	)	(1,559	)
Amortization of deferred finance charges⁽³⁾	422		121		785		103		-		1,430		843		194
Equipment lease receivables, net	-		-		-		516		-		516		-		1,032
Provision/benefit for income taxes, net of changes in deferred taxes	(5,806	)	(2,625	)	(882	)	(315	)	2,243		(7,385	)	(11,612	)	(630	)
Pension contribution	-		(825	)	-		-		-		(825	)	-		-
Changes in working capital	(5,095	)	1,711		(1,274	)	8,411		(982	)	2,772		(10,189	)	9,698
Cash provided by (used in) operating activities	18,576		11,624		30,372		10,700		(766	)	70,506		37,151		14,069
Changes in working capital	5,095		(1,711	)	1,274		(8,411	)	982		(2,772	)	10,189		(9,698	)
Maintenance capital expenditures	(7,560	)	(2,133	)	(1,182	)	(162	)	-		(11,036	)	(15,119	)	(323	)
Free cash flow	16,111		7,780		30,464		2,128		216		56,699		32,221		4,048


	For the Quarter Ended June 30, 2013⁽⁸⁾
($ in Thousands) (Unaudited)															Contracted
					Atlantic		Contracted		MIC						Power and
			Hawaii		Aviation		Power and		Corporate		Proportionately		IMTT		Energy
	IMTT 50%		Gas 100%		100%		Energy⁽²⁾		100%		Combined⁽¹⁾		100%		100%

Net income (loss) attributable to MIC LLC	12,492		4,662		8,432		729		(25,647	)	668		24,984		416
Interest expense (income), net⁽³⁾	559		1,238		4,626		995		(41	)	7,376		1,117		1,865
Provision (benefit) for income taxes	8,296		2,995		5,426		(547	)	(8,963	)	7,207		16,592		(548	)
Depreciation	9,076		1,878		5,997		1,773		-		18,723		18,151		3,264
Amortization of intangibles	243		312		7,977		166		-		8,697		485		331
Loss from customer contract termination	-		-		-		813		-		813		-		1,626
Casualty losses, net⁽⁵⁾	3,250		-		-		-		-		3,250		6,500		-
Loss on extinguishment of debt	-		-		2,434		-		-		2,434		-		-
Base management fee settled in shares	-		-		-		-		8,053		8,053		-		-
Performance fee settled in shares	-		-		-		-		24,440		24,440		-		-
Other non-cash expense (income)⁽⁴⁾	51		326		(47	)	(466	)	254		117		101		(156	)
EBITDA excluding non-cash items	33,965		11,411		34,845		3,463		(1,904	)	81,780		67,930		6,798

EBITDA excluding non-cash items	33,965		11,411		34,845		3,463		(1,904	)	81,780		67,930		6,798
Interest (expense) income, net⁽³⁾	(559	)	(1,238	)	(4,626	)	(995	)	41		(7,376	)	(1,117	)	(1,865	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾	(4,804	)	(617	)	28		(681	)	-		(6,073	)	(9,607	)	(1,361	)
Amortization of deferred finance charges⁽³⁾	250		123		648		91		-		1,112		500		179
Equipment lease receivables, net	-		-		-		554		-		554		-		1,107
Provision/benefit for income taxes, net of changes in deferred taxes	(3,269	)	(775	)	(1,127	)	(37	)	1,532		(3,676	)	(6,538	)	(73	)
Changes in working capital⁽⁶⁾	9,402		9,780		1,735		(15,047	)	(966	)	4,904		18,803		(18,126	)
Cash provided by (used in) operating activities	34,986		18,684		31,503		(12,652	)	(1,297	)	71,224		69,971		(13,341	)
Changes in working capital⁽⁶⁾	(9,402	)	(9,780	)	(1,735	)	15,047		966		(4,904	)	(18,803	)	18,126
Maintenance capital expenditures⁽⁷⁾	(13,439	)	(2,415	)	(3,436	)	(52	)	-		(19,342	)	(26,878	)	(103	)
Free cash flow	12,145		6,489		26,332		2,343		(331	)	46,978		24,290		4,682

(1) Proportionately combined Free Cash Flow is equal to the sum of Free Cash Flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
(2) Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in its solar power generation and district energy businesses.
(3) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(4) IMTT management's calculation of IMTT's EBITDA includes various non-cash items, unlike MIC’s other businesses. In order to ensure IMTT’s EBITDA excluding non-cash items does in fact exclude non-cash items, and to promote consistency across its reporting segments, MIC has excluded known non-cash items when calculating IMTT’s EBITDA excluding non-cash items including primarily the non-cash pension expense of $1.5 million for the quarter ended June 30, 2014. The non-cash pension expense of $2.8 million was reported in changes in working capital for the quarter ended June 30, 2013.
(5) Casualty losses, net, includes $2.5 million and $1.5 million related to the quarters ended December 31, 2012 and March 31, 2013, respectively, which were recorded in terminal operating costs in those periods. These amounts have been included in the quarter ended June 30, 2013.
(6) Pension contribution of $900,000 for Hawaii Gas for the quarter ended June 30, 2013 was reported in changes in working capital.
(7) Maintenance capital expenditures at IMTT includes a reclassification from growth capital expenditures in the quarters ended December 31, 2012 and March 31, 2013 of $1.2 million and $509,000, respectively. These amounts have been included in the quarter ended June 30, 2013
(8) Reclassified to conform with current period presentation.


MACQUARIE INFRASTRUCTURE COMPANY LLC
RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA
EXCLUDING NON-CASH ITEMS AND CASH FROM OPERATING ACTIVITIES TO FREE CASH
FLOW

	For the Six Months Ended June 30, 2014
($ in Thousands) (Unaudited)															Contracted
					Atlantic		Contracted		MIC						Power and
			Hawaii		Aviation		Power and		Corporate		Proportionately		IMTT		Energy
	IMTT 50%		Gas 100%		100%		Energy⁽²⁾		100%		Combined⁽¹⁾		100%		100	%

Net income (loss) attributable to MIC LLC	27,492		12,489		16,253		1,286		(23,501	)	34,019		54,984		(261	)
Interest expense (income), net⁽³⁾	7,973		3,678		22,917		3,510		(69	)	38,009		15,946		5,335
Provision (benefit) for income taxes	18,279		8,119		8,770		743		(4,133	)	31,778		36,557		1,215
Depreciation	18,492		3,929		13,591		6,915		-		42,926		36,983		10,473
Amortization of intangibles	469		624		16,949		324		-		18,366		937		648
Base management fee settled/to be settled in shares	-		-		-		-		18,529		18,529		-		-
Performance fees to be settled in shares	-		-		-		-		4,960		4,960		-		-
Loss on disposal of assets	-		-		816		-		-		816		-		-
Other non-cash expense (income)⁽⁴⁾	1,751		1,132		156		(4,355	)	1,310		(7	)	3,501		(2,890	)
EBITDA excluding non-cash items	74,454		29,971		79,452		8,422		(2,904	)	189,395		148,908		14,520

EBITDA excluding non-cash items	74,454		29,971		79,452		8,422		(2,904	)	189,395		148,908		14,520
Interest (expense) income, net⁽³⁾	(7,973	)	(3,678	)	(22,917	)	(3,510	)	69		(38,009	)	(15,946	)	(5,335	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾	(3,325	)	146		8,305		(1,542	)	-		3,584		(6,649	)	(3,084	)
Amortization of deferred finance charges⁽³⁾	844		239		1,516		203		-		2,802		1,687		386
Equipment lease receivables, net	-		-		-		1,014		-		1,014		-		2,028
Provision/benefit for income taxes, net of changes in deferred taxes	(13,361	)	(5,336	)	(2,126	)	(511	)	4,540		(16,793	)	(26,721	)	(1,019	)
Pension contribution	-		(1,135	)	-		-		-		(1,135	)	-		-
Changes in working capital	(2,471	)	(3,777	)	(2,245	)	18,942		(3,488	)	6,961		(4,941	)	22,121
Cash provided by (used in) operating activities	48,169		16,430		61,985		23,018		(1,783	)	147,819		96,338		29,617
Changes in working capital	2,471		3,777		2,245		(18,942	)	3,488		(6,961	)	4,941		(22,121	)
Maintenance capital expenditures	(13,113	)	(3,791	)	(1,999	)	(337	)	-		(19,240	)	(26,226	)	(673	)
Free cash flow	37,527		16,416		62,231		3,740		1,705		121,619		75,053		6,823



	For the Six Months Ended June 30, 2013⁽⁸⁾
($ in Thousands) (Unaudited)															Contracted
					Atlantic		Contracted		MIC						Power and
			Hawaii		Aviation		Power and		Corporate		Proportionately		IMTT		Energy
	IMTT 50%		Gas 100%		100%		Energy⁽²⁾		100%		Combined⁽¹⁾		100%		100%

Net income (loss) attributable to MIC LLC	24,157		11,369		19,044		1,011		(47,439	)	8,142		48,314		298
Interest expense (income), net⁽³⁾	3,862		2,943		8,725		1,979		(130	)	17,379		7,723		3,742
Provision (benefit) for income taxes	16,857		7,478		12,824		1,309		(18,305	)	20,162		33,713		1,415
Depreciation	18,193		3,724		11,889		3,494		-		37,300		36,386		6,479
Amortization of intangibles	336		624		15,956		334		-		17,250		672		668
Loss from customer contract termination	-		-		-		813		-		813		-		1,626
Casualty losses, net⁽⁵⁾	3,250		-		-		-		-		3,250		6,500		-
Loss on disposal of assets	-		-		106		-		-		106		-		-
Loss on extinguishment of debt	-		-		2,434		-		-		2,434		-		-
Base management fee settled in shares	-		-		-		-		15,188		15,188		-		-
Performance fee settled in shares	-		-		-		-		46,482		46,482		-		-
Other non-cash expense (income)⁽⁴⁾	88		988		(115	)	(2,935	)	835		(1,139	)	176		(2,337	)
EBITDA excluding non-cash items	66,742		27,126		70,863		6,004		(3,369	)	167,366		133,484		11,891

EBITDA excluding non-cash items	66,742		27,126		70,863		6,004		(3,369	)	167,366		133,484		11,891
Interest (expense) income, net⁽³⁾	(3,862	)	(2,943	)	(8,725	)	(1,979	)	130		(17,379	)	(7,723	)	(3,742	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾	(7,008	)	(695	)	53		(1,324	)	-		(8,974	)	(14,016	)	(2,647	)
Amortization of deferred finance charges⁽³⁾	583		229		1,309		182		-		2,303		1,166		359
Equipment lease receivables, net	-		-		-		1,037		-		1,037		-		2,074
Provision/benefit for income taxes, net of changes in deferred taxes	(4,112	)	(3,867	)	(5,175	)	(138	)	7,443		(5,849	)	(8,223	)	(276	)
Changes in working capital⁽⁶⁾	708		(787	)	4,893		(13,588	)	(7,674	)	(16,448	)	1,416		(17,252	)
Cash provided by (used in) operating activities	53,052		19,063		63,218		(9,805	)	(3,470	)	122,058		106,104		(9,593	)
Changes in working capital⁽⁶⁾	(708	)	787		(4,893	)	13,588		7,674		16,448		(1,416	)	17,252
Maintenance capital expenditures⁽⁷⁾	(23,000	)	(3,421	)	(4,901	)	(125	)	-		(31,446	)	(45,999	)	(249	)
Free cash flow	29,345		16,429		53,424		3,658		4,204		107,060		58,689		7,410

(1) Proportionately combined Free Cash Flow is equal to the sum of Free Cash Flow attributable to MIC's ownership interest in each of its operating businesses and MIC Corporate.
(2) Proportionately combined Free Cash Flow for Contracted Power and Energy is equal to MIC's controlling ownership interest in its solar power generation and district energy businesses.
(3) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(4) IMTT management's calculation of IMTT's EBITDA includes various non-cash items, unlike MIC’s other businesses. In order to ensure IMTT’s EBITDA excluding non-cash items does in fact exclude non-cash items, and to promote consistency across its reporting segments, MIC has excluded known non-cash items when calculating IMTT’s EBITDA excluding non-cash items including primarily the non-cash pension expense of $3.3 million for the six months ended June 30, 2014. The non-cash pension expense of $5.6 million was reported in changes in working capital for the six months ended June 30, 2013.
(5) Casualty losses, net, includes $2.5 million and $1.5 million related to the quarters ended December 31, 2012 and March 31, 2013, respectively, which were recorded in terminal operating costs in those periods. These amounts have been included in the six months ended June 30, 2013.
(6) Pension contribution of $1.4 million for Hawaii Gas for the six months ended June 30, 2013 was reported in changes in working capital.
(7) Maintenance capital expenditures at IMTT includes a reclassification from growth capital expenditures in the quarters ended December 31, 2012 and March 31, 2013 of $1.2 million and $509,000, respectively. These amounts have been included in the six months ended June 30, 2013.
(8) Reclassified to conform with current period presentation.

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Macquarie Infrastructure Company
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Jay A. Davis, 212-231-1825
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Paula Chirhart, 212-231-1239
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