MIC. Third Quarter 2018 Earnings Conference Call Supplemental Materials. November 1, 2018

Transcription

1 MIC Third Quarter 2018 Earnings Conference Call Supplemental Materials November 1, 2018

2 Important Notice This presentation by Macquarie Infrastructure Corporation (MIC) is proprietary and all rights are reserved. Any reproduction, in whole or in part, without the prior written consent of MIC is prohibited. This presentation is based on information generally available to the public and does not contain any material, non-public information. The presentation has been prepared solely for informational purposes. It is not a solicitation of any offer to buy or sell any security or instrument. This presentation contains forward-looking statements. Forwardlooking statements in this presentation are subject to a number of risks and uncertainties, some of which are beyond our control. Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. A description of known risks that could cause our actual results to differ appears under the caption Risk Factors in our Form 10-K filed with the SEC on February 21, 2018, our Form 10-Q filed with the SEC on October 31, 2018, and other materials filed with the SEC subsequently. Additional risks of which we are not currently aware could also cause our actual results to differ. These forward-looking statements are made as of the date of this presentation. We undertake 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 consists of Macquarie Group Limited and its worldwide subsidiaries and affiliates. MIC 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 Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIC. Use of Non-GAAP Metrics In addition to our results under U.S. GAAP, we use certain non- GAAP measures to assess the performance and prospects of our businesses. In particular, we use EBITDA excluding non-cash items, Free Cash Flow and certain proportionately combined financial metrics. Proportionately combined financial metrics reflect our proportionate ownership interest in our wind and solar facilities. We define EBITDA excluding non-cash items as net income (loss) or earnings the most comparable GAAP measure before interest, taxes, depreciation and amortization and non-cash items including impairments, unrealized derivative gains and losses, adjustments for other non-cash items and pension expense reflected in the statements of operations. EBITDA excluding noncash items also excludes base management fees and performance fees, if any, whether paid in cash or stock. We define Free Cash Flow as cash from operating activities the most comparable GAAP measure which includes cash paid for interest, taxes and pension contributions, less maintenance capital expenditures, which includes principal repayments on capital lease obligations used to fund maintenance capital expenditures, and excludes changes in working capital. Please review our Form 10-Q and earnings release, filed on October 31, 2018, for a complete discussion of our use of non-gaap metrics and reconciliations to the most comparable GAAP measures. PAGE 2

3 Results for 3Q 18

4 MIC Overview Owns and operates a portfolio of infrastructure and infrastructure-like businesses in the U.S. IMTT An industry leader in the handling and storage of bulk liquid petroleum, chemical and agricultural products 44% of EBITDA 1 Atlantic Aviation Operates one of the largest networks of fixed base operations (FBOs) across the U.S. 42% of EBITDA 1 Contracted Power 2 Controlling interests in seven solar facilities and two wind facilities 7% of EBITDA 1 MIC Hawaii Comprises Hawaii Gas and businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii 7% of EBITDA 1 1. Represents MIC s proportionately combined EBITDA excluding non-cash items for the quarter ended September 30, 2018 excluding the results from Bayonne Energy Center and Critchfield Pacific Inc. (CPI), the write-down of CPI and the expenses incurred at MIC Corporate of $6.9 million. 2. On October 12, 2018, Contracted Power divested 100% of BEC for $900 million in cash and assumed debt. PAGE 4

5 3Q 18 Results Consolidated and Proportionately Combined Results Selected Key Results: Consolidated Proportionately Combined 1 $ millions 3Q 18 3Q 17 % 3Q 18 3Q 17 % Net Income % % Adjusted EBITDA ex Non-cash Items % % Cash from Operating Activities % % Adjusted Free Cash Flow % % Proportionately Combined Adjusted EBITDA ex Non-cash Items 3 down on prior comparable period reflecting primarily the forecasted reduction in earnings at IMTT Adjusted Free Cash Flow 3 down on prior comparable period as a result of increased interest expense, maintenance capital expenditures and state taxes Cash from Operating Activities reflect reduced earnings 1 and higher interest expense and state taxes partially offset by favorable movements in working capital Dividend of $1.00 per share for 3Q 18, payable on November 15 to shareholders on record on November Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. 2. Net Income includes approximately $30.0 million write-down of investment in CPI. 3. Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes costs relating to certain investment and acquisition/disposition activities during 2018 and Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes the write-down of our investment in CPI for 2018 and excludes implementation costs relating to our shared services center for Conformed to current period presentation for the adoption of ASU No , Statement of Cash Flows (Topic 230): Restricted Cash. See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, PAGE 5

6 Adjusted Free Cash Flow Performance ($ in millions) Adjusted Free Cash Flow (Proportionately Combined) 1,2 : $ millions (9.6) IMTT Business Unit Adjusted EBITDA 1, Atlantic Aviation Contracted Power (1.5) MIC Hawaii (3.3) (1.3) (5.3) (0.9) Q 17 3Q 18 Corporate EBITDA Maintenance Capex Interest Expense Cash Taxes Decrease in Adjusted Free Cash Flow (Proportionately Combined) 1,2 reflects: Reduced contribution from IMTT and MIC Hawaii partially offset by improved contribution from Atlantic Aviation and Contracted Power Higher interest expense, increased maintenance capital expenditures, and reduced Corporate EBITDA Weighted average shares outstanding increased to 85.4 million in 3Q 18 versus 83.6 million in 3Q Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. 2. Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes costs relating to certain investment and acquisition/disposition activities during 2018 and Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes the write-down of our investment in CPI for 2018, and excludes implementation costs relating to our shared services center for PAGE 6

7 3Q 18 Performance Operating businesses continued to perform broadly in line with expectations during 3Q 18 IMTT Atlantic Aviation Contracted Power Performance reflects: Anticipated decline in capacity utilization % in 3Q 18 compared with 92.7% in 3Q 17 As anticipated, slightly lower average storage rates On Repurposing initiatives: Of the 1.3 million barrels being repurposed in 2018, 900,000 have been re-contracted and the remainder are expected to be re-contracted during November; 600,000 barrels expected to be in service by year-end On Repositioning initiatives: Expected to construct 714,000 barrels of chemical storage for Methanex at Geismar 1 Committed to construction of an automated truck loading facility for petroleum and biodiesel at Bayonne Committed to constructing additional dock at Geismar Performance reflects: Modest growth in general aviation flight activity through July and August Contributions from acquisitions of FBOs and hangar rentals Partially offset by: Higher operating costs Runway closures and flight restrictions at several of the airports at which the business operates in 2018 Sale of BEC completed on October 12 Launched process to sell majority of operating assets in wind and solar portfolio MIC Hawaii Entered into agreement to sell CPI Performance reflects: Continued poor performance of CPI and the related write-down of investment in this business Improved performance in the utility portion of Hawaii Gas 1. Subject to Methanex s Final Investment Decision, expected in mid PAGE 7

8 Update on MIC Strategic Priorities

9 MIC Strategic Priorities Multiple value-enhancing initiatives currently underway 1 2 Priority Initiatives / Objectives Cost / Timeline Reinforce the infrastructure characteristics of MIC s businesses Efficiently manage capital Repurpose up to 3 million barrels of capacity at IMTT to products with stronger demand outlook Reposition and enhance IMTT estate to increase interconnectivity, capability and capacity Prioritize growth capital expenditure into core businesses Complete strategic review of Contracted Power ~$35 million, up to 18 months, EBITDA generative on recontracting Of the 1.3 million barrels being repurposed in 2018, 900,000 have been re-contracted and the remainder are expected to be re-contracted in November; 600,000 barrels expected to be in service by year-end ~$190 million, over three years EBITDA and Free Cash Flow generative as individual projects progress and complete (12-24 months) $200 million of growth capital expected to be deployed in 2018; approximately $130 million deployed year-to-date Aggregate value of opportunities currently under evaluation in excess of $750 million, including approximately $650 million at IMTT Divested BEC for $900 million, completed in October 2018; launched process to sell the majority of the operating assets in portfolio of wind and solar facilities Sell smaller, non-core operations ~$40 million realized to date; entered agreement to sell CPI 3 Reduce leverage, increase financial flexibility Reduce leverage/net debt with proceeds of asset sales Ongoing, with the sale of BEC resulting in the deconsolidation of $243.5 million asset level financing and the repayment of the majority of the outstanding balances on revolving credit facilities Net Debt / EBITDA approximately 4x Extend tenor of debt facilities Early preparation for July 2019 maturity of certain convertible debt facilities PAGE 9

10 Sale of Non-Core Assets MIC completed the sale of BEC in October 2018 and made further progress on the sale of other non-core assets Sale of BEC: As announced on October 16, following the receipt of regulatory and other approvals, MIC completed the sale of BEC to an investment fund managed by Morgan Stanley MIC sold BEC for $900 million in cash and assumed debt Net cash proceeds of $657 million Proceeds from the sale of BEC used to pay down the majority of outstanding balances on all revolving credit facilities Revolving credit facilities may be redrawn to fund growth capital agenda Sale of Other Non-core Assets: Entered into an agreement to sell CPI for nominal consideration in a transaction that is expected to close in 2018 Commenced a sale process involving the majority of the operating assets in portfolio of wind and solar facilities which is expected to be concluded in 2Q 19 Sale and redeployment of proceeds expected to maximize value relative to expanding portfolio through acquisition Expect to retain solar facility in Hawaii The sale of smaller, non-core assets and redeployment of the proceeds is expected to preserve and enhance value for shareholders PAGE 10

11 Increased Financial Flexibility Rationalizing portfolio strengthens balance sheet and leads to growth in cash generation Recent Capital Management Initiatives: Divestment of non-core assets generated net proceeds of approximately $700 million in Repayment of the majority of revolving credit facilities Enhances balance sheet strength and flexibility Funds investment in growth in future Free Cash Flow from operating businesses Funds significant proportion of growth capital program from internal resources Generates incremental tax shield primarily through accelerated depreciation 1. Includes the divestment of BEC, CPI and other smaller non-core assets during PAGE 11

12 Credit Profile Enhanced balance sheet strength and flexibility following the pay down of revolving credit facilities Holding company rated BBB- (S&P) As of October 30, 2018: Business MIC Corporate IMTT Debt Revolving Facility Convertible Senior Notes Weighted Average Remaining Life (Years) Senior Notes 7.5 Tax-Exempt Bonds Balance Outstanding ($000 s) 26, , , ,975 Weighted Average Rate % 2.41% 3.97% 3.37% Atlantic Aviation Term Loan , % Contracted Power Renewables Project Finance , % MIC Hawaii 3 Term Loan Senior Notes , , % 4.22% Total 5.1 2,701, % As of October 30, 2018, $2.7 billion of debt outstanding, down 25% from $3.6 billion as of July 31, Reflects annualized interest rate on all facilities including interest rate hedges. 2. Interest rate reflects the impact of the Tax Cuts and Jobs Act. 3. Excludes $2.2m of equipment loans at the MIC Hawaii business. PAGE 12

13 Update on Guidance

14 Guidance MIC s overall EBITDA guidance for 2018 is unchanged: $5.0 million increase in Contracted Power driven by increased contribution from BEC and development profits related to a renewable power project $5.0 million reduction in MIC Hawaii due to continued poor performance of CPI 2018 Guidance: $ millions (Proportionately Combined 1 ) Current Outlook 2018E Prior Outlook 2018E Adjusted EBITDA ex Non-cash Items Adjusted Free Cash Flow Dividend per Share $4.00 $4.00 $ A 2018 Segment EBITDA Guidance: $ millions (Proportionately Combined 1 ) Current Outlook 2018E Prior Outlook 2018E IMTT Atlantic Aviation Contracted Power MIC Hawaii Corporate/Other 2 (20) (20) (20) (20) (7) 2017A 1. Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. 2. Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes costs relating to certain investment and acquisition/disposition activities during 2018 and Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes the write-down of our investment in CPI for 2018 and excludes implementation costs relating to our shared services center for PAGE 14

15 2018 Adjusted EBITDA ($ millions) Adjusted EBITDA (Proportionately Combined) 1 : $ A $687.5 $5.0 $687.5 Prior Outlook 2,3 Contracted Power ($5.0) MIC Hawaii Current Outlook 3 Overall EBITDA guidance for 2018 is unchanged: $5.0 million increase to Contracted Power midpoint driven by increased contribution from BEC and development profits related to a renewable power project $5.0 million reduction to MIC Hawaii midpoint due to continued poor performance of CPI (expected to be divested 4Q 18) No change to IMTT or Atlantic Aviation Businesses divested in 2018 generated approximately $40 million of EBITDA 1. Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. 2. Reported on August 1, 2018 alongside 2Q 18 financial results. 3. Prior Outlook and Current Outlook reflect midpoints of segment guidance. PAGE 15

16 2018 Maintenance Capex ($ millions) Maintenance Capex $63 Reducing maintenance capex guidance by $12 million as a result of: $35 ($10) ($2.5) $51 $10 million reduction at Contracted Power due to the absence of expected maintenance capex at BEC $2.5 million reduction at IMTT No change to Atlantic Aviation and MIC Hawaii 2017A Prior Outlook 1,2 Contracted Power IMTT Current Outlook 2 1. Reported on August 1, 2018 alongside 2Q 18 financial results. 2. Prior Outlook and Current Outlook reflect midpoints of segment guidance. PAGE 16

17 2018 Adjusted Free Cash Flow ($ millions) Adjusted Free Cash Flow (Proportionately Combined) 1 : $568.0 $494.5 $10.0 $2.5 $507.0 Increasing midpoint of Free Cash Flow guidance to accommodate: Decrease in maintenance capex for BEC $341.0 Decrease in maintenance capex for IMTT 2018 Dividend Guidance implies 67% Adjusted Free Cash Flow payout ratio at midpoint 2017A Prior Outlook 2,3 BEC Maint. Capex IMTT Maint. Capex Current Outlook Dividend Guidance 1. Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. 2. Reported on August 1, 2018 alongside 2Q 18 financial results. 3. Prior Outlook and Current Outlook reflect midpoints of segment guidance. PAGE 17

18 2018 Growth Capital Deployment Forecast 2018 growth capital deployment of approximately $200 million 2018E Deployed Capex: $200 million $130 million deployed YTD ($ millions) Operating business Outlook IMTT 55 Atlantic Aviation 80 Contracted Power 55 MIC Hawaii 10 Total 200 Current growth capital projects underway or under consideration are generally expected to: Contribute within two years of commencement on average Earn an EBITDA multiple of between 7x and 10x Currently committed growth capital of $310 million 1 for projects to commence over the next five years, including $160 million in 2019 In addition, pipeline in excess of $750 million of projects currently under evaluation Expect to deploy, on average, $300 $350 million of growth capital per year 1. In addition to the $130 million of growth capital which has been deployed in PAGE 18

19 Medium-Term Positioning Core businesses well positioned to generate growth in shareholder value over the medium-term IMTT Atlantic Aviation MIC Hawaii Leading terminal position in two of the four largest bulk liquid markets in the U.S. High barriers to entry Investment to repurpose up to 3m barrels of liquid storage capacity located on LMR Investment to support terminal repositioning that will improve terminal capability and/or add new storage capacity Utilization expected to recover to low 90 s percent by early nd largest FBO network in the U.S., with significant geographic and customer diversity and high barriers to entry Overarching commitment to provide superior service and safety to customers Strong relationships with airports, customers, employees and industry stakeholders Long-dated leasehold concessions Owns the sole regulated gas utility in Hawaii Leading (~75%) non-utility market share supported by significant investments in storage and logistics High barriers to entry Leading brand / long-term customer relationships Supported by MIC Global Services, which provides back-office functions including Accounting, Human Resources, Tax, IT and Risk Management to each of the operating businesses PAGE 19

20 Appendices

21 Summary Financial Information Quarter Ended September 30, Change Favorable/(Unfavorable) $ % ($ In Thousands, Except Share and Per Share Data) (Unaudited) GAAP Metrics Net income $ 21,376 $ 36,173 (14,797) (40.9) Weighted average number of shares outstanding: basic 85,378,088 83,644,806 1,733, Net income per share attributable to MIC $ 0.25 $ 0.48 (0.23) (47.9) Cash provided by operating activities (1) 147, ,723 (2,672) (1.8) MIC Non-GAAP Metrics EBITDA excluding non-cash items (2) $ 159,796 $ 182,684 (22,888) (12.5) Shared service implementation costs (3) - 1,402 (1,402) (100.0) CPI investment adjustment (3) 17,083-17,083 NM Investment and acquisition/disposition costs (3) 1,878 3,023 (1,145) (37.9) Adjusted EBITDA excluding non-cash items (3) $ 178,757 $ 187,109 (8,352) (4.5) Cash interest (4) $ (32,456) $ (27,151) (5,305) (19.5) Cash taxes (3,076) (2,154) (922) (42.8) Maintenance capital expenditures (13,372) (12,106) (1,266) (10.5) Noncontrolling interest (5) (2,394) (1,308) (1,086) (83.0) Adjusted Free Cash Flow (3) $ 127,459 $ 144,390 (16,931) (11.7) NM Not meaningful 1. Conformed to current period presentation for the adoption of ASU No , Statement of Cash Flows (Topic 230): Restricted Cash. See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, EBITDA excluding non-cash items is calculated as net income before interest expense, taxes, depreciation and amortization expense, management fees, pension expense and other non-cash (income) expense recorded in the consolidated statement of operations. See slide 23 and 24 for reconciliation of net income (loss) to EBITDA excluding non-cash items. 3. Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes costs relating to certain investment and acquisition/disposition activities during 2018 and Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow excludes the write-down of our investment in CPI for 2018, and excludes implementation costs relating to our shared services center for Cash interest is calculated as interest expense, net, excluding the impact of non-cash adjustments for unrealized (gains) losses from derivative instruments, amortization of deferred financing costs and the amortization of debt discount recorded in the consolidated statement of operations. 5. Noncontrolling interest adjustment represents the portion of Free Cash Flow not attributable to MIC s ownership interest. PAGE 21

22 Reconciliation from Consolidated Free Cash Flow to Proportionately Combined Free Cash Flow Quarter Ended September 30, Change Favorable/ (Unfavorable) Nine Months Ended September 30, Change Favorable/ (Unfavorable) $ % $ % ($ In Thousands) (Unaudited) Free Cash Flow - Consolidated basis $ 110,892 $ 141,273 (30,381) (21.5) $ 372, ,933 (50,724) (12.0) 100% of Contracted Power Free Cash Flow included in (30,865) (25,970) (71,365) (56,513) consolidated Free Cash Flow MIC's share of Contracted Power Free Cash Flow 28,474 24,667 64,600 51, % of MIC Hawaii Free Cash Flow included in consolidated 11,342 (8,137) (6,634) (32,368) Free Cash Flow MIC's share of MIC Hawaii Free Cash (11,345) 8,132 6,626 32,358 Flow Free Cash Flow - Proportionately Combined basis $ 108,498 $ 139,965 (31,467) (22.5) $ 365,436 $ 417,710 (52,274) (12.5) PAGE 22

23 Proportionately Combined Free Cash Flow Quarter Ended September 30, 2018 IMTT For the Quarter Ended September 30, 2018 Atlantic Aviation Contracted Proportionately Power (1) MIC Hawaii (1) MIC Corporate Combined (2) Contracted Power 100% ($ in Thousands) (Unaudited) Net income (loss) 16,432 24,735 17,252 (17,958) (19,961) 20,500 18,128 (17,958) Interest expense, net (3) 11,677 5,290 4,373 2,068 8,523 31,931 4,944 2,069 Provision (benefit) for income taxes 6,422 9,058 7,852 (7,299) (8,149) 7,884 7,852 (7,299) Goodwill impairment ,215-3,215-3,215 Depreciation and amortization 32,683 25,582 6,186 10, ,110 8,026 10,489 Fees to Manager-related party ,333 12, Pension expense (4) 1, , Other non-cash expense (income), net (5) (1,522) 4, ,489 (1,574) 4,303 EBITDA excluding non-cash items 69,335 64,993 34,141 (5,058) (6,855) 156,556 37,376 (5,053) EBITDA excluding non-cash items 69,335 64,993 34,141 (5,058) (6,855) 156,556 37,376 (5,053) Interest expense, net (3) (11,677) (5,290) (4,373) (2,068) (8,523) (31,931) (4,944) (2,069) Convertible senior notes interest (6) - (2,013) - - 2, Adjustments to derivative instruments recorded in (870) (354) (1,571) 34 - (2,761) (1,863) 33 interest expense, net (3) Amortization of debt financing costs (3) ,023 2, Amortization of debt discount (3) Benefit (provision) for current income taxes 2,593 (5,729) (84) (2,032) 2,176 (3,076) (84) (2,032) Changes in working capital (721) 6,313 (5,450) 22, ,952 (5,615) 22,570 Cash provided by (used in) operating activities 59,071 58,200 23,024 13,543 (9,016) 144,822 25,250 13,546 Changes in working capital 721 (6,313) 5,450 (22,570) (240) (22,952) 5,615 (22,570) Maintenance capital expenditures (8,863) (2,191) - (2,318) - (13,372) - (2,318) Proportionately Combined Free Cash flow 50,929 49,696 28,474 (11,345) (9,256) 108,498 30,865 (11,342) 1. Represents MIC s proportionately combined interests in the businesses comprising these reportable segments. 2. The sum of the amounts attributable to MIC in proportion to its ownership. 3. Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. 5. Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. Other non-cash expense (income), net, also includes the write-down of our investment in CPI for the quarter ended September 30, See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. 6. Represents the cash interest expense reclassified from MIC Corporate to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviation s credit facility in October MIC Hawaii 100% PAGE 23

24 Proportionately Combined Free Cash Flow Quarter Ended September 30, 2017 For the Quarter Ended September 30, 2017 Contracted Power 100% IMTT Atlantic Aviation Contracted Power (1) MIC Hawaii (1) MIC Corporate Proportionately Combined (2) ($ in Thousands) (Unaudited) Net income (loss) 20,755 21,591 7,705 6,161 (19,584) 36,628 7,251 6,160 Interest expense, net (3) 10,187 4,295 5,598 1,875 6,597 28,552 6,281 1,877 Provision (benefit) for income taxes 14,422 11,139 6,337 4,830 (11,181) 25,547 6,337 4,830 Depreciation and amortization 31,511 25,286 12,949 3,706-73,452 14,830 3,711 Fees to Manager-related party ,954 17, Pension expense (4) 1, , Other non-cash expense (income), net (5) 178 1,212 (1,913) (3,361) 159 (3,725) (1,914) (3,360) EBITDA excluding non-cash items 78,936 63,528 30,676 13,483 (6,055) 180,568 32,785 13,490 EBITDA excluding non-cash items 78,936 63,528 30,676 13,483 (6,055) 180,568 32,785 13,490 Interest expense, net (3) (10,187) (4,295) (5,598) (1,875) (6,597) (28,552) (6,281) (1,877) Convertible senior notes interest (6) - (2,012) - - 2, Adjustments to derivative instruments recorded in (524) 464 (786) 23 - (823) (922) 23 interest expense, net (3) Amortization of debt financing costs (3) , Amortization of debt discount (3) Benefit (provision) for current income taxes 344 (1,208) 10 (1,773) 474 (2,153) 9 (1,773) Changes in working capital (7) 3,732 (1,335) (995) (2,553) (2,934) (4,085) (565) (2,554) Cash provided by (used in) operating activities 72,714 55,426 23,672 7,404 (11,230) 147,986 25,405 7,408 Changes in working capital (7) (3,732) 1, ,553 2,934 4, ,554 Maintenance capital expenditures (8,116) (2,165) - (1,825) - (12,106) - (1,825) Proportionately Combined Free Cash Flow 60,866 54,596 24,667 8,132 (8,296) 139,965 25,970 8,137 MIC Hawaii 100% 1. Represents MIC s proportionately combined interests in the businesses comprising these reportable segments. 2. The sum of the amounts attributable to MIC in proportion to its ownership. 3. Interest expense, net, includes adjustments to derivative instruments, non-cash amortization of deferred financing fees and non-cash amortization of debt discount related to the 2.00% Convertible Senior Notes due October Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. 5. Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. Other non-cash expense (income), net, also includes the write-down of our investment in CPI for the quarter ended September 30, See Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items, Free Cash Flow and Proportionately Combined Metrics above for further discussion. 6. Represents the cash interest expense reclassified from MIC Corporate to Atlantic Aviation related to the 2.00% Convertible Senior Notes due October 2023, proceeds of which were used to pay down a portion of Atlantic Aviation s credit facility in October Conformed to current period presentation for the adoption of ASU No , Statement of Cash Flows (Topic 230): Restricted Cash. See Note 2, Basis of Presentation, in our Notes to Consolidated Condensed Financial Statements in Part I of Form 10-Q for the quarter ended September 30, PAGE 24