MIC. Overview of the IMTT Segment. December

Transcription

1 MIC Overview of the IMTT Segment December The contents of this presentation reflect financial and operating information through the period ended September 30, 2017, as reported on the Company s Form 10-Q which was filed with the Securities and Exchange Commission on November 1, 2017.

2 Important Notice This presentation provides a summary of the International-Matex Tank Terminals (IMTT) reporting segment of Macquarie Infrastructure Corporation (MIC). The purpose of this presentation is to provide external parties, including current and prospective investors and research analysts, an overview of IMTT and its key operating characteristics. For a complete discussion of IMTT s operations, actual results, performance, prospects, opportunities, and risks, this presentation should be read in conjunction with the Company s Form 10-Q, filed on November 1, 2017, and other materials filed with the SEC subsequently. 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. Forward-looking 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, 2017 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 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 non-cash 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 press release, filed on November 1, 2017, for a complete discussion of our use of non-gaap metrics. PAGE 2

3 Business Overview IMTT is an independent provider of bulk liquid terminal services in the U.S. Stores and handles refined petroleum products, chemicals, and vegetable/animal oils Services include storage tank rentals, dock and inter-modal transportation access, product throughput, heating, blending, and packaging Presence in key commodity distribution, transhipment, and trading hubs Demand is tied to the overall level of commodity consumption, import and export activity, and geographical imbalances in commodity supply and demand Expected to grow through investments in additional terminal capacity and services Key Statistics Geographic Footprint 5 Terminals 1 Storage Capacity 2 GAAP Net Income 3 EBITDA excluding non-cash items 3 Cash from Operations 3 Free Cash Flow 3 19 (17 U.S. / 2 Canada) 48.3 million barrels $94.6 million $320.6 million $271.3 million $256.6 million Net Debt/EBITDA 3,4 4.0x 1. One Canadian facility is 20% owned by IMTT. 2. As of September 30, For the twelve months ended September 30, EBITDA excluding non-cash items and Free Cash Flow are non-gaap measures. 4. Pro forma adjustment made for full year EBITDA impact of Epic Midstream LLC acquisition in August IMTT s two Canadian facilities are not depicted. PAGE 3

4 High Quality Revenue Stream ~80.4% of revenue generated by take or pay type agreements 1 Weighted average remaining contract life of approximately 2.1 years 2 IMTT does not take title to products, reducing direct commodity exposure Position in the supply chain orients IMTT s customer base towards downstream operators such as refiners, manufacturers, traders, and distributors Top ten customers account for ~55% of revenue; seven of top ten rated investment grade 3 Revenue by Product & Service Type 4 Chemical 24% Refined Products 55% Renewable/Veg & Animal Oil 6% Crude & Asphalt 4% 1. For the total 12 months (TTM) ended September 30, As of September 30, For the year ended December 31, The other three companies were not rated. 4. For the year ended December 31, Other Includes 5% of revenues from spill response activity. Other 11% PAGE 4

5 Key Market Snapshots New York Harbor and Louisiana Terminals together account for 81% of capacity and 91% of segment gross profit 1 Louisiana Terminals 1 Four terminal locations: St. Rose, Gretna, Avondale, and Geismar Combined 20.8 million barrels of storage capacity Connections to two Class I rails, 30 docks along the Mississippi River, and various pipelines Regional transshipment point for agricultural, chemical, and refined petroleum products 52% of IMTT s gross profit in 2016 IMTT Bayonne Facility New York Harbor (NYH) 1 Located on the Kill Van Kull in Bayonne, NJ 15.7 million barrels of storage capacity Intermodal connectivity including pipeline (Colonial, Buckeye, and Harbor), rail, waterway, and roads NYH is a key trading hub for refined products NYH is a physical settlement site for NYMEX gasoline and ultra-low sulfur diesel futures contracts 39% of IMTT s gross profit in For the year ended December 31, PAGE 5

6 Capacity Utilization Consistently high utilization reflects essential nature of IMTT s services Utilization has averaged 94% during the past 10 years Storage and handling represents a small portion of the total cost associated with delivering a product to market Unused capacity is generally attributable to tank inspections, repairs, and modifications Historical Capacity Utilization 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 94% 94% 94% 94% 94% 94% 93% 95% 96% 92% 93% Q and 2014 utilization levels reflect the impact of several large tanks being out of service for scheduled cleanings and inspections. PAGE 6

7 Barriers to Entry Physical and financial barriers to entry Barriers to the development of competing operations include: Limited suitable waterfront land Inadequate pipeline, rail, dock, and truck access Regulatory and environmental restrictions High upfront capital costs for new development Competitive advantage a representative example: The channel in front of IMTT s Bayonne, NJ facility has been dredged to 50 feet Depth can accommodate the largest liquids carrying vessels capable of delivering to NYH Eliminates the need for ships to transfer a portion of their cargo to barges before docking (a process known as lightering ) Reduces or eliminates demurrage Only NYH liquids terminal with 50 foot draft Competitive Advantage at Bayonne, NJ Competitive Advantage at Bayonne, NJ Legend IMTT Facility Tanks Refineries Competitors Ports 50 ft Channel Air draft restrictions Bridge Container Terminals IMTT Facilites Newark Newark Bay Draft: ft m. Goethels Bridge Airdraft: 140 ft m. dfdfsdf Staten Island Outerbridge Crossing Airdraft: 155 ft m. Arthur Kill Draft: ft m. Jersey City Bayonne Bridge Airdraft: 151 ft m. Upper New York Bay Draft: 50 ft m. Manhattan Brooklyn Verazano -Narrows Bridge Airdraft: 228 ft m. Lower New York Bay Draft: ft m. Air Draft Restrictions IMTT Facility 50 Foot Channel PAGE 7

8 Platform for Growth IMTT is an attractive platform for capital deployment Approximately $1.0 billion invested in the growth and development of additional storage capacity, facilities, and related infrastructure 1 Owns developable land on which to add incremental capacity Requires long-term contracts before investing in incremental storage capacity In August 2017, IMTT acquired Epic Midstream, adding 3.1 mmbbls of storage capacity to its portfolio Storage Capacity mmbbls Current 1. Reflects the period between MIC s purchase of an initial 50% interest in IMTT in May 2006, and the year ended December 31, MIC acquired the remaining 50% interest in IMTT that it did not already own on July 16, PAGE 8

9 Epic Midstream IMTT completed its acquisition of Epic Midstream Transaction Overview Investment Highlights Epic Midstream owns a portfolio of bulk liquid storage and handling facilities across 7 locations in the U.S. Southeast and Southwest More than 3.1 million barrels of liquid storage capacity The two largest facilities are located in the deepwater port of Savannah, Georgia Transaction valued Epic Midstream at $171.5 million 11.0x 2018 PF EBITDA Funding comprised of a mix of cash and equity issued directly to the sellers $125 million of MIC shares were issued to the sellers (1.5% discount to the 30 trading-day VWAP) $46.5 million paid in cash, including drawings on IMTT s revolving credit facility Expected to be accretive to Free Cash Flow in 2018 IMTT Integration High Quality Revenue Stream Product & Customer Diversification Deep-water Port Access Selected Growth Opportunities Epic s operations will fully integrate into IMTT s organizational structure IMTT will retain Epic s core commercial team to support continued growth Majority of Epic s revenues are generated by take-or-pay contracts Weighted average remaining contract life of 2.0 years Increases IMTT s storage and handling exposure to jet fuel Customer base includes an affiliate of the U.S. Department of Defense that has been a customer for 20+ years Epic s Savannah, GA terminals are located on one of the largest U.S. deep-water ports Location positions Epic to benefit from increasing Southeast jet fuel imports Opportunity for additional EBITDA growth Material undeveloped land PAGE 9