MIC November 2018
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 August 1, 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 46 008 583 542. 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
MIC Overview MIC provides investors with an opportunity to generate an attractive risk-adjusted total return through the ownership of infrastructure and infrastructure-like businesses Our businesses: IMTT An industry leader in the handling and storage of bulk liquid petroleum, chemical and agricultural products 43% of EBITDA 1 Atlantic Aviation Operates one of the largest networks of fixed base operations (FBOs) across the U.S. 41% 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 9% of EBITDA 1 Ticker Symbol NYSE: MIC Market Capitalization 3 Current Dividend 4 Dividend Yield 3,4 Credit Rating BBB 5 ~$3.3 billion $4.00/share ~10% 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 (BEC) and Critchfield Pacific Inc. (CPI), the write-down of CPI, costs relating to certain investment and acquisition/disposition activities 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. 3. As of November 5, 2018. 4. Reflects quarterly dividend of $1.00/share, declared for the quarter ended September 30, 2018, annualized. Dividends are subject to the continued stable performance of MIC s businesses, no material deterioration in the condition of the broader U.S. economy, and authorization of the Company s Board of Directors. 5. S&P Global Ratings, a business unit of Standard & Poor s Financial Services LLC. PAGE 3
Strategic Priorities Multiple value-enhancing initiatives currently underway Strategic priorities: 1 Reinforce the infrastructure characteristics of MIC s businesses 2 Efficiently manage capital 3 Reduce leverage and increase financial flexibility We are confident in our ability to continue to deliver long-term value to shareholders: Expertise and track record of success Disciplined capital management Balance sheet strength and flexibility Organic and inorganic growth prospects PAGE 4
International-Matex Tank Terminals An industry leader in the handling and storage of refined petroleum products, chemicals, and vegetable / tropical oils Services include storage tank rentals, dock and intermodal transportation access, product throughput, heating, blending, and packaging Key Statistics: Terminals 1 19 (17 U.S. / 2 Canada) Storage capacity 2 Net income 3 EBITDA excluding non-cash items 3 Cash from operations 3 Free cash flow 3 48.6 million barrels $357.8 million $303.3 million $239.2 million $221.8 million Net Debt/EBITDA 3,4 3.6x 1. One Canadian facility is 20% owned by IMTT. 2. As of September 30, 2018. Includes 3.0 million bbl in Newfoundland and 0.6 million bbl in Geismar not subject to lease agreements. 3. For the twelve months ended September 30, 2018. EBITDA excluding non-cash items and Free Cash Flow are non-gaap measures. 4. Pro forma for paydown of revolving credit facility in October 2018. Note: Photographs depict IMTT s St. Rose terminal (top) and Bayonne terminal (bottom). PAGE 5
Atlantic Aviation Operates one of the largest networks of fixed base operations (FBOs) across the U.S. Provides fuel and fuel related services, de-icing, aircraft parking, hangar rental, catering, and other services primarily to general aviation (non-commercial) aircraft owners and operators Operates at 70 domestic airports subject to long-dated leases granted by airport authorities Key Statistics: Locations 1 70 WA remaining lease life 1,2 Net income 3 EBITDA excluding non-cash items 3 Cash from operations 3 Free cash flow 3 19.9 years $142.7 million $257.6 million $220.0 million $195.5 million Net Debt/EBITDA 3,4 1.4x 1. As of September 30, 2018. 2. Weighted by EBITDA excluding non-cash items in the prior calendar year, adjusted for the impact of acquisitions and dispositions. 3. For the twelve months ended September 30, 2018. EBITDA excluding non-cash items and Free Cash Flow are non-gaap measures. 4. Pro forma for paydown of revolving credit facility in October 2018. Note: Photographs depict Las Vegas, NV FBO (top) and the new 37,000 ft 2 hangar at LAX (bottom). PAGE 6
Contracted Power Controlling interests in seven solar facilities and two wind facilities Launched process to sell the majority of operating wind and solar facilities; expected to conclude in 2Q19 Completed sale of BEC in October 2018 Key Statistics: Gross generating capacity 1 Net income 1,2 EBITDA excluding non-cash items 1,2 Cash from operations 1,2 Free cash flow 1,2 345MW $5.8 million $50.2 million $39.5 million $36.2 million 1. Excludes BEC. 2. For the twelve months ended September 30, 2018. EBITDA excluding non-cash items and Free Cash Flow are non-gaap measures. Reflects MIC s proportionate interest in the wind and solar power businesses. Note: Photographs depict Representative Solar PV Facility (top) and Windfarm (bottom). PAGE 7
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 Hawaii Gas: a regulated gas utility, unregulated liquefied petroleum gas (LPG) distribution business Waihonu Solar: 7MW facilities located on Oahu Other distributed generation projects serving commercial users under long-term contracts Key Statistics: Net Income 1 $27.7 million EBITDA excluding non-cash items 1 $58.9 million Cash from Operations 1 $48.1 million Free Cash Flow 1 $37.2 million Net Debt/EBITDA excluding non-cash items 1,2 2.9x 1. For the twelve months ended September 30, 2018. EBITDA excluding non-cash items and Free Cash Flow are non-gaap measures. Reflects MIC s proportionate interest in the solar power business and excludes CPI, including our write-down in the business, in MIC Hawaii segment. 2. Excludes the renewable business in MIC Hawaii segment and pro forma for paydown of revolving credit facility in October 2018. Note: Photographs depict propane tanks at Hawaii Gas (top) and the Waihonu Solar Facilities (bottom). PAGE 8
MIC Strategic Priorities
Reinforce Infrastructure Characteristics Infrastructure businesses are underpinned by high value, long-lived physical assets with good visibility into cash generating capacity and high barriers to entry Approach: Invest in the physical assets of our businesses Increase the proportion of revenue being generated from contracted or regulated sources Preserve the preferred position that our businesses enjoy in their respective markets Recent Initiatives: 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 Continued investment at Atlantic Aviation to renew and extend long-dated leases PAGE 10
Efficiently Manage Capital Disciplined capital management and rationalization of portfolio to strengthen balance sheet Approach: Prioritize growth capital expenditure into core businesses with accretive returns Generation of incremental tax shield, primarily through accelerated depreciation Sale of smaller, non-core operations Recent Initiatives: Completed divestment of BEC for $900 million in October 2018 Divested $40 million of other smaller non-core operations Launched process to sell majority of renewable operating assets $200 million of growth capital expected to be deployed in 2018 $750 million aggregate value of opportunities currently under evaluation Ability to fund significant proportion of growth capital program from internal resources PAGE 11
Reduce Leverage, Increase Financial Flexibility Enhanced balance sheet strength and flexibility following the pay down of revolving credit facilities; Net Debt / EBITDA approximately 4.0x (excluding renewables) 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) 3.2 3.0 Senior Notes 7.5 Tax-Exempt Bonds 3 3.6 Balance Outstanding 1 ($000 s) 26,500 752,445 600,000 508,975 Weighted Average Rate 2 4.05% 2.41% 3.97% 3.37% Atlantic Aviation Term Loan 2.9 375,000 2.75% Contracted Power Renewables Project Finance 13.6 242,343 4.83% MIC Hawaii 4 Term Loan Senior Notes 4.8 3.8 95,821 100,000 2.85% 4.22% Total 5.1 2,701,084 3.30% As of October 30, 2018, $2.7 billion of debt outstanding, down 25% from $3.6 billion as of July 31, 2018 1. Proportionate to MIC s ownership interest. 2. Reflects annualized interest rate on all facilities including interest rate hedges. 3. Interest rate reflects the impact of the Tax Cuts and Jobs Act. 4. Excludes $2.2 million of equipment loans at the MIC Hawaii business. PAGE 12
Governance Initiatives Improving the alignment of MIC with shareholders more broadly Board refreshment Appointment of two independent directors CEO Christopher Frost appointed to Board, replacing James Hooke Executive compensation alignment Key changes to the compensation framework for MIC Senior Officers to address shareholders feedback 1. Increased oversight by independent directors Amanda Brock Maria Jelescu Dreyfus Christopher Frost 2. Increased alignment through the introduction of minimum stockholding requirements Manager has waived certain fees under Management Services Agreement to effectively cap management fees at 1% of equity market capitalization less cash on hand PAGE 13
Update on Guidance
Guidance Businesses performing in line with expectations; guidance updated to reflect sale of smaller, non-core operations 2018 Guidance: $ millions (Proportionately Combined 1 ) Current Outlook 2018E Adjusted EBITDA ex Non-cash Items 2 670-705 Adjusted Free Cash Flow 2 493 521 Dividend per Share $4.00 2018 Segment EBITDA Guidance: $ millions (Proportionately Combined 1 ) Current Outlook 2018E IMTT 285 295 Atlantic Aviation 265 275 Contracted Power 85 95 MIC Hawaii 2 55-60 Corporate/Other 2 (20) (20) 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 2017. 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 2017. PAGE 15
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 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 Total 200 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 2018. PAGE 16
Summary Core businesses well positioned to generate growth in shareholder value over the medium-term IMTT 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 3 million 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 2020 Atlantic Aviation 2 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 MIC Hawaii 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 PAGE 17
MIC Contact for additional information Jay Davis Managing Director 125 W. 55th Street, Level 15 New York, NY 10019 +1 (212) 231-1825 jay.davis@macquarie.com Dileep Murthy Vice President 125 W. 55th Street, Level 15 New York, NY 10019 +1 (212) 231-6641 dileep.murthy@macquarie.com PAGE 18