MIC Fourth Quarter 2017 Earnings Conference Call Support Slides February 2018
Disclaimer 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 being provided to support the MIC conference call regarding earnings scheduled for February 22, 2018, and the information contained herein is qualified in its entirety by, and should be read in conjunction with, the MIC Form 10-K covering the year ended December 31, 2017. 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, 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 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-K and press release, filed on February 21, 2018, for a complete discussion of our use of non-gaap metrics. PAGE 2
MIC Results Consolidated Net Income, Adjusted EBITDA Excluding Non-Cash Items, Cash From Operating Activities and Adjusted Free Cash Flow $ Millions 4Q 2017 4Q 2016 FY 2017 FY 2016 Net Income 361.3 71.1 456.1 154.9 Adjusted EBITDA ex Non-cash Items 1,2 181.0 166.0 729.7 695.6 Cash from Operating Activities 131.8 123.3 529.5 560.3 Adjusted Free Cash Flow Consolidated 1,3 138.1 121.1 575.8 518.6 Proportionately Combined 4 Net Income, Adjusted EBITDA Excluding Non-Cash Items, Cash From Operating Activities and Adjusted Free Cash Flow $ Millions 4Q 2017 4Q 2016 FY 2017 FY 2016 Net Income 360.1 68.5 455.2 153.1 Adjusted EBITDA ex Non-cash Items 1,2 177.5 162.6 718.5 683.6 Cash from Operating Activities 129.7 121.0 522.0 551.6 Adjusted Free Cash Flow Proportionately Combined 1,3 135.5 118.6 568.0 510.2 1. Excludes $1.7 million and $8.5 million of costs related to the implementation of the shared service initiative for the quarter and year ended December 31, 2017, respectively, and $1.4 million and $9.3 million of costs incurred in connection with the evaluation of various investment and acquisition opportunities during the quarter and year ended December 31, 2017, respectively. 2. For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT. 3. Excludes $17.8 million for the payment of interest rate swap breakage fees and $8.6 million for the payment of interest rate cap premium for the quarter and year ended December 31, 2016, respectively. 4. Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. PAGE 3
$ millions MIC Cash Generation Adjusted Free Cash Flow (Proportionately Combined) 1,2 600 500 400 300 200 100 0 568.0 510.2 118.6 135.5 4Q'16 4Q'17 FY'16 FY'17 Adjusted Free Cash Flow 1,2 was $568.0 million in FY 17, reflecting an increase of 11.3% from $510.2 million in FY 16 The increase in Adjusted Free Cash Flow 1,2 reflects: Increased EBITDA primarily at Atlantic Aviation and IMTT including contributions from acquisitions; Lower than anticipated maintenance capital expenditures at IMTT; partially offset by, Higher state taxes Weighted average shares outstanding increased to 83.2 million for FY 17 compared to 80.9 million in FY 16 Dividends of $5.56 per share declared in FY 17, reflecting a payout ratio of 81.4% 1. Excludes $1.7 million and $8.5 million of costs related to the implementation of the shared service initiative for the quarter and year ended December 30, 2017, respectively, $1.4 million and $9.3 million of costs incurred in connection with the evaluation of various investment and acquisition opportunities during the quarter and year ended December 31, 2017, respectively, and $17.8 million of interest rate swap breakage costs and $8.6 million of costs associated with the purchase of an interest rate cap for the quarter and year ended December 31, 2016, respectively. 2. Includes only MIC s proportionate interest in its wind and solar facilities within the Contracted Power and MIC Hawaii segments. PAGE 4
MIC Dividend History $6.00 $5.56 $5.00 $4.46 $5.05 $4.00 $3.89 $3.35 $3.00 $2.00 $1.00 $0.00 2013 2014 2015 2016 2017 1. Past performance is not necessarily indicative of future results. PAGE 5
MIC Credit Profile Holding company rated BBB- Proportionately combined leverage ratio of 4.8x (excluding renewable assets) 1 Business Debt Weighted Average Remaining Life (Years) MIC Corporate IMTT Atlantic Aviation CP MIC Hawaii 5 Revolving Facility Convertible Senior Notes Senior Notes Tax-Exempt Bonds Revolving Facility Term Loan Revolving Facility Renewables Project Finance BEC Term Loan Term Loan Senior Notes Revolving Facility 3.9 3.7 8.2 4.2 2.2 3.6 3.6 14.3 4.5 5.6 4.5 5.0 Balance Outstanding ($000 s) 2,3 107,500 752,451 600,000 508,975 205,000 390,000 274,000 261,166 251,000 96,511 100,000 14,000 Weighted Average Rate 4 3.34% 2.41% 3.97% 3.31% 3.09% 2.50% 3.09% 4.82% 3.91% 2.85% 4.22% 2.84% Total 5.3 3,560,603 3.28% 1. Leverage ratio adjusted for full year EBITDA impact of acquisitions. 2. As of February 20, 2018. 3. Proportionate to MIC s ownership interest. 4. Reflects annualized interest rate on all facilities including interest rate hedges. 5. Excludes $2.6 million of equipment loans at MIC Hawaii business. PAGE 6
MIC Liquidity Profile Liquidity Position $ Millions Cash and cash equivalents $47.1 Undrawn Revolving Credit Facility Capacity 1 $1,054.5 MIC Corporate 2 492.5 Operating Companies 562.0 Total Liquidity 3 $1,101.6 Over $1.1 billion of total available liquidity across MIC and its operating companies 1 No bullet maturities until 2019 Weighted average remaining life of debt facilities of 5.3 years 1 1. As of February 20, 2018. 2. Reflects the refinancing and upsizing of the senior secured revolving credit facility completed in January 2018. 3. Excludes letters of credits outstanding of $43.2 million. PAGE 7
$ millions MIC Growth Capital Update MIC deployed more than $625.0 million in growth capital projects and bolt-on M&A in 2017 Key Events: Completed acquisition of Epic Midstream Completed acquisition of FBOs at Oxford, CT and Opa-Locka, FL Current backlog of approved growth projects valued at approximately $240.0 million 1 Approved Project Backlog $400 $350 $300 370 340 300 280 280 $250 $200 200 215 240 $150 $100 $50 $0 1Q'16 2Q'16 3Q'16 4Q'16 1Q'17 2Q'17 3Q'17 4Q'17 1. As of February 20, 2017. PAGE 8
30-Jun-15 31-Jul-15 31-Aug-15 30-Sep-15 31-Oct-15 30-Nov-15 31-Dec-15 31-Jan-16 29-Feb-16 31-Mar-16 30-Apr-16 31-May-16 30-Jun-16 31-Jul-16 31-Aug-16 30-Sep-16 31-Oct-16 30-Nov-16 31-Dec-16 31-Jan-17 28-Feb-17 31-Mar-17 30-Apr-17 31-May-17 30-Jun-17 31-Jul-17 31-Aug-17 30-Sep-17 31-Oct-17 30-Nov-17 31-Dec-17 31-Jan-18 MIC Total Return vs. MSCI Total Return Indexed for the period from June 30, 2015 through February 20, 2018 1 160 150 140 130 120 110 $2.4bn Performance Fee deficit at 20-Feb-18 100 90 80 70 60 MIC MSCI US Utilities Index 1. Source: MSCI. As of February 20, 2018. MIC last generated a Performance Fee during the quarter ended June 30, 2015. PAGE 9
MIC - Tax Reform Incentivizes Reinvestment Reinvestment by MIC allows for a materially greater reinvested amount, the effect of which is amplified by tax reform 1 A corporation has $100 of taxable income, $100 of cash, and $100 of pre-tax earnings and profit Option 1: Post-tax cash is distributed to equity as a dividend Federal tax paid to government $100 x 21% federal tax rate = $21 Option 2: Corporation reinvests $100 in property that qualifies for 100% bonus depreciation Investment of $100 creates a tax deduction of $100. Taxable income is $0. Cash left to distribute as a dividend $100 - $21 = $79 Dividend income for shareholders, subject to federal tax $79 x 23.8% federal tax rate = $18.80 Post-tax cash available for shareholders $79 - $18.80 = $60.20 Federal tax paid to government $0 x 21% = $0 Post-tax cash reinvested $100 - $0 = $100 In summary, $100 can be reinvested by the corporation compared to only $60 if a shareholder were to reinvest their dividend in stocks or other securities 1. This is an example which does not take MIC s specific tax attributes or circumstances into account. PAGE 10
APPENDIX
Summary Financial Information 2017 2016 $ % 2017 2016 $ % ($ In Thousands, Except Share and Per Share Data) (Unaudited) GAAP Metrics Net income $ 361,276 $ 71,131 290,145 NM $ 456,112 $ 154,869 301,243 194.5 Weighted average number of shares outstanding: basic 84,572,725 81,853,027 2,719,698 3.3 83,204,404 80,892,654 2,311,750 2.9 Net income per share attributable to MIC $ 4.13 $ 0.89 3.24 NM $ 5.42 $ 1.93 3.49 180.8 Cash provided by operating activities 131,790 123,332 8,458 6.9 529,459 560,320 (30,861) (5.5) MIC Non-GAAP Metrics EBITDA excluding non-cash items (1)(2) $ 177,980 $ 166,006 11,974 7.2 $ 711,903 $ 695,588 16,315 2.3 Shared service implementation costs (3) 1,655-1,655 NM 8,502-8,502 NM Investment and acquisition costs (3) 1,381-1,381 NM 9,254-9,254 NM Adjusted EBITDA excluding non-cash items (2)(3) $ 181,016 $ 166,006 15,010 9.0 $ 729,659 $ 695,588 34,071 4.9 Cash interest (4) $ (28,106) $ (25,922) (2,184) (8.4) $ (107,541) $ (107,930) 389 0.4 Cash taxes (2,667) (2,027) (640) (31.6) (11,160) (7,310) (3,850) (52.7) Cash pension contribution - (3,500) 3,500 100.0 - (3,500) 3,500 100.0 Maintenance capital expenditures (5) (12,140) (13,478) 1,338 9.9 (35,202) (58,203) 23,001 39.5 Noncontrolling interest (6) (2,583) (2,446) (137) (5.6) (7,806) (8,400) 594 7.1 Adjusted Free Cash Flow (3)(4) $ 135,520 $ 118,633 16,887 14.2 $ 567,950 $ 510,245 57,705 11.3 Quarter Ended December 31, Change Favorable/(Unfavorable) Year Ended December 31, Change Favorable/(Unfavorable) NM - Not meaningful (1) 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 below for reconciliation of net income (loss) to EBITDA excluding non-cash items. (2) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT. (3) For the quarter and year ended December 31, 2017, Adjusted EBITDA excluding non-cash items and Adjusted Free Cash Flow exclude costs relating to implementation of our shared services initiative and costs relating to certain investment and acquisition activities. (4) 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. For purposes of calculating Adjusted Free Cash Flow, for the quarter and year ended December 31, 2016, cash interest excludes $17.8 million for the payment of interest rate swap breakage fees and $8.6 million for the payment of interest rate cap premium. (5) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses, at IMTT. (6) Noncontrolling interest adjustment represents the portion of Free Cash Flow not attributable to MIC's ownership interest. PAGE 12
Reconciliation from Consolidated Free Cash Flow to Proportionately Combined Free Cash Flow Quarter Ended Change Year Ended Change December 31, Favorable/(Unfavorable) December 31, Favorable/(Unfavorable) 2017 2016 $ % 2017 2016 $ % ($ In Thousands) (Unaudited) Free Cash Flow - Consolidated basis $ 135,067 $ 94,680 40,387 42.7 $ 558,000 $ 492,246 65,754 13.4 100% of CP Free Cash Flow included in consolidated Free Cash Flow (18,621) (16,099) (75,134) (72,631) MIC's share of CP Free Cash Flow 16,042 13,654 67,342 64,234 100% of MIC Hawaii Free Cash Flow included in consolidated Free Cash Flow (6,347) (5,879) (38,715) (36,311) MIC's share of MIC Hawaii Free Cash Flow 6,343 5,878 38,701 36,308 Free Cash Flow - Proportionately Combined basis $ 132,484 $ 92,234 40,250 43.6 $ 550,194 $ 483,846 66,348 13.7 PAGE 13
Proportionately Combined Free Cash Flow Quarter Ended December 31, 2017 IMTT Atlantic Aviation For the Quarter Ended December 31, 2017 Contracted Power (1) MIC Hawaii (1) ($ in Thousands) (Unaudited) MIC Corporate Proportionately Combined (2) Contracted Power 100% MIC Hawaii 100% Net income (loss) 295,865 64,145 10,394 9,413 (19,750) 360,067 11,604 9,412 Interest expense, net (3) 7,650 864 2,660 1,246 7,587 20,007 3,056 1,246 Benefit for income taxes (256,150) (30,257) (2,040) (1,485) (9,506) (299,438) (2,040) (1,485) Depreciation and amortization of intangibles 32,637 26,296 13,387 4,376 161 76,857 15,269 4,381 Fees to Manager-related party - - - - 16,778 16,778 - - Pension expense (4) 1,347 5-273 - 1,625-273 Other non-cash expense (income), net (5) 452 390 (1,934) (614) 297 (1,409) (1,933) (614) EBITDA excluding non-cash items 81,801 61,443 22,467 13,209 (4,433) 174,487 25,956 13,213 EBITDA excluding non-cash items 81,801 61,443 22,467 13,209 (4,433) 174,487 25,956 13,213 Interest expense, net (3) (7,650) (864) (2,660) (1,246) (7,587) (20,007) (3,056) (1,246) Convertible senior notes interest (6) - (2,013) - - 2,013 - - - Adjustments to derivative instruments recorded in interest expense, net (3) (3,577) (2,721) (3,616) (510) - (10,424) (4,019) (511) Amortization of debt financing costs (3) 411 351 364 99 995 2,220 379 100 Amortization of debt discount (3) - - - - 889 889 - - (Provision) benefit for current income taxes (1,348) (8,647) (136) (3,047) 10,510 (2,668) (135) (3,047) Changes in working capital (20,382) (573) 6,832 6,477 (7,173) (14,819) 6,223 6,488 Cash provided by (used in) operating activities 49,255 46,976 23,251 14,982 (4,786) 129,678 25,348 14,997 Changes in working capital 20,382 573 (6,832) (6,477) 7,173 14,819 (6,223) (6,488) Maintenance capital expenditures (6,580) (2,894) (377) (2,162) - (12,013) (504) (2,162) Proportionately Combined Free Cash flow 63,057 44,655 16,042 6,343 2,387 132,484 18,621 6,347 PAGE 14
Proportionately Combined Free Cash Flow Quarter Ended December 31, 2016 IMTT Atlantic Aviation For the Quarter Ended December 31, 2016 Contracted Power (1) MIC Hawaii (1) ($ in Thousands) (Unaudited) MIC Corporate Proportionately Combined (2) Contracted Power 100% MIC Hawaii 100% Net income 27,367 16,199 11,413 12,419 1,144 68,542 13,996 12,425 Interest (income) expense, net (3) (2,710) 6,524 (9,260) (657) 6,797 694 (10,328) (665) Provision (benefit) for income taxes 19,019 10,631 6,702 5,578 (31,082) 10,848 6,702 5,578 Depreciation and amortization of intangibles 30,773 21,618 11,980 3,623-67,994 13,855 3,629 Fees to Manager-related party - - - - 18,916 18,916 - - Pension expense (4) 1,805 60-223 - 2,088-223 Other non-cash expense (income), net (5) 26 457 (1,623) (5,448) 118 (6,470) (1,623) (5,448) EBITDA excluding non-cash items (7) 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742 EBITDA excluding non-cash items (7) 76,280 55,489 19,212 15,738 (4,107) 162,612 22,602 15,742 Interest income (expense), net (3) 2,710 (6,524) 9,260 657 (6,797) (694) 10,328 665 Convertible senior notes interest (6) - (1,969) - - 1,969 - - - Adjustments to derivative instruments recorded in interest expense, net (3) (12,892) (8,574) (14,844) (2,583) - (38,893) (16,756) (2,594) Amortization of debt financing costs (3) 412 11,699 363 100 918 13,492 376 100 Amortization of debt discount (3) - - - - 1,007 1,007 - - Interest rate swap breakage fees - (17,770) - - - (17,770) - - Interest rate cap premium - (8,629) - - - (8,629) - - (Provision) benefit for current income taxes (2,367) 384 2 (1,846) 1,800 (2,027) 2 (1,846) Pension contribution - - - (3,500) - (3,500) - (3,500) Changes in working capital 7,992 (248) 1,039 3,777 2,862 15,422 780 3,788 Cash provided by (used in) operating activities 72,135 23,858 15,032 12,343 (2,348) 121,020 17,332 12,355 Changes in working capital (7,992) 248 (1,039) (3,777) (2,862) (15,422) (780) (3,788) Maintenance capital expenditures (5,521) (4,816) (339) (2,688) - (13,364) (453) (2,688) Proportionately Combined Free Cash Flow 58,622 19,290 13,654 5,878 (5,210) 92,234 16,099 5,879 PAGE 15
Proportionately Combined Free Cash Flow Year Ended December 31, 2017 IMTT Atlantic Aviation For the Year Ended December 31, 2017 Contracted Power (1) MIC Hawaii (1) ($ in Thousands) (Unaudited) MIC Corporate Proportionately Combined (2) Contracted Power 100% MIC Hawaii 100% Net income (loss) 363,049 124,370 20,252 25,422 (77,931) 455,162 21,208 25,416 Interest expense, net (3) 38,357 14,512 20,837 7,035 27,006 107,747 23,487 7,041 (Benefit) provision for income taxes (209,464) 6,509 6,169 9,287 (46,655) (234,154) 6,169 9,287 Depreciation and amortization of intangibles 126,463 100,190 52,777 15,284 161 294,875 60,300 15,303 Fees to Manager-related party - - - - 71,388 71,388 - - Pension expense (4) 6,996 20-1,090-8,106-1,090 Other non-cash expense (income), net (5) 767 1,642 (8,082) 2,494 831 (2,348) (8,103) 2,494 EBITDA excluding non-cash items 326,168 247,243 91,953 60,612 (25,200) 700,776 103,061 60,631 EBITDA excluding non-cash items 326,168 247,243 91,953 60,612 (25,200) 700,776 103,061 60,631 Interest expense, net (3) (38,357) (14,512) (20,837) (7,035) (27,006) (107,747) (23,487) (7,041) Convertible senior notes interest (6) - (7,782) - - 7,782 - - - Adjustments to derivative instruments recorded in interest expense, net (3) (3,834) 429 (4,704) (398) - (8,507) (5,301) (398) Amortization of debt financing costs (3) 1,647 1,170 1,458 402 3,964 8,641 1,516 403 Amortization of debt discount (3) - - - - 3,266 3,266 - - (Provision) benefit for current income taxes (4,417) (14,457) (129) (8,312) 16,155 (11,160) (129) (8,312) Changes in working capital (32,795) (7,240) (2,992) (6,356) (13,864) (63,247) (3,480) (6,364) Cash provided by (used in) operating activities 248,412 204,851 64,749 38,913 (34,903) 522,022 72,180 38,919 Changes in working capital 32,795 7,240 2,992 6,356 13,864 63,247 3,480 6,364 Maintenance capital expenditures (20,143) (7,965) (399) (6,568) - (35,075) (526) (6,568) Proportionately Combined Free Cash Flow 261,064 204,126 67,342 38,701 (21,039) 550,194 75,134 38,715 PAGE 16
Proportionately Combined Free Cash Flow Year Ended December 31, 2016 IMTT (8) Atlantic Aviation For the Year Ended December 31, 2016 Contracted Power (1) MIC Hawaii (1) ($ in Thousands) (Unaudited) MIC Corporate Proportionately Combined (2) Contracted Power 100% MIC Hawaii 100% Net income (loss) 83,142 59,538 12,309 35,741 (37,648) 153,082 14,093 35,744 Interest expense, net (3) 38,752 33,961 18,541 5,564 17,243 114,061 21,286 5,559 Provision (benefit) for income taxes 57,736 39,889 14,327 20,441 (61,137) 71,256 14,328 20,441 Depreciation and amortization of intangibles 134,385 90,659 48,047 11,317-284,408 55,548 11,325 Fees to Manager-related party - - - - 68,486 68,486 - - Pension expense (4) 7,219 110-1,272-8,601-1,272 Other non-cash expense (income), net (5) 657 905 (7,028) (11,539) 681 (16,324) (7,047) (11,539) EBITDA excluding non-cash items (7) 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802 EBITDA excluding non-cash items (7) 321,891 225,062 86,196 62,796 (12,375) 683,570 98,208 62,802 Interest expense, net (3) (38,752) (33,961) (18,541) (5,564) (17,243) (114,061) (21,286) (5,559) Convertible senior notes interest (6) - (1,969) - - 1,969 - - - Adjustments to derivative instruments recorded in interest expense, net (3) (2,169) (4,158) (4,088) (2,080) - (12,495) (4,762) (2,088) Amortization of debt financing costs (3) 1,654 14,195 1,434 948 2,755 20,986 1,489 948 Amortization of debt discount (3) - - - - 1,007 1,007 - - Interest rate swap breakage fees - (17,770) - - - (17,770) - - Interest rate cap premium - (8,629) - - - (8,629) - - (Provision) benefit for current income taxes (5,438) (2,137) (7) (8,353) 8,624 (7,311) (6) (8,353) Pension contribution - - - (3,500) - (3,500) - (3,500) Changes in working capital (3,734) 11,164 (1,148) 9,335 (5,772) 9,845 (1,129) 9,342 Cash provided by (used in) operating activities 273,452 181,797 63,846 53,582 (21,035) 551,642 72,514 53,592 Changes in working capital 3,734 (11,164) 1,148 (9,335) 5,772 (9,845) 1,129 (9,342) Maintenance capital expenditures (9) (38,620) (10,632) (760) (7,939) - (57,951) (1,012) (7,939) Proportionately Combined Free Cash Flow 238,566 160,001 64,234 36,308 (15,263) 483,846 72,631 36,311 PAGE 17
Proportionately Combined Free Cash Flow Footnotes (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 (income), 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 2023. Interest expense (income), net, also includes a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas and the October 2016 refinancing at Atlantic Aviation. (4) Pension expense primarily consists of interest cost, expected return on plan assets and amortization of actuarial and performance gains and losses. Any cash contributions to pension plans are not included in pension expense, but rather reflected as a reduction to Free Cash Flow, as noted in the table above. (5) Other non-cash expense (income), net, primarily includes non-cash amortization of tolling liabilities, unrealized gains (losses) on commodity hedges, adjustments to asset retirement obligations and non-cash gains (losses) related to disposal of assets. 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 2016. (7) For the quarter and year ended December 31, 2016, EBITDA excluding non-cash items included $1.0 million and $16.5 million, respectively, of insurance recoveries related to damaged docks at IMTT. (8) On March 31, 2016, IMTT acquired the remaining 33.3% interest in its Quebec terminal that it did not previously own. IMTT was previously providing management services to this terminal and no operational changes are expected. Prior to the acquisition, IMTT consolidated the results of the Quebec terminal in its financial statements and adjusted for the portion that it did not own through noncontrolling interests. Since the IMTT Acquisition in July 2014 and prior to the acquisition of the noncontrolling interest, MIC reported IMTT s EBITDA excluding non-cash items and Free Cash Flow including the 33.3% portion of the Quebec terminal. The contribution from the minority interest was not significant. Therefore, there were no changes to our historical EBITDA excluding noncash items, Free Cash Flow or results generally as a function of acquiring this noncontrolling interest. (9) For the year ended December 31, 2016, maintenance capital expenditures included $13.9 million associated with the rebuilding of damaged docks, the majority of which were insured losses, at IMTT. PAGE 18