Macquarie Infrastructure Company Announcement for June 2005 - Release by Maquarie International Infrastructure Fund Limited's Investment in Macquarie Infrastructure Company

11 August 2005

New York, NY - Macquarie Infrastructure Company (the “Company” or “MIC”) (NYSE: MIC) announced the consolidated results of its operations for the quarter ended June 30, 2005.  MIC businesses generated revenue of $72.5 million, a $14.9 million or 25.8% increase compared to revenue produced in the second quarter of 2004 (prior to MIC’s acquisition of these businesses).  The Company also reported net income for the period of $5.6 million or $0.21 per share.  The results reflect the continued growth of MIC’s operating businesses, including acquisitions by those businesses, and an expected level of return on its investments.

“We are pleased to have delivered results for the quarter that demonstrate consistency and growth,” said Peter Stokes, Macquarie’s Chief Executive Officer.  “The performance of both our operating businesses and investments has been in line with our expectations and each of our segments has shown improvement over the prior quarter and the prior year.  With strong deal flow expected to continue, we believe we are on track to meeting our objectives for the full year 2005,” he added.

MIC generated cash from operations during the period of $10.9 million and received a $925,000 bankruptcy settlement amount in connection with its acquisition of Northwind Aladdin in 2004.  Of the $10.9 million, $4.4 million was an initial dividend distribution on the Company’s investment in South East Water (“SEW”).

Earnings before interest, taxes, depreciation and amortization (“EBITDA”) was $19.1 million for the quarter.  For a reconciliation of net income to EBITDA, please see the last page of this release.

Financial Highlights

MIC benefited from improved performance in each of its business segments.  Revenue from airport services, airport parking and district energy businesses increased by 30.8%, 9.8% and 28.1%, respectively, over the quarter ended June 30, 2004.  The Company’s results for the quarter ended June 30, 2005 include the following highlights:

• Consolidated revenue of $72.5 million – a 25.8% increase over 2Q’04;
• Consolidated net income of $5.6 million or $0.21 per share;
• Cash from operations of $10.9 million or $0.40 cents per share;
• A bankruptcy settlement amount of $925,000 - $694,000 has been booked as a purchase adjustment (goodwill) and $231,000 flows through “Other Income”;
• EBITDA (earnings before interest, taxes, depreciation and amortization) of $19.1 million or $0.71 per share;
• Cash and cash equivalents at quarter end totalled $120.3 million.

Dividends

On August 8, 2005, the Company’s Board of Directors declared a dividend to shareholders for the quarter ended June 30, 2005 of $0.50 per share. Shares of trust stock will trade ex-dividend on September 1, 2005.  The dividend will be payable on September 9, 2005 to shareholders of record at the close of business on September 6, 2005.

The Company intends to declare and pay regular quarterly cash distributions on all outstanding shares.  The Company anticipates declaring and paying a quarterly distribution for the quarter ending September 30, 2005 of $0.50 per share.

The Company’s dividend policy is based on the predictable and stable cash flows of its businesses and investments.  The Company’s intention is to distribute to its shareholders the majority of its cash available for distribution and not to retain significant cash balances in excess of prudent reserves.

Estimated Cash Available for Distribution

The Company believes that EBITDA, in addition to GAAP measures, provides insight into the performance of its operating businesses and its ability to service its obligations and support its ongoing dividend policy.  However, EBITDA does not reflect other cash items that management considers in estimating cash available for distribution. 

The following table details year-to-date cash receipts and payments that are not reflected on the Company’s income statement in order to provide additional insight into management’s estimate of cash available for distribution.  The Company believes that its cash from operations and investments, plus its cash in acquired businesses (net of reserves and including an Atlantic purchase price adjustment) will be sufficient to meet its expected dividend payments in 2005.

The Company’s airport services, airport parking and district energy businesses experience seasonal fluctuations in revenue, although the causes of seasonality are specific to each.  In general, the district energy business revenue is positively correlated to the warmer quarters of the year in which the demand for cooling services increases.  Similarly, the airport parking business benefits from increased leisure travel in the summer and holiday periods.  The airport services business revenue tends to be fairly constant with only minor third quarter downturn at those locations dominated by business travel.

In the first quarter of 2005 our businesses generated $9.8 million, or $0.367 per share, from operations.  For the first quarter we estimated cash available for distribution to be approximately $10.3 million, or $0.387 per share.  As illustrated in the table below, our businesses generated cash from operations of $20.7 million, or $0.765 per share through the first six months of 2005.  Again adjusting for timing, we now estimate cash available for distribution to be $22.3 million, or $0.824 per share for the first six months of 2005 – a 9% increase over the first quarter in the percentage coverage of declared dividend.

• Additional adjustments reflect the following:
  • Net cash receipt of $694,000 relating to a bankruptcy settlement at Aladdin in 2Q’05 that was reflected as a purchase price adjustment;
  • General Aviation Holdings (“GAH”) acquisition costs in first quarter income statement data that were funded from IPO proceeds;
  • Expected annual distributions from investments of $21.3 million, of which $9.1 million has been received year to date;
  • Base management fees to the Company’s manager that are paid in arrears;
  • Expected maintenance capex of $5.2 million annually, funded from operating cash flow, but not spent evenly throughout the year.

Business/Segment Highlights for the Quarter Ended June 30, 2005

The following is a segment analysis of results from operations for the quarter and year to date periods ended June 30, 2005, compared to results for the quarter and year to date periods ended June 30, 2004, prior to the Company’s acquisition of the businesses in these segments. 

The Company has included EBITDA, a non-GAAP financial measure, on both a consolidated basis as well as for each of its segments as it considers it to be an important measure of its overall performance.  The Company believes EBITDA provides additional insight into the performance of its operating companies and its ability to service its obligations and support its ongoing dividend policy.

GAH contributed $4.9 million and $1.3 million to fuel revenue and non-fuel revenue, respectively, and $1.4 million to EBITDA for the second quarter, and contributed $10.1 million and $2.5 million to fuel revenue and non-fuel revenue, respectively, and $3.3 million to EBITDA for the six months ended June 30, 2005.

Key factors affecting the quarter and six months ended June 30, 2005 included:

• Contribution of positive operating results from the GAH acquisition in January 2005;
• At Atlantic total fuel volumes (including into-plane volumes) at existing locations increased by 5.0% for the quarter ended June 30, 2005 and decreased by 0.8% for the six month period ended June 30, 2005 versus the comparable periods in 2004;
• At AvPorts jet fuel volumes increased 6.7% and 6.3% over the prior quarter and six months ended June 30, 2004, respectively;
• The Company generally pursues a strategy of keeping dollar margins relatively steady and passes on increases in fuel prices to customers;
• Significant increases in AvPorts de-icing revenue increased six month results;
• Conversion of two key customers at Atlantic to into-plane fueling contracts shifting classification of related revenue from fuel to non-fuel;
• Selling, general and administrative expenses at AvPorts increased by $265,000 in the second quarter as a result of an accrual related to the establishment of a multi-year stock appreciation rights plan for senior employees, and;
• An increase in combined segment EBITDA of $2.4 million in the second quarter of 2005 over the second quarter of 2004.

Airport Parking (Macquarie Parking)

Key factors affecting the quarter and six months ended June 30, 2005 included:

• Customers using pre-existing parking facilities increased by 5.1% and 6.0% for the quarter and six months, respectively, versus the same periods in 2004;
• Internet marketing initiatives and increased air passenger traffic generated higher volumes of customers which increased overall revenue, but the Company believes shorter lengths of stay put downward pressure on revenue per car out;
• Higher EBITDA for the second quarter of 2005 versus the second quarter of 2004 primarily reflects reduced operating losses at our new facilities – lower EBITDA for the six months reflects operating losses at the new facilities for the full six months in 2005, and;
• Improvement in operating margins at pre-existing facilities.

District Energy (Thermal Chicago and Northwind Aladdin)

Key factors affecting the quarter and six months ended June 30, 2005 included:

• Capacity revenue generally increased in-line with inflation;
• Excluding ETT Nevada, consumption ton-hours sold were higher mostly due to  above average temperature in Chicago in June 2005;
• EBITDA was higher largely due to the inclusion of ETT Nevada, and;
• Excluding ETT Nevada and a non-recurring financial restructuring gain in 2004 of $1.3 million, EBITDA increased by 19.8% for the three months ended June 30, 2005;

Toll Roads (Yorkshire Link)

• Vehicle kilometers for the quarter ended June 30, 2005 increased 1.9% compared to the quarter ended June 30, 2004
• Cash distributions for the full year 2005 are expected to be approximately $9.4 million including receipt of a one-time debt reserve release of $1.9 million

Investments

Macquarie Communications Infrastructure Group (MCG)

• MCG declared a cash distribution of Australian Dollar 14.6 cents per stapled security on June 20, 2005 for the 6 month period ended June 30, 2005 - the Company recorded a receivable of $1.7 million net of withholding taxes and will receive the cash distribution in mid-August
• Cash distributions for the full year 2005 are expected to be approximately $3.4 million net of withholding taxes
• The Company expects year over year growth in cash distributions of 25.0% for the year ended June 30, 2006 based on public statements made by management of MCG

South East Water (SEW)

• The Company received dividends from its investment in SEW totalling $4.4 million during the second quarter of 2005
• For the full year 2005 the Company expects to receive dividends of approximately $8.5 million relating to its investment in SEW
• Included in these expected dividends is a non-recurring component of approximately $2.6 million

About Macquarie Infrastructure Company

Macquarie Infrastructure Company owns, operates and invests in a diversified group of infrastructure businesses, which provide basic, everyday services, in the United States and other developed countries. Its businesses and investments consist of an airport services business (Atlantic and AvPorts), an airport parking business (PCAA and Avistar), a district energy business (Thermal Chicago and Northwind Aladdin), a 50% interest in the company that operates the Yorkshire Link shadow toll road and investments in South East Water, a UK regulated water utility and in Macquarie Communications Infrastructure Group.

Forward Thinking Statements

This earnings release contains forward-looking statements.  We 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 presentation are subject to a number of risks and uncertainties, some of which are beyond our control including, among other things: our ability to successfully integrate and manage acquired businesses, make and finance future acquisitions, service, comply with the terms of and refinance our debt, and implement our strategy, decisions made by persons who control our investments including the distribution of dividends, our regulatory environment, changes in air travel, automobile usage, fuel and gas prices, foreign exchange fluctuations, environmental risks and changes in U.S. federal tax law.

Our actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements.  Additional risks of which we are not currently aware could also cause our 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.  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 ” refers to the Macquarie Group of companies, which comprises Macquarie Bank Limited and its worldwide subsidiaries and affiliates.

• Download Macquarie Infrastructure Company Trust: (pdf 397 KB)
  • Consolidated Condensed Balance Sheets
  • Consolidated Condensed Statement of Operations
  • Consolidated Condensed Statement of Cash Flows
  • Reconciliation of Net Income (Loss) to EBITDA

For further information please contact:

Investor Enquiries
Lianne Buck
Macquarie International Infrastructure Fund
Tel: (61 2) 8232 3965
Email: lianne.buck@macquarie.com

Media Enquiries
Jane Rotsey
Public Affairs Manager
Mobile: (61) 401 997 160
Email: jane.rotsey@macquarie.com