MIC - Macquarie

MIC
August 2016
I
Important
t t Notice
N ti
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 information purposes, it is not a solicitation of any offer to buy or
sell any security or instrument.
This p
presentation contains forward-looking
g statements. Forward-looking
g statements in this p
presentation are subject
j
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 on
February 23, 2016. Additional risks of which we are not currently aware could also cause our actual results to differ.
Th
These
f
forward-looking
d l ki
statements
t t
t are made
d as off the
th date
d t off this
thi presentation.
t ti
W undertake
We
d t k no obligation
bli ti
t publicly
to
bli l
update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except
as required by law.
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.
This presentation discusses historical performance and results which may not be indicative of future performance.
PAGE 2
MIC – Company
C
O
Overview
i
What does it own?
 MIC owns and operates a diversified group of businesses that provide essential services
to businesses and individuals primarily in the United States
MIC
100%
International-Matex
Tank Terminals
100%
Atlantic Aviation
Controlling/100%
Contracted Power
and Energy
100%
Hawaii Gas
PAGE 3
MIC - Investment
I
t
t Thesis
Th i
Why invest in MIC?
 MIC offers investors an attractive Total Return investment opportunity
• 6.3% yield1
• Potential cash flow growth of 10%-15%
10% 15% per annum
• Total return of 15.8% p.a. since MIC’s IPO on December 15, 20042
 Attractive business characteristics support strong and stable cash generation
• High-value
g a ue p
physical
ys ca assets, p
preferred
e e ed market
a et pos
positions,
t o s, high
g ba
barriers
e s to e
entry,
t y, inflation
at o p
protection
otect o
 Diversified business portfolio
• Opportunity to deploy $250 - $350 million per year in expansion projects and bolt-on M&A
provides a p
platform for the deployment
p y
of additional capital
p
• Each business p
• No need for external financing
 Strong credit profile
• Rated BBB• ~$1.1 billion of available credit capacity
• Weighted average debt maturity of 6.5 years3
1.
2.
3.
As of August 3 , 2016. Based on a declared quarterly dividend of $1.25/share ($5.00/share annualized)
At August 1, 2016. Assumes dividends reinvested. Past performance is not indicative of future results. Source: MSCI.
As of August 1, 2016
PAGE 4
MIC - Cash
C h Fl
Flow G
Growth
th E
Engine
i
75%-85%
%8 %
Organic
G
Growth
th
Cash Flow
Cas
o
Dividends
de ds
15%-25%
Incremental
Cash Flow
Growth
Capex and
M&A
Total potential growth in annual cash flow of 10%-15%
PAGE 5
MIC – Component
C
t Growth
G
th1
The sources of annual growth in cash flow are clear
 Organic growth in cash flow, portfolio wide
3% - 5%
 Implementation of shared services and operating initiatives
2% - 3%
 Deployment of growth capital with returns comparable to historical norms
4% - 6%
 Optimization
O ti i ti off capital
it l structure
t t
1% - 1%
Total potential growth in annual cash flow
1.
10% - 15%
Past performance is not necessarily indicative of future results
PAGE 6
MIC - Dividend
Di id d Hi
History
t
Dividend Growth
 Annualized dividend growth of 12.6% since 2Q’131
 Targeting 12%-14% year-on-year dividend growth in 20162
$1 40
$1.40
$1.25
$1.20
$1 00
$1.00
$0.875
$0.80
$0.60
$0.40
$0.20
$0.00
2Q'13 3Q'13 4Q'13 1Q'14 2Q'14 3Q'14 4Q'14 1Q'15 2Q'15 3Q'15 4Q'15 1Q'16 2Q'16
1.
2.
Reflects the quarter during which the company resumed a normalized dividend payout following the successful refinancing of Atlantic Aviation’s credit facilities. Past performance is
not necessarily indicative of future results.
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.
PAGE 7
MIC – Debt
D bt P
Profile
fil
MIC Debt Profile Overview1
 MIC’
MIC’s businesses
b i
are individually
i di id ll capitalized
it li d
 MIC is rated BBB Proportionately combined leverage ratio2 of 4.23x, and 4.10x excluding standalone
project-finance style debt at MIC’s
MIC s Renewable assets
 $1.1 billion of undrawn revolving credit facility capacity across its businesses and MIC
Corporate
 Weighted
g
average
g maturity
y of 6.5 yyears1
MIC
IMTT
•
•
•
1.
2.
3.
$600MM Senior
Unsecured Revolver
($20MM Drawn)
$600MM Unsecured
Senior Notes
$509MM Unsecured
tax-exempt bonds
Atlantic Aviation
•
•
$70MM Senior
Secured Revolver
(Undrawn)
$597MM Senior
Secured Term Loan
•
•
$350MM Convertible Notes
$410MM Secured Revolver ($20MM drawn)
Contracted Power and Energy
BEC
•
•
$25MM Senior
Secured Revolver
(Undrawn)
$266MM Senior
Secured Term Loan
Renewable
•
Hawaii Gas
•
$208MM of term
debt3
•
•
$60MM Senior
Secured Revolver
(Undrawn)
$100MM Senior
Secured Notes
$80MM Term Loan
Balances are as of August 1, 2016
Net Debt/EBITDA as of June 30, 2016
Includes MIC’s proportionate interest in its solar and wind power businesses within the Contracted Power and Energy segment.
PAGE 8
MIC – Organization
O
i ti Chart
Ch t
How is MIC organized?
 MIC is externally managed by an affiliate of the Macquarie Group
 Board comprises six directors, five of whom are independent under the rules of the
NYSE
Macquarie Group
Limited
ted
(ASX: MQG)
Public
ub c Shareholders
S a e o de s
8.6%1
Management
Services
Agreement
1.
2.
91.4%2
MIC
(NYSE: MIC)
As of August 1, 2016
Includes directors and officers ownership of an aggregate ~0.3% as of August 1, 2016
PAGE 9
MIC - IMTT
What does it own?
One of the largest independent providers of bulk liquid terminal services in the U.S.
Total storage capacity of 45.1 million barrels
Stores and handles refined petroleum products, chemicals, vegetable and animal oils
~80% of revenue from take-or-pay type contracts1
Barriers to entry include limited suitable waterfront land, regulatory and environmental
restrictions, and high upfront capital costs
Chemical
23%
Renewable/Veg
& Animal Oil
6%
Refined
Petroleum
Product
55%
Crude Oil &
Asphalt
3%
Storage Capacity & Utilization3
Capacity (mmbb
bls)
Storage C
Revenue by Product & Service Type1
46.0
45.0
44 0
44.0
43.0
42.0
41.0
40.0
39.0
38.0
37.0
36.0
94% 94% 94% 94% 94% 94%
93% 92%95%
96%
95%
90%
85%
80%
75%
Capacity Utilization (%
%)





70%
Other 2
13%
1.
2.
3.
For the year ended December 31, 2015
Storage
Includes 8% of revenues from spill response activity
2013 and 2014 utilization levels reflect the impact of several large tanks being out of service for scheduled cleanings and inspections
Capacity
Capacity Utilization
PAGE 10
MIC - IMTT
IMTT St.
St Rose
R
IMTT Bayonne
B
Facility
F ilit
PAGE 11
MIC - Atlantic
Atl ti A
Aviation
i ti
What does it own?
 Provides primarily fuel and fuel-related services to owners and operators of general
aviation aircraft
 Operates at 69 airports subject to long-dated
long dated lease concessions
 Passes through changes in underlying fuel costs to customers with a focus on
maintaining, and ultimately growing, dollar-based margins
well-suited
suited for a roll
roll-up
up strategy
 Fragmented market structure is well
Weighted Average Lease Life1
Geographic Footprint
20
19
Yea
ars
19
18
17
19.6
19 4
19.4
17.9
19.5
18.8
17.8
17.6
16.8
16
15
2008 2009 2010 2011 2012 2013 2014 2015 2Q16
1.
As of June 30, 2016. Includes extension options under Atlantic Aviation’s control. Atlantic Aviation calculates weighted average lease life based on EBITDA excluding non-cash items in the prior calendar
year, adjusted for the impact of acquisitions and dispositions.
PAGE 12
MIC - Contracted
C t t d Power
P
and
dE
Energy
What does it own?
 Controlling interests in five solar power facilities, two wind power facilities, and a 100%
interest in a gas-fired power facility
 Electricity is sold to creditworthy off-takers, typically under multi-year contracts
 Renewable assets operate subject to long term power purchase agreements
(PPAs) with initial average durations of 20-25 years
 Bayonne Energy Center (BEC) has contracted 62.5% of its capacity under a tolling
arrangementt with
ith a weighted
i ht d average remaining
i i lif
life off 12 years
Geographic Footprint
Capacity Growth
900
800
700
BEC
MW
W
600
500
400
300
200
100
0
2012
Wind
Solar
2013
2014
Current
Gas
PAGE 13
MIC – Contracted
C t t d Power
P
and
dE
Energy
B
Bayonne
E
Energy C
Center
t
S l
Solar
PAGE 14
MIC H
Hawaiiii
MIC Hawaii – What does the segment manage?
 Supplies synthetic natural gas and propane across Hawaii’s six main islands to ~68,000
customers
 Comprises a regulated gas utility and an unregulated LPG distribution business
 Products are used in a wide range of commercial and residential applications
 Received regulatory approval to replace 30% of its synthetic natural gas with LNG
 The 7 MW Waihonu solar facility,
y, located on Oahu,, was placed
p
into service in mid-2016
Gas Volumes1
Geographic Footprint
Kauai
Utility and Non-Utility
Molokai & Lanai
Utility and Non-Utility
Maui
Utility and Non-Utility
therms
Oahu
Headquarters
SNG Manufacturing Plant
Utility and Non-Utility
7MW Solar Facility
Hawaii
Utility and Non-Utility
Solar
1.
2008
2009
2010
2011
2012
2013
2014
2015
Reflects utility and non-utility volumes
PAGE 15
MIC – Growth
G
th Initiatives
I iti ti
Capital deployment opportunities
 Targeting $350 million per year of growth capital deployment
 Storage capacity and ancillary infrastructure at IMTT, hangars at Atlantic Aviation,
and LNG infrastructure at Hawaii Gas
 BEC II: an incremental 130 MW of generation capacity on land immediately
adjacent to the existing BEC facility
 Bolt-on M&A: acquisitions within our existing verticals (i.e. additional FBOs and
renewable generation facilities)
$500
$450
$470
$100
Approved Project Backlog1
$400
$130
$MM
$350
$300
$250
$240
$200
$150
$100
$50
$0
G
Growth
th Projects
P j t (ex.
(
BEC II)
BEC II
B lt on M&A
Bolt
2
T t l
Total
1
1.
2.
As of August 1, 2016. For BEC II, forecast spending of approximately $32 million in 2016, $82 million in 2017, and $16 million in 2018
MIC has invested $26.5 million in bolt-on M&A transactions through the quarter ended June 30, 2016. In the year ended December 31, 2015, MIC invested a total of $266.9 million in acquisitions, including
$209.0 million in BEC II.
PAGE 16
C t t d Power
Contracted
P
& Energy
E
– Growth
G
th Initiatives
I iti ti
MIC is pursuing several CP&E initiatives within IMTT’s footprint in Bayonne, NJ
Spectra TETLP
Pipeline (approx.)
Transco Bayonne
Pipeline (approx.)
New BEC lateral via
IMTT (approx.)
130 MW BEC
Expansion Site
Co-gen facility on
IMTT land currently
leased to thirdparty
Bayonne Energy
Center
© 2015 Google
All property lines are approximate and indicative only
PAGE 17
C t t d Power
Contracted
P
& Energy
E
– Growth
G
th Initiatives
I iti ti
An additional opportunity for power development exists in Chesapeake, VA
Former Coal Plant
(~800MW retired in Jan 2015)
230kV substation
Colonial Pipeline
PAGE 18
Atl ti A
Atlantic
Aviation
i ti – Hangar
H
Additi
Additions
Atlantic Aviation recently opened the doors to a new 37,000 ft2 hangar at LAX
• The facility is capable of handling some of the largest business jets in the market today
• High demand resulted in the hangar’s capacity being sold out three years in advance
PAGE 19
MIC
Contact for additional information
J D
Jay
Davis
i
Mike Hacke
Managing Director
Manager
125 W. 55th Street, Level 15
125 W. 55th Street, Level 15
New York, NY 10019
New York, NY 10019
+1 (212) 231-1825
+1 (212) 231-6483
jay.davis@macquarie.com
michael.hacke@macquarie.com
PAGE 20