Macquarie Infrastructure Corp - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

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EX-99.1 - EXHIBIT 99.1 - Macquarie Infrastructure Corp	a51450785ex99_1.htm
8-K - MACQUARIE INFRASTRUCTURE CO. 8-K - Macquarie Infrastructure Corp	a51450785.htm

Exhibit 99.2

Macquarie Infrastructure Corporation
125 West 55th Street New York, NY10019 United States	Telephone +1 212 231 1825 Facsimile +1 212 231 1828 Internet: www.macquarie.com/mic

FOR IMMEDIATE RELEASE

MACQUARIE INFRASTRUCTURE CORPORATION REPORTS THIRD QUARTER 2016 FINANCIAL RESULTS, INCREASED DIVIDEND

Net income increases to $42.5 million from $8.3 million

Cash from Operating Activities increases to $159.1 million from $61.0 million

Proportionately Combined Free Cash Flow increases to $131.9 million

Quarterly cash dividend of $1.29 per share, up 14.2%, authorized

Full year 2016 guidance reaffirmed

New York, October 31, 2016 – Macquarie Infrastructure Corporation (NYSE: MIC) reported its financial results for the third quarter of 2016 including net income of $42.5 million, up from $8.3 million in the third quarter of 2015. For the nine months ended September 30, 2016, MIC reported net income of $83.7 million versus a net loss of $145.7 million in the prior comparable period.

“Our businesses delivered financial and operating performance in the third quarter that was consistent with our expectations and guidance for the full year,” said James Hooke, chief executive officer of MIC. “Atlantic Aviation benefitted from a continued increase in flight activity and the facilities comprising our renewables portfolio experienced a return to more normal wind and solar resource levels.”

“The terminal operations of IMTT produced improved financial results, while losses at its environmental response subsidiary narrowed,” Hooke noted. “Our MIC Hawaii segment added to the overall result with contributions from recent acquisitions.”

Cash provided by Operating Activities increased 160.9% to $159.1 million and 71.4% to $437.0 million in the quarter and nine months ended September 30, 2016, respectively. The increase in Cash from Operating Activities reflects primarily the absence of performance fees settled in cash, improvement in Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), and the absence of interest rate swap break costs, partially offset by higher cash state taxes.

Proportionately Combined Free Cash Flow (“PCFCF”) increased 42.2% to $131.9 million and 34.2% to $391.6 million in the quarter and nine months ended September 30, 2016, respectively. The increases were primarily the result of improved operations, including contributions from acquisitions in 2015 and 2016, and do not reflect adjustments made to exclude the impact of interest rate swap breaks costs of $19.2 million and $50.6 million in the quarter and year to date periods, respectively, and $9.3 million of transaction-related in the year to date figures in 2015. Adjusted for these items, the increase in PCFCF would have been 17.6% for the quarter and 11.4% for the nine month period. See “Use of Non-GAAP Measures” below for MIC’s definition of PCFCF and the attached tables for a reconciliation of non-GAAP measures including PCFCF to the most comparable GAAP measures.

The weighted average number of MIC shares outstanding during the quarter ended September 30, 2016 increased 2.0% to 81,220,841 versus the prior comparable period. The increase was primarily the result of the reinvestment by MIC’s manager on August 1, 2016 of a previously deferred performance fee and the monthly reinvestment of base management fees.

The MIC board of directors authorized a cash dividend of $1.29 per share, or $5.16 annualized, for the third quarter of 2016. The dividend will be payable November 15, 2016 to shareholders of record on November 10, 2016. The cash payment represents a 14.2% increase over the dividend paid for the third quarter of 2015.

MIC reaffirmed its expectation that it will deliver a previously announced full-year 2016 dividend of between $5.00 and $5.10 per share, up from $4.46 in 2015. “Including the dividend to be paid in November, we will have returned $3.74 per share in cash to shareholders, or a payout of approximately 77.0% of PCFCF based on the Company’s financial performance in 2016,” said Hooke. The payment of any future dividend is predicated on the continued stable performance of MIC’s businesses and authorization by the Company’s board of directors.

MIC made total capital expenditures of $79.4 million and $198.2 million in the quarter and nine month periods ended September 30, 2016, respectively. In addition, the Company completed bolt-on acquisitions having an aggregate value of $22.4 million and $48.9 million in the same two periods.

MIC’s combined expenditures on growth projects and bolt-on acquisitions totaled $78.0 million and $201.2 million in the quarter and year to date periods ended September 30, 2016, respectively. The Company has also entered into agreements for additional acquisitions and investments that are expected to result in the deployment of approximately $50.0 million prior to year-end.

“We have effectively achieved our capital deployment objectives for 2016 at this point having allocated approximately $150.0 million to growth projects and $100.0 million to bolt-on acquisitions,” Hooke stated. “For the full year we now expect total growth capital expenditures to be approximately $300.0 million – a level that increases our confidence in our ability to deploy a forecast $350.0 million in 2017.” As of the end of September, MIC reported having a backlog of approved growth projects with a value of more than $340.0 million including the pending commitments.

Following the quarter end, MIC completed the refinancing of the long-term debt of Atlantic Aviation. The previous Atlantic credit facility, consisting of a $595.9 million term loan and an undrawn $70.0 million revolving credit facility, was replaced with a $400.0 million term loan and $350.0 million revolving credit facility, of which $200.0 million was drawn at closing. MIC subsequently purchased an interest rate cap limiting the potential increase in the LIBOR component of the term loan coupon to 1.0% for total consideration of $8.6 million.

MIC also completed a public offering of $402.5 million of seven-year, convertible senior notes including notes offered pursuant to the underwriters’ exercise of an over-allotment option of $52.5 million. Net proceeds of the offering were used primarily to pay down approximately $175.0 million of the outstanding balance on Atlantic Aviation’s new revolving credit facility and other revolving credit facilities, to fund a portion of the announced growth projects and to pay costs including approximately $17.8 million of interest rate swap break fees. The notes bear interest at a rate of 2% per annum, are convertible only upon satisfaction of certain conditions and during certain periods and may, at MIC’s option, be settled upon conversion in shares, cash or a combination thereof.

Summary of Consolidated (GAAP) Results for the Quarter and Nine Months Ended September 30, 2016

MIC reported growth in revenue of 1.2% to $420.5 million for the quarter and a decrease of 1.9% to $1,214.5 million in the nine month period. Changes in revenue reflect, in part, fluctuations in the cost of energy inputs such as jet fuel and gas. The pass-through of energy input costs, up or down, makes gross profit – revenue less direct expenses - effectively the “top line” to which MIC manages its businesses. The decrease in revenue in the nine month period was entirely offset by a decrease in direct expenses primarily related to the decline in the cost of energy inputs recorded in cost of services/cost of product sales.

Gross profit increased 4.2% to $246.2 million and 6.1% to $734.7 million in the quarter and nine months ended September 30, 2016, respectively. The growth in the quarter reflects increased flight activity and contributions from sites acquired by Atlantic Aviation, an improvement in wind and solar resources and the addition of gross profit from acquisitions in 2016. Through nine months, the improvement also includes the incremental gross profit in the first quarter related to the acquisition of BEC and favorable changes in the value of commodity hedges.

Selling, general and administrative expenses increased by 4.8% to $77.5 million in the third quarter and decreased by 1.5% to $222.2 million for the nine months ended September 30, 2016. The increase in expenses for the quarter reflects primarily costs related to the evaluation of various acquisition and investment opportunities and the expenses associated with acquired businesses.

The decrease in selling, general and administrative expenses for the nine month period reflects primarily a reduction in transaction related expenses and the absence of costs related to the conversion of MIC from a limited liability company to a corporation, partially offset by the incremental one quarter of costs associated with BEC.

The consolidated items above resulted in MIC reporting net income of $42.5 million and $83.7 million in the quarter and nine months ended September 30, 2016, respectively, compared with net income of $8.3 million and a net loss of $145.7 million in the prior comparable periods.

Summary of Proportionately Combined (non-GAAP) Results for the Quarter and Nine Months Ended September 30, 2016

The following items are discussed on a proportionately combined basis reflective of MIC’s partial interest in certain of its businesses. See “Use of Non-GAAP Measures” below for MIC’s definition of Free Cash Flow, EBITDA excluding Non-Cash Items and proportionately combined metrics as well as further information on MIC’s use of these measures. See also the reconciliations of non-GAAP measures to the comparable GAAP measures attached to this release.

MIC’s EBITDA excluding non-cash items increased 14.7% to $183.9 million and 12.5% to $521.0 million in the quarter and nine months ended September 30, 2016, respectively. The increases reflect primarily the growth in gross profit, and approximately $13.0 million of insurance proceeds recorded in Other income, net, partially offset in the quarter by higher selling, general and administrative expenses. Excluding the insurance proceeds, EBITDA would have increased by 6.5%.

Cash interest expense decreased in the quarter and nine months periods versus the prior comparable periods primarily as a result of a reduction in weighted average interest rates partially offset by higher average balances outstanding on debt facilities.

Cash taxes increased primarily as a result of the absence of any performance fees and associated tax benefits in 2016 versus the comparable periods in 2015. MIC files a consolidated federal income tax return and any federal income tax liability generated by its operating companies in 2016, other than Alternative Minimum Tax, is expected to be offset by the application of net operating loss carryforwards available at the holding company level.

Maintenance capital expenditures increased in both the third quarter and year to date periods versus the comparable periods in 2015. Of the increase, $13.9 million in both periods relates to expenditures for the repair of damage to IMTT docks that were insured losses. The insurance recoveries are recorded as a component of Other Income, net in both IMTT segment and MIC consolidated statements of operations.

MIC’s Free Cash Flow increased to $131.9 million in the third quarter of 2016 and to $391.6 million through nine months versus $92.8 million and $291.8 million in the comparable periods in 2015. The comparable period figures do not reflect adjustments made to exclude the impact of interest rate swap breaks costs of $19.2 million and $50.6 million in the quarter and year to date periods, respectively, and $9.3 million of transaction-related in the year to date figure.

Conference Call and Webcast

When: Management has scheduled a conference call for 8:00 a.m. Eastern Time on Tuesday, November 1, 2016 during which it will review and comment on the Company’s results for the third quarter.

How: To listen to the conference call please dial +1(650) 521-5252 or +1(877) 852-2928 at least 10 minutes prior to the scheduled start time. A webcast of the call will be accessible via the Company’s website at www.macquarie.com/mic. Please allow extra time prior to the call to visit the site and download the necessary software to listen to the webcast.

Slides: The Company will prepare materials in support of its conference call presentation. The materials will be available for downloading from the Company’s website prior to the conference call.

Replay: For interested individuals unable to participate in the live conference call, a replay will be available after 2:00 p.m. on November 1, 2016 through midnight on November 7, 2016, at +1(404) 537-3406 or +1(855) 859-2056, Passcode: 49732812. An online archive of the webcast will be available on the Company’s website for one year following the call. MIC-G

About MIC

MIC owns, operates and invests in a diversified group of businesses providing basic services to customers in the United States. Its businesses consist of a bulk liquid terminals business, International-Matex Tank Terminals, an airport services business, Atlantic Aviation, entities comprising an energy services, production and distribution segment, MIC Hawaii, and entities comprising a Contracted Power and Energy segment. For additional information, please visit the MIC website at www.macquarie.com/mic. MIC-G

Use of Non-GAAP Measures

In addition to MIC’s results under U.S. GAAP, the Company uses certain non-GAAP measures to assess the performance and prospects of its businesses. In particular, MIC uses Free Cash Flow, EBITDA excluding non-cash items and certain proportionately combined financial metrics. See the reconciliations of these non-GAAP measures to the comparable GAAP measures in the tables attached to this release.

In analyzing the financial performance of its businesses, MIC focuses primarily on cash generation and Free Cash Flow in particular. MIC believes investors use Free Cash Flow as a measure of its ability to sustain and potentially increase its quarterly cash dividend and to fund a portion of its growth.

MIC measures EBITDA excluding non-cash items as it reflects its businesses’ ability to effectively manage the volume of products sold or services provided, the margin earned on those transactions and the management of operating expenses independent of the capitalization and tax attributes of those businesses.

Given MIC’s varied ownership levels in some of its businesses, principally in the CP&E segment, together with its obligations to report the results of these businesses on a consolidated basis, management believes that GAAP measures such as net income (loss) do not fully reflect all of the items it considers in assessing the amount of cash generated based on its ownership interest in its businesses. Proportionately combined financial metrics reflect MIC Corporate and its ownership interest in each of its businesses. MIC notes that the proportionately combined metrics used may be calculated in a different manner by other companies and may limit their usefulness as a comparative measure. Therefore, proportionately combined metrics should be used as a supplemental measure to help understand MIC’s financial performance and not in lieu of financial results reported under GAAP.

MIC defines Free Cash Flow, including Proportionately Combined Free Cash Flow (PCFCF), 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. MIC defines 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 and adjustments for other non-cash items 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. In its Quarterly Report on Form 10-Q, MIC has disclosed Free Cash Flow on a consolidated basis and for each of its operating segments and MIC Corporate. The Company believes that both Free Cash Flow and EBITDA excluding non-cash items support a more complete understanding of the business factors and economic trends reflected in the financial performance of its businesses than would otherwise be achieved using GAAP results alone.

Free Cash Flow reflects the ability of MIC businesses to generate cash on an ongoing basis, in part in support of its dividend and to fund a portion of its growth. MIC characterizes its businesses as owners of high-value, long-lived assets which are capable of generating Free Cash Flow in excess of GAAP net income as a result of: (i) non-cash depreciation, amortization and any impairment charges; (ii) the Company’s ability to defer all or a portion of current federal income taxes; (iii) non-cash unrealized gains or losses on derivative instruments; and, (iv) various other non-cash items such as pension expense, amortization of tolling liabilities and gains (losses) on disposal of assets. The non-cash 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 reflected as a reduction to Free Cash Flow, as noted above. In addition, management uses Free Cash Flow as a measure of the Company’s ability to sustain and potentially increase its quarterly cash dividend and to fund a portion of its growth. MIC believes that external consumers of its financial statements, including investors and research analysts, use this metric to assess the Company’s performance and as an indicator of its success in generating a cash return on investment.

Free Cash Flow does not take into consideration required payments on indebtedness and other fixed obligations or the other cash items that are excluded from MIC’s definition of Free Cash Flow. The Company notes that Free Cash Flow may be calculated differently by other companies thereby limiting its usefulness as a comparative measure. Free Cash Flow should be used as a supplemental measure to help understand MIC’s financial performance and not in lieu of its financial results reported under GAAP.

Classification of Maintenance Capital Expenditures and Growth Capital Expenditures

MIC categorizes capital expenditures as either maintenance capital expenditures or growth capital expenditures. As neither maintenance capital expenditure nor growth capital expenditure is a GAAP term, the Company has adopted a framework to categorize specific capital expenditures. In broad terms, maintenance capital expenditures primarily maintain its businesses at current levels of operations, capability, profitability or cash flow, while growth capital expenditures primarily provide new or enhanced levels of operations, capability, profitability or cash flow. MIC management considers a number of factors in determining whether a specific capital expenditure will be classified as maintenance or growth.

In some cases, specific capital expenditures contain characteristics of both maintenance and growth capital expenditures. MIC does not bifurcate specific capital expenditures into growth and maintenance components. Each discrete capital expenditure is considered within the above framework and the entire capital expenditure is classified as either maintenance or growth.

Forward-Looking Statements

This press release contains forward-looking statements. MIC 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 release are subject to a number of risks and uncertainties, some of which are beyond MIC’s control including, among other things: changes in general economic or business conditions; its ability to service, comply with the terms of and refinance debt, successfully integrate and manage acquired businesses, retain or replace qualified employees, manage growth, make and finance future acquisitions, and implement its strategy; risks associated with development, investment and expansion in the power industry; its regulatory environment establishing rate structures and monitoring quality of service; demographic trends, the political environment, the economy, tourism, construction and transportation costs, air travel, environmental costs and risks; fuel and gas and other commodity costs; its ability to recover increases in costs from customers, cybersecurity risks, work interruptions or other labor stoppages, reliance on sole or limited source suppliers, risks or conflicts of interests involving its relationship with the Macquarie Group and changes in U.S. federal tax law.

MIC’s actual results, performance, prospects or opportunities could differ materially from those expressed in or implied by the forward-looking statements. Additional risks of which MIC is not currently aware could also cause its 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. MIC undertakes 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 Group Limited and its worldwide subsidiaries and affiliates. Macquarie Infrastructure Corporation 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 (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of Macquarie Infrastructure Corporation.

For further information, please contact:

Investor enquiries

Jay A. Davis
Investor Relations
MIC
(212) 231-1825

Media enquiries

Melissa McNamara
Corporate Communications
MIC
(212) 231-1667

Michael Hacke

Investor Relations

MIC

(212) 231-6483

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Thousands, Except Share Data)


	September 30, 2016			December 31, 2015⁽¹⁾
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	28,379		$	22,394
Restricted cash		12,841			18,946
Accounts receivable, less allowance for doubtful accounts
of $1,576 and $1,690, respectively		126,487			95,597
Inventories		30,376			29,489
Prepaid expenses		12,783			21,690
Other current assets		16,648			28,453
Total current assets		227,514			216,569
Property, equipment, land and leasehold improvements, net		4,164,745			4,116,163
Investment in unconsolidated business		9,058			8,274
Goodwill		2,021,509			2,017,211
Intangible assets, net		906,654			934,892
Other noncurrent assets		11,195			15,695
Total assets	$	7,340,675		$	7,308,804

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Due to Manager - related party	$	6,535		$	73,317
Accounts payable		70,347			56,688
Accrued expenses		78,479			78,527
Current portion of long-term debt		34,833			40,099
Fair value of derivative instruments		17,797			19,628
Other current liabilities		41,292			40,531
Total current liabilities		249,283			308,790
Long-term debt, net of current portion		2,836,100			2,746,525
Deferred income taxes		877,955			816,836
Fair value of derivative instruments		38,978			15,698
Tolling agreements - noncurrent		62,317			68,150
Other noncurrent liabilities		151,983			150,363
Total liabilities		4,216,616			4,106,362
Commitments and contingencies		-			-
Stockholders’ equity ⁽²⁾:
Common stock ($0.001 par value; 500,000,000 authorized;81,755,988 shares issued and outstanding at September 30, 2016 and 80,006,744 shares issued and outstanding at December 31, 2015)	$	82		$	80
Additional paid in capital		2,157,006			2,317,421
Accumulated other comprehensive loss		(25,743	)		(23,295	)
Retained earnings		819,557			735,984
Total stockholders’ equity		2,950,902			3,030,190
Noncontrolling interests		173,157			172,252
Total equity		3,124,059			3,202,442
Total liabilities and equity	$	7,340,675		$	7,308,804
_________________
(1) Conformed to current period presentation. See Note 2, "Basis of Presentation", for Recently Issued Accounting Standards adopted in the nine months ended September 30, 2016.
(2) See Note 8, "Stockholders' Equity", for discussions on preferred stock and special stock.

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
($ in Thousands, Except Share and Per Share Data)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015
Revenue
Service revenue	$	323,975		$	319,827		$	942,437		$	973,638
Product revenue		96,549			95,882			272,053			264,258
Total revenue		420,524			415,709			1,214,490			1,237,896
Costs and expenses
Cost of services		134,512			138,353			371,832			420,187
Cost of product sales		39,845			41,035			107,923			125,409
Selling, general and administrative		77,468			73,901			222,182			225,618
Fees to Manager - related party		18,382			18,118			49,570			337,950
Depreciation		59,242			53,070			172,125			162,293
Amortization of intangibles		15,417			17,783			49,917			83,656
Total operating expenses		344,866			342,260			973,549			1,355,113
Operating income (loss)		75,658			73,449			240,941			(117,217	)
Other income (expense)
Interest income		27			21			85			34
Interest expense⁽¹⁾		(20,871	)		(54,761	)		(117,268	)		(108,624	)
Other income, net		16,689			772			20,389			2,392
Net income (loss) before income taxes		71,503			19,481			144,147			(223,415	)
(Provision) benefit for income taxes		(29,022	)		(11,139	)		(60,409	)		77,725
Net income (loss)	$	42,481		$	8,342		$	83,738		$	(145,690	)
Less: net income (loss) attributable to noncontrolling interests		455			(2,296	)		165			(4,230	)
Net income (loss) attributable to MIC	$	42,026		$	10,638		$	83,573		$	(141,460	)

Basic income (loss) per share attributable to MIC	$	0.52		$	0.13		$	1.04		$	(1.83	)
Weighted average number of shares outstanding: basic		81,220,841			79,625,436			80,570,192			77,364,257

Diluted income (loss) per share attributable to MIC	$	0.51		$	0.13		$	1.03		$	(1.83	)
Weighted average number of shares outstanding: diluted		85,750,096			80,343,329			81,313,767			77,364,257
Cash dividends declared per share	$	1.29		$	1.13		$	3.74		$	3.31

(1) Interest expense includes gains on derivative instruments of $3.7 million and losses of derivative instruments of $43.0 million for the quarter and nine months ended September 30, 2016, respectively. For the quarter and nine months ended September 30, 2015, interest expense includes losses on derivative instruments of $29.5 million and $38.4 million, respectively.

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
($ in Thousands)

	Nine Months Ended September 30,
	2016			2015

Operating activities
Net income (loss)	$	83,738		$	(145,690	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of property and equipment		172,125			162,293
Amortization of intangible assets		49,917			83,656
Amortization of debt financing costs		7,536			6,757
Adjustments to derivative instruments		20,022			(36,079	)
Fees to Manager- related party		49,570			270,130
Deferred taxes		55,126			(78,323	)
Other non-cash expense, net		4,257			3,592
Changes in other assets and liabilities, net of acquisitions:
Restricted cash		727			765
Accounts receivable		(10,094	)		(5,458	)
Inventories		(1,047	)		(843	)
Prepaid expenses and other current assets		5,967			5,238
Due to Manager - related party		21			(44	)
Accounts payable and accrued expenses		(3,365	)		(3,134	)
Income taxes payable		3,848			(5,755	)
Other, net		(1,360	)		(2,186	)
Net cash provided by operating activities		436,988			254,919

Investing activities
Acquisitions of businesses and investments, net of cash acquired		(38,989	)		(236,956	)
Purchases of property and equipment		(198,151	)		(97,066	)
Proceeds from insurance claim		10,002			-
Change in restricted cash		-			10,559
Other, net		861			1,107
Net cash used in investing activities		(226,277	)		(322,356	)

Financing activities
Proceeds from long-term debt	$	370,000		$	2,120,569
Payment of long-term debt		(295,950	)		(2,195,535	)
Proceeds from the issuance of shares		7,651			492,248
Dividends paid to common stockholders		(290,527	)		(251,326	)
Contributions received from noncontrolling interests		15,431			532
Purchase of noncontrolling interest		(9,909	)		-
Distributions paid to noncontrolling interests		(3,682	)		(1,848	)
Offering and equity raise costs paid		(678	)		(16,789	)
Debt financing costs paid		(1,784	)		(23,530	)
Change in restricted cash		5,379			8,008
Payment of capital lease obligations		(1,151	)		(1,880	)
Net cash (used in) provided by financing activities		(205,220	)		130,449

Effect of exchange rate changes on cash and cash equivalents		494			(687	)

Net change in cash and cash equivalents		5,985			62,325
Cash and cash equivalents, beginning of period		22,394			48,014
Cash and cash equivalents, end of period	$	28,379		$	110,339

Supplemental disclosures of cash flow information
Non-cash investing and financing activities:
Accrued equity offering costs	$	90		$	16
Accrued financing costs	$	548		$	317
Accrued purchases of property and equipment	$	31,728		$	20,570
Acquisition of equipment through capital leases	$	-		$	398
Issuance of shares to Manager	$	116,373		$	201,067
Issuance of shares to independent directors	$	750		$	750
Conversion of convertible senior notes to shares	$	4		$	25
Conversion of LLC interests to common stock⁽¹⁾	$	-		$	79
Conversion of LLC interests to additional paid in capital⁽¹⁾	$	-		$	2,428,334
Distributions payable to noncontrolling interests	$	10		$	568
Taxes paid, net	$	1,426		$	6,352
Interest paid	$	81,998		$	79,106
______________
(1) See Note 8, "Stockholders' Equity", for discussion on common stock, LLC interests and additional paid in capital.

MACQUARIE INFRASTRUCTURE CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS – MD&A

	Quarter Ended September 30,						Change Favorable/ (Unfavorable)						Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016			2015			$				%			2016			2015		$				%
	($ In Thousands, Except Share and Per Share Data) (Unaudited)
Revenue
Service revenue	$	323,975		$	319,827			4,148			1.3		$	942,437		$	973,638			(31,201	)		(3.2	)
Product revenue		96,549			95,882			667			0.7			272,053			264,258			7,795			2.9
Total revenue		420,524			415,709			4,815			1.2			1,214,490			1,237,896			(23,406	)		(1.9	)

Costs and expenses
Cost of services (exclusive of depreciation and amortization of intangibles shown separately below)		134,512			138,353			3,841			2.8			371,832			420,187			48,355			11.5
Cost of product sales (exclusive of depreciation and amortization of intangibles shown separately below)		39,845			41,035			1,190			2.9			107,923			125,409			17,486			13.9
Gross profit		246,167			236,321			9,846			4.2			734,735			692,300			42,435			6.1
Selling, general and administrative		77,468			73,901			(3,567	)		(4.8	)		222,182			225,618			3,436			1.5
Fees to Manager - related party		18,382			18,118			(264	)		(1.5	)		49,570			337,950			288,380			85.3
Depreciation		59,242			53,070			(6,172	)		(11.6	)		172,125			162,293			(9,832	)		(6.1	)
Amortization of intangibles		15,417			17,783			2,366			13.3			49,917			83,656			33,739			40.3
Total operating expenses		170,509			162,872			(7,637	)		(4.7	)		493,794			809,517			315,723			39.0
Operating income (loss)		75,658			73,449			2,209			3.0			240,941			(117,217	)		358,158		NM
Other income (expense)
Interest income		27			21			6			28.6			85			34			51			150.0
Interest expense⁽¹⁾		(20,871	)		(54,761	)		33,890			61.9			(117,268	)		(108,624	)		(8,644	)		(8.0	)
Other income, net		16,689			772			15,917		NM				20,389			2,392			17,997		NM
Net income (loss) before income taxes		71,503			19,481			52,022		NM				144,147			(223,415	)		367,562			164.5
(Provision) benefit for income taxes		(29,022	)		(11,139	)		(17,883	)		(160.5	)		(60,409	)		77,725			(138,134	)		(177.7	)
Net income (loss)	$	42,481		$	8,342			34,139		NM			$	83,738		$	(145,690	)		229,428			157.5
Less: net income (loss) attributable to noncontrolling interests		455			(2,296	)		(2,751	)		(119.8	)		165			(4,230	)		(4,395	)		(103.9	)
Net income (loss) attributable to MIC	$	42,026		$	10,638			31,388		NM			$	83,573		$	(141,460	)		225,033			159.1

Basic income (loss) per share attributable to MIC	$	0.52		$	0.13			0.39		NM			$	1.04		$	(1.83	)		2.87			156.8
Weighted average number of shares outstanding: basic		81,220,841			79,625,436			1,595,405			2.0			80,570,192			77,364,257			3,205,935			4.1
__________________
NM - Not meaningful
(1) Interest expense includes gains on derivative instruments of $3.7 million and losses on derivative instruments of $43.0 million for the quarter and nine months ended September 30, 2016, respectively. For the quarter and nine months ended September 30, 2015, interest expense includes losses on derivative instruments of $29.5 million and $38.4 million, respectively.

MACQUARIE INFRASTRUCTURE CORPORATION

RECONCILIATION OF CONSOLIDATED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND A RECONCILIATION

FROM CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

	Quarter Ended September 30,						Change Favorable/(Unfavorable)				Nine Months Ended September 30,						Change Favorable/(Unfavorable)
	2016			2015			$		%		2016			2015			$		%
	($ In Thousands) (Unaudited)

Net income (loss)	$	42,481		$	8,342						$	83,738		$	(145,690	)
Interest expense, net⁽¹⁾		20,844			54,740							117,183			108,590
Provision (benefit) for income taxes		29,022			11,139							60,409			(77,725	)
Depreciation		59,242			53,070							172,125			162,293
Amortization of intangibles		15,417			17,783							49,917			83,656
Fees to Manager- related party⁽²⁾		18,382			18,118							49,570			337,950
Other non-cash expense (income), net⁽³⁾		1,435			(484	)						(3,360	)		860
EBITDA excluding non-cash items	$	186,823		$	162,708			24,115		14.8	$	529,582		$	469,934			59,648		12.7

EBITDA excluding non-cash items	$	186,823		$	162,708						$	529,582		$	469,934
Interest expense, net⁽¹⁾		(20,844	)		(54,740	)						(117,183	)		(108,590	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾		(8,832	)		24,243							27,639			17,209
Amortization of debt financing costs⁽¹⁾		2,287			2,191							7,536			6,757
Interest rate swap breakage fees		-			(19,171	)						-			(50,556	)
Provision/benefit for income taxes, net of changes in deferred taxes		(1,115	)		(150	)						(5,283	)		(598	)
Changes in working capital⁽²⁾		751			(54,106	)						(5,303	)		(79,237	)
Cash provided by operating activities		159,070			60,975							436,988			254,919
Changes in working capital⁽²⁾		(751	)		54,106							5,303			79,237
Maintenance capital expenditures		(24,472	)		(20,758	)						(44,725	)		(38,263	)
Free cash flow	$	133,847		$	94,323			39,524		41.9	$	397,566		$	295,893			101,673		34.4


(1) Interest expense, net, includes adjustment to derivative instruments and non-cash amortization of deferred financing fees. Interest expense also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas for the nine months ended September 30, 2016 and a non-cash write-off of deferred financing costs related to the May 2015 refinancing at IMTT for the nine months ended September 30, 2015.
(2) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 volume weighted average share price of $71.84.
(3) Other non-cash expense (income), net, primarily includes non-cash pension expense, amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

MACQUARIE INFRASTRUCTURE CORPORATION

RECONCILIATION FROM CONSOLIDATED FREE CASH FLOW TO PROPORTIONATELY COMBINED FREE CASH FLOW

	Quarter Ended September 30,							Change Favorable/ (Unfavorable)			Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016				2015			$		%	2016			2015			$		%
	($ In Thousands) (Unaudited)

Free Cash Flow- Consolidated basis		$	133,847		$	94,323			39,524	41.9	$	397,566		$	295,893			101,673		34.4
100% of CP&E Free Cash Flow included in consolidated Free Cash Flow			(26,718	)		(2,577	)					(56,532	)		(9,607	)
MIC's share of CP&E Free Cash Flow			24,773			1,040						50,580			5,496
100% of MIC Hawaii Free Cash Flow included in consolidated Free Cash Flow			(8,696	)		(9,121	)					(30,432	)		(35,728	)
MIC's share of MIC Hawaii Free Cash Flow			8,694			9,121						30,430			35,728
Free Cash Flow- Proportionately Combined basis		$	131,900		$	92,786			39,114	42.2	$	391,612		$	291,782			99,830		34.2

MACQUARIE INFRASTRUCTURE CORPORATION

RECONCILIATION OF SEGMENT NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND A RECONCILIATION FROM CASH

PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

IMTT

	Quarter Ended September 30,						Change Favorable/ (Unfavorable)						Nine Months Ended September 30,							Change Favorable/ (Unfavorable)
	2016			2015									2016			2015
	$			$			$			%			$			$				$			%
	($ In Thousands) (Unaudited)

Revenues		133,143			135,436			(2,293	)		(1.7	)		396,786			415,881				(19,095	)		(4.6	)
Cost of services (exclusive of depreciation and amortization of intangibles shown separately below)		53,085			55,990			2,905			5.2			149,845			170,633				20,788			12.2
Gross profit		80,058			79,446			612			0.8			246,941			245,248				1,693			0.7
General and administrative expenses		8,358			8,903			545			6.1			24,322			24,909				587			2.4
Depreciation and amortization		35,709			32,233			(3,476	)		(10.8	)		103,612			99,785				(3,827	)		(3.8	)
Operating income		35,991			38,310			(2,319	)		(6.1	)		119,007			120,554				(1,547	)		(1.3	)
Interest expense, net⁽¹⁾		(7,827	)		(19,045	)		11,218			58.9			(41,462	)		(32,214	)			(9,248	)		(28.7	)
Other income, net		13,495			549			12,946		NM				16,947			1,950				14,997		NM
Provision for income taxes		(17,079	)		(8,053	)		(9,026	)		(112.1	)		(38,717	)		(36,801	)			(1,916	)		(5.2	)
Net income⁽²⁾		24,580			11,761			12,819			109.0			55,775			53,489				2,286			4.3
Less: net income attributable to noncontrolling interests		-			172			172			100.0			59			530				471			88.9
Net income attributable to MIC⁽²⁾		24,580			11,589			12,991			112.1			55,716			52,959				2,757			5.2

Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income⁽²⁾		24,580			11,761									55,775			53,489
Interest expense, net⁽¹⁾		7,827			19,045									41,462			32,214
Provision for income taxes		17,079			8,053									38,717			36,801
Depreciation and amortization		35,709			32,233									103,612			99,785
Other non-cash expense, net⁽³⁾		1,825			1,769									6,045			4,624		`
EBITDA excluding non-cash items		87,020			72,861			14,159			19.4			245,611			226,913				18,698			8.2

EBITDA excluding non-cash items		87,020			72,861									245,611			226,913
Interest expense, net⁽¹⁾		(7,827	)		(19,045	)								(41,462	)		(32,214	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾		(2,433	)		8,474									10,723			2,140
Amortization of debt financing costs⁽¹⁾		411			408									1,242			1,937
Interest rate swap breakage fees		-			-									-			(31,385	)
Provision for income taxes, net of changes in deferred taxes		(904	)		(52	)								(3,071	)		(156	)
Changes in working capital		(1,243	)		8,686									(11,726	)		(9,667	)
Cash provided by operating activities		75,024			71,332									201,317			157,568
Changes in working capital		1,243			(8,686	)								11,726			9,667
Maintenance capital expenditures		(19,860	)		(12,036	)								(33,099	)		(20,550	)
Free cash flow		56,407			50,610			5,797			11.5			179,944			146,685				33,259			22.7
_____________________

NM - Not meaningful
(1)Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees. For the nine months ended September 30, 2015, interest expense also includes non-cash write-off of deferred financing costs related to the May 2015 refinancing.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Other non-cash expense, net, primarily includes non-cash adjustments related to pension expense and non-cash gains (losses) related to disposal of assets. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

Atlantic Aviation


	Quarter Ended September 30,						Change Favorable/ (Unfavorable)					Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016			2015								2016			2015
		$			$		$			%			$			$		$				%
	($ In Thousands) (Unaudited)
Revenues		186,823			184,391			2,432		1.3			544,029			557,757			(13,728	)		(2.5	)
Cost of services (exclusive of depreciation and amortization ofintangibles shown separately below)		77,524			82,363			4,839		5.9			218,126			249,554			31,428			12.6
Gross profit		109,299			102,028			7,271		7.1			325,903			308,203			17,700			5.7
Selling, general and administrative expenses		53,027			51,180			(1,847	)	(3.6	)		157,019			153,226			(3,793	)		(2.5	)
Depreciation and amortization		22,148			22,494			346		1.5			69,041			104,019			34,978			33.6
Operating income		34,124			28,354			5,770		20.3			99,843			50,958			48,885			95.9
Interest expense, net⁽¹⁾		(5,199	)		(13,436	)		8,237		61.3			(27,437	)		(32,126	)		4,689			14.6
Other (expense) income, net		(150	)		(240	)		90		37.5			191			(877	)		1,068			121.8
Provision for income taxes		(11,543	)		(5,854	)		(5,689	)	(97.2	)		(29,258	)		(7,440	)		(21,818	)	NM
Net income⁽²⁾		17,232			8,824			8,408		95.3			43,339			10,515			32,824		NM

Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income⁽²⁾		17,232			8,824								43,339			10,515
Interest expense, net⁽¹⁾		5,199			13,436								27,437			32,126
Provision for income taxes		11,543			5,854								29,258			7,440
Depreciation and amortization		22,148			22,494								69,041			104,019
Other non-cash expense (income), net⁽³⁾		216			(5	)							498			1,468
EBITDA excluding non-cash items		56,338			50,603			5,735		11.3			169,573			155,568			14,005			9.0

EBITDA excluding non-cash items		56,338			50,603								169,573			155,568
Interest expense, net⁽¹⁾		(5,199	)		(13,436	)							(27,437	)		(32,126	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾		(2,371	)		5,346								4,416			7,927
Amortization of debt financing costs⁽¹⁾		791			804								2,496			2,418
Provision for income taxes, net of changes in deferred taxes		(159	)		(261	)							(2,521	)		(894	)
Changes in working capital		5,142			2,086								11,412			292
Cash provided by operating activities		54,542			45,142								157,939			133,185
Changes in working capital		(5,142	)		(2,086	)							(11,412	)		(292	)
Maintenance capital expenditures		(2,075	)		(6,785	)							(5,816	)		(12,966	)
Free cash flow		47,325			36,271			11,054		30.5			140,711			119,927			20,784			17.3
_____________________
NM - Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Other non-cash expense (income), net, primarily includes non-cash gains (losses) related to disposal of assets. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

Contracted Power and Energy

	Quarter Ended September 30,						Change Favorable/ (Unfavorable)						Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016			2015									2016			2015
		$			$		$				%			$			$		$				%
	($ In Thousands) (Unaudited)

Revenues		45,538			43,304			2,234			5.2			114,017			91,257			22,760			24.9
Cost of product sales (exclusive of depreciation and amortization of intangibles shown separately below)		7,344			6,702			(642	)		(9.6	)		17,495			14,485			(3,010	)		(20.8	)
Gross profit		38,194			36,602			1,592			4.3			96,522			76,772			19,750			25.7
Selling, general and administrative expenses		6,824			6,635			(189	)		(2.8	)		19,331			23,443			4,112			17.5
Depreciation and amortization		14,000			13,860			(140	)		(1.0	)		41,693			35,159			(6,534	)		(18.6	)
Operating income		17,370			16,107			1,263			7.8			35,498			18,170			17,328			95.4
Interest expense, net⁽¹⁾		(2,764	)		(16,567	)		13,803			83.3			(31,614	)		(27,850	)		(3,764	)		(13.5	)
Other income (expense), net		3,531			(51	)		3,582		NM				3,839			1,065			2,774		NM
Provision for income taxes		(8,013	)		(3,266	)		(4,747	)		(145.3	)		(7,626	)		(6,131	)		(1,495	)		(24.4	)
Net income (loss)⁽²⁾		10,124			(3,777	)		13,901		NM				97			(14,746	)		14,843			100.7
Less: net income (loss) attributable to noncontrolling interests		566			(2,468	)		(3,034	)		(122.9	)		217			(4,760	)		(4,977	)		(104.6	)
Net income (loss) attributable to MIC⁽²⁾		9,558			(1,309	)		10,867		NM				(120	)		(9,986	)		9,866			98.8

Reconciliation of net income (loss) to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income (loss)⁽²⁾		10,124			(3,777	)								97			(14,746	)
Interest expense, net⁽¹⁾		2,764			16,567									31,614			27,850
Provision for income taxes		8,013			3,266									7,626			6,131
Depreciation and amortization		14,000			13,860									41,693			35,159
Other non-cash income, net ⁽³⁾		(1,459	)		(2,224	)								(5,424	)		(4,972	)
EBITDA excluding non-cash items		33,442			27,692			5,750			20.8			75,606			49,422			26,184			53.0

EBITDA excluding non-cash items		33,442			27,692									75,606			49,422
Interest expense, net⁽¹⁾		(2,764	)		(16,567	)								(31,614	)		(27,850	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾		(3,778	)		10,417									11,994			7,005
Amortization of debt financing costs⁽¹⁾		376			262									1,113			310
Interest rate swap breakage fees		-			(19,171	)								-			(19,171	)
Provision for income taxes, net of changes in deferred taxes		1			-									(8	)		(2	)
Changes in working capital		949			794									(1,909	)		(3,904	)
Cash provided by operating activities		28,226			3,427									55,182			5,810
Changes in working capital		(949	)		(794	)								1,909			3,904
Maintenance capital expenditures		(559	)		(56	)								(559	)		(107	)
Free cash flow		26,718			2,577			24,141		NM				56,532			9,607			46,925		NM
_____________________
NM- Not meaningful
(1) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Other non-cash income, net, primarily includes amortization of tolling liabilities. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

MIC Hawaii

	Quarter Ended September 30,						Change Favorable/ (Unfavorable)						Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016			2015									2016			2015
		$			$		$				%			$			$		$				%
	($ In Thousands) (Unaudited)

Product revenues		51,011			52,578			(1,567	)		(3.0	)		158,036			173,001			(14,965	)		(8.7	)
Service revenues		5,258			-			5,258		NM				5,258			-			5,258		NM
Cost of product sales (exclusive of depreciation and amortization of intangibles shown separately below)		32,501			34,333			1,832			5.3			90,428			110,924			20,496			18.5
Cost of Service (exclusive of depreciation and amortization of intangibles shown separately below)		3,946			-			(3,946	)	NM				3,946			-			(3,946	)	NM
Gross profit		19,822			18,245			1,577			8.6			68,920			62,077			6,843			11.0
Selling, general and administrative expenses		6,540			5,162			(1,378	)		(26.7	)		16,230			15,380			(850	)		(5.5	)
Depreciation and amortization		2,802			2,266			(536	)		(23.7	)		7,696			6,986			(710	)		(10.2	)
Operating income		10,480			10,817			(337	)		(3.1	)		44,994			39,711			5,283			13.3
Interest expense, net⁽¹⁾		(1,571	)		(1,824	)		253			13.9			(6,224	)		(5,573	)		(651	)		(11.7	)
Other expense, net		(187	)		(172	)		(15	)		(8.7	)		(588	)		(432	)		(156	)		(36.1	)
Provision for income taxes		(3,246	)		(3,687	)		441			12.0			(14,863	)		(13,287	)		(1,576	)		(11.9	)
Net income⁽²⁾		5,476			5,134			342			6.7			23,319			20,419			2,900			14.2
Less: net loss attributable to noncontrolling interests		(111	)		-			111		NM				(111	)		-			111		NM
Net income attributable to MIC⁽²⁾		5,587			5,134			453			8.8			23,430			20,419			3,011			14.7

Reconciliation of net income to EBITDA excluding non-cash items and a reconciliation of cash provided by operating activities to Free Cash Flow:
Net income⁽²⁾		5,476			5,134									23,319			20,419
Interest expense, net⁽¹⁾		1,571			1,824									6,224			5,573
Provision for income taxes		3,246			3,687									14,863			13,287
Depreciation and amortization		2,802			2,266									7,696			6,986
Other non-cash expense (income), net⁽³⁾		665			(212	)								(5,042	)		(823	)
EBITDA excluding non-cash items		13,760			12,699			1,061			8.4			47,060			45,442			1,618			3.6

EBITDA excluding non-cash items		13,760			12,699									47,060			45,442
Interest expense, net⁽¹⁾		(1,571	)		(1,824	)								(6,224	)		(5,573	)
Adjustments to derivative instruments recorded in interest expense⁽¹⁾		(250	)		6									506			137
Amortization of debt financing costs⁽¹⁾		96			121									848			362
Provision for income taxes, net of changes in deferred taxes		(1,361	)		-									(6,507	)		-
Changes in working capital		(1,394	)		6,012									5,554			5,366
Cash provided by operating activities		9,280			17,014									41,237			45,734
Changes in working capital		1,394			(6,012	)								(5,554	)		(5,366	)
Maintenance capital expenditures		(1,978	)		(1,881	)								(5,251	)		(4,640	)
Free cash flow		8,696			9,121			(425	)		(4.7	)		30,432			35,728			(5,296	)		(14.8	)
_____________________
NM - Not meaningful
(1)Interest expense, net, includes adjustments to derivative instruments related to interest rate swaps and non-cash amortization of deferred financing fees. For the nine months ended September 30, 2016, interest expense also included a non-cash write-off of deferred financing fees related to the February 2016 refinancing.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) Other non-cash expense (income), net, primarily includes non-cash adjustments related to pension expense and unrealized gains (losses) on commodity hedges. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

Corporate and Other

	Quarter Ended September 30,						Change Favorable/ (Unfavorable)						Nine Months Ended September 30,						Change Favorable/ (Unfavorable)
	2016			2015									2016			2015
		$			$		$				%			$			$		$			%
	($ In Thousands) (Unaudited)

Fees to Manager-related party		18,382			18,118			(264	)		(1.5	)		49,570			337,950			288,380		85.3
Selling, general and administrative expenses		3,925			2,021			(1,904	)		(94.2	)		8,831			8,660			(171	)	(2.0	)
Operating loss		(22,307	)		(20,139	)		(2,168	)		(10.8	)		(58,401	)		(346,610	)		288,209		83.2
Interest expense, net⁽¹⁾		(3,483	)		(3,868	)		385			10.0			(10,446	)		(10,827	)		381		3.5
Other income		-			686			(686	)		(100.0	)		-			686			(686	)	(100.0	)
Benefit for income taxes		10,859			9,721			1,138			11.7			30,055			141,384			(111,329	)	(78.7	)
Net loss⁽²⁾		(14,931	)		(13,600	)		(1,331	)		(9.8	)		(38,792	)		(215,367	)		176,575		82.0

Reconciliation of net loss to EBITDA excluding non-cash items and a reconciliation of cash used in operating activities to Free Cash Flow:
Net loss⁽²⁾		(14,931	)		(13,600	)								(38,792	)		(215,367	)
Interest expense, net⁽¹⁾		3,483			3,868									10,446			10,827
Benefit for income taxes		(10,859	)		(9,721	)								(30,055	)		(141,384	)
Fees to Manager-related party⁽³⁾		18,382			18,118									49,570			337,950
Other non-cash expense, net		188			188									563			563
EBITDA excluding non-cash items		(3,737	)		(1,147	)		(2,590	)	NM				(8,268	)		(7,411	)		(857	)	(11.6	)

EBITDA excluding non-cash items		(3,737	)		(1,147	)								(8,268	)		(7,411	)
Interest expense, net⁽¹⁾		(3,483	)		(3,868	)								(10,446	)		(10,827	)
Amortization of debt financing costs⁽¹⁾		613			596									1,837			1,730
Benefit for income taxes, net of changes in deferred taxes		1,308			163									6,824			454
Changes in working capital⁽³⁾		(2,703	)		(71,684	)								(8,634	)		(71,324	)
Cash used in operating activities		(8,002	)		(75,940	)								(18,687	)		(87,378	)
Changes in working capital⁽³⁾		2,703			71,684									8,634			71,324
Free cash flow		(5,299	)		(4,256	)		(1,043	)		(24.5	)		(10,053	)		(16,054	)		6,001		37.4
_____________________
NM- Not meaningful
(1) Interest expense, net, includes non-cash amortization of deferred financing fees.
(2) Corporate allocation expense, intercompany fees and the tax effect have been excluded from the above table as they are eliminated on consolidation.
(3) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by our Manager on August 1, 2016 using the June 2016 volume weighted average share price of $71.84.

MACQUARIE INFRASTRUCTURE CORPORATION

RECONCILIATION OF PROPORTIONATELY COMBINED NET INCOME (LOSS) TO EBITDA EXCLUDING NON-CASH ITEMS AND A

RECONCILIATION FROM CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

	For the Quarter Ended September 30, 2016
($ in Thousands) (Unaudited)	IMTT			Atlantic Aviation			Contracted Power and Energy⁽¹⁾			MIC Hawaii⁽¹⁾			MIC Corporate			Proportionately Combined⁽²⁾			Contracted Power and Energy 100%			MIC Hawaii 100%

Net income (loss)		24,580			17,232			9,489			5,479			(14,931	)		41,849			10,124			5,476
Interest expense, net⁽³⁾		7,827			5,199			2,352			1,568			3,483			20,429			2,764			1,571
Provision (benefit) for income taxes		17,079			11,543			8,014			3,246			(10,859	)		29,023			8,013			3,246
Depreciation and amortization of intangibles		35,709			22,148			12,122			2,800			-			72,779			14,000			2,802
Fees to Manager-related party		-			-			-			-			18,382			18,382			-			-
Other non-cash expense (income), net⁽⁴⁾		1,825			216			(1,459	)		665			188			1,435			(1,459	)		665
EBITDA excluding non-cash items		87,020			56,338			30,518			13,758			(3,737	)		183,897			33,442			13,760

EBITDA excluding non-cash items		87,020			56,338			30,518			13,758			(3,737	)		183,897			33,442			13,760
Interest expense, net⁽³⁾		(7,827	)		(5,199	)		(2,352	)		(1,568	)		(3,483	)		(20,429	)		(2,764	)		(1,571	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾		(2,433	)		(2,371	)		(3,334	)		(253	)		-			(8,391	)		(3,778	)		(250	)
Amortization of deferred finance charges⁽³⁾		411			791			362			96			613			2,273			376			96
Provision/benefit for income taxes, net of changes in deferred taxes		(904	)		(159	)		-			(1,361	)		1,308			(1,116	)		1			(1,361	)
Changes in working capital		(1,243	)		5,142			875			(1,390	)		(2,703	)		681			949			(1,394	)
Cash provided by (used in) operating activities		75,024			54,542			26,069			9,282			(8,002	)		156,915			28,226			9,280
Changes in working capital		1,243			(5,142	)		(875	)		1,390			2,703			(681	)		(949	)		1,394
Maintenance capital expenditures		(19,860	)		(2,075	)		(421	)		(1,978	)		-			(24,334	)		(559	)		(1,978	)
Free cash flow		56,407			47,325			24,773			8,694			(5,299	)		131,900			26,718			8,696

	For the Quarter Ended September 30, 2015
	IMTT⁽⁵⁾			Atlantic Aviation			Contracted Power and Energy⁽¹⁾			MIC Hawaii			MIC Corporate			Proportionately Combined⁽²⁾			Contracted Power and Energy 100%

Net income (loss)		11,761			8,824			(2,408	)		5,134			(13,600	)		9,711			(3,777	)
Interest expense, net⁽³⁾		19,045			13,436			14,647			1,824			3,868			52,820			16,567
Provision (benefit) for income taxes		8,053			5,854			3,266			3,687			(9,721	)		11,139			3,266
Depreciation and amortization of intangibles		32,233			22,494			11,988			2,266			-			68,981			13,860
Fees to Manager-related party		-			-			-			-			18,118			18,118			-
Other non-cash expense (income), net⁽⁴⁾		1,769			(5	)		(2,223	)		(212	)		188			(483	)		(2,224	)
EBITDA excluding non-cash items		72,861			50,603			25,270			12,699			(1,147	)		160,286			27,692

EBITDA excluding non-cash items		72,861			50,603			25,270			12,699			(1,147	)		160,286			27,692
Interest expense, net⁽³⁾		(19,045	)		(13,436	)		(14,647	)		(1,824	)		(3,868	)		(52,820	)		(16,567	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾		8,474			5,346			9,396			6			-			23,222			10,417
Amortization of deferred finance charges⁽³⁾		408			804			248			121			596			2,177			262
Interest rate swap breakage fees		-			-			(19,171	)		-			-			(19,171	)		(19,171	)
Provision/benefit for income taxes, net of changes in deferred taxes		(52	)		(261	)		-			-			163			(150	)		-
Changes in working capital		8,686			2,086			252			6,012			(71,684	)		(54,648	)		794
Cash provided by (used in) operating activities		71,332			45,142			1,348			17,014			(75,940	)		58,896			3,427
Changes in working capital		(8,686	)		(2,086	)		(252	)		(6,012	)		71,684			54,648			(794	)
Maintenance capital expenditures		(12,036	)		(6,785	)		(56	)		(1,881	)		-			(20,758	)		(56	)
Free cash flow		50,610			36,271			1,040			9,121			(4,256	)		92,786			2,577

	For the Nine Months Ended September 30, 2016
($ in Thousands) (Unaudited)	IMTT⁽⁵⁾			Atlantic Aviation			Contracted Power and Energy⁽¹⁾			MIC Hawaii⁽¹⁾			MIC Corporate			Proportionately Combined⁽²⁾			Contracted Power and Energy 100%			MIC Hawaii 100%

Net income (loss)		55,775			43,339			896			23,322			(38,792	)		84,540			97			23,319
Interest expense, net⁽³⁾		41,462			27,437			27,801			6,221			10,446			113,367			31,614			6,224
Provision (benefit) for income taxes		38,717			29,258			7,625			14,863			(30,055	)		60,408			7,626			14,863
Depreciation and amortization of intangibles		103,612			69,041			36,067			7,694			-			216,414			41,693			7,696
Fees to Manager-related party		-			-			-			-			49,570			49,570			-			-
Other non-cash expense (income), net⁽⁴⁾		6,045			498			(5,405	)		(5,042	)		563			(3,341	)		(5,424	)		(5,042	)
EBITDA excluding non-cash items		245,611			169,573			66,984			47,058			(8,268	)		520,958			75,606			47,060

EBITDA excluding non-cash items		245,611			169,573			66,984			47,058			(8,268	)		520,958			75,606			47,060
Interest expense, net⁽³⁾		(41,462	)		(27,437	)		(27,801	)		(6,221	)		(10,446	)		(113,367	)		(31,614	)		(6,224	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾		10,723			4,416			10,756			503			-			26,398			11,994			506
Amortization of deferred finance charges⁽³⁾		1,242			2,496			1,071			848			1,837			7,494			1,113			848
Provision/benefit for income taxes, net of changes in deferred taxes		(3,071	)		(2,521	)		(9	)		(6,507	)		6,824			(5,284	)		(8	)		(6,507	)
Changes in working capital		(11,726	)		11,412			(2,187	)		5,558			(8,634	)		(5,577	)		(1,909	)		5,554
Cash provided by (used in) operating activities		201,317			157,939			48,814			41,239			(18,687	)		430,622			55,182			41,237
Changes in working capital		11,726			(11,412	)		2,187			(5,558	)		8,634			5,577			1,909			(5,554	)
Maintenance capital expenditures		(33,099	)		(5,816	)		(421	)		(5,251	)		-			(44,587	)		(559	)		(5,251	)
Free cash flow		179,944			140,711			50,580			30,430			(10,053	)		391,612			56,532			30,432

	For the Nine Months Ended September 30, 2015
	IMTT⁽⁵⁾			Atlantic Aviation			Contracted Power and Energy⁽¹⁾			MIC Hawaii			MIC Corporate			Proportionately Combined⁽²⁾			Contracted Power and Energy 100%

Net income (loss)		53,489			10,515			(12,462	)		20,419			(215,367	)		(143,406	)		(14,746	)
Interest expense, net⁽³⁾		32,214			32,126			24,261			5,573			10,827			105,001			27,850
Provision (benefit) for income taxes		36,801			7,440			6,131			13,287			(141,384	)		(77,725	)		6,131
Depreciation and amortization of intangibles		99,785			104,019			29,545			6,986			-			240,335			35,159
Fees to Manager-related party⁽⁶⁾		-			-			-			-			337,950			337,950			-
Other non-cash expense (income), net⁽⁴⁾		4,624			1,468			(4,955	)		(823	)		563			877			(4,972	)
EBITDA excluding non-cash items		226,913			155,568			42,520			45,442			(7,411	)		463,032			49,422

EBITDA excluding non-cash items		226,913			155,568			42,520			45,442			(7,411	)		463,032			49,422
Interest expense, net⁽³⁾		(32,214	)		(32,126	)		(24,261	)		(5,573	)		(10,827	)		(105,001	)		(27,850	)
Adjustments to derivative instruments recorded in interest expense, net⁽³⁾		2,140			7,927			6,231			137			-			16,435			7,005
Amortization of deferred finance charges⁽³⁾		1,937			2,418			286			362			1,730			6,733			310
Interest rate swap breakage fees		(31,385	)		-			(19,171	)		-			-			(50,556	)		(19,171	)
Provision/benefit for income taxes, net of changes in deferred taxes		(156	)		(894	)		(2	)		-			454			(598	)		(2	)
Changes in working capital⁽⁶⁾		(9,667	)		292			(4,430	)		5,366			(71,324	)		(79,763	)		(3,904	)
Cash provided by (used in) operating activities		157,568			133,185			1,173			45,734			(87,378	)		250,282			5,810
Changes in working capital⁽⁶⁾		9,667			(292	)		4,430			(5,366	)		71,324			79,763			3,904
Maintenance capital expenditures		(20,550	)		(12,966	)		(107	)		(4,640	)		-			(38,263	)		(107	)
Free cash flow		146,685			119,927			5,496			35,728			(16,054	)		291,782			9,607

(1) Represents MIC's Proportionately combined interests in the businesses comprising this reportable segment.

(2) Proportionately combined Free Cash Flow is equal to the sum of Free Cash Flow attributable to MIC's ownership interest in each of its reportable segments and MIC Corporate.

(3) Interest expense, net, includes adjustments to derivative instruments and non-cash amortization of deferred financing charges. Interest expense, net, also includes a non-cash write-off of deferred financing fees related to the February 2016 refinancing at Hawaii Gas for the nine months ended September 30, 2016 and a non-cash write-off of deferred financing costs related to the May 2015 refinancing at IMTT for the nine months ended September 30, 2015.

(4) Other non-cash expense (income), net, primarily includes non-cash pension expense, amortization of tolling liabilities, unrealized gains (losses) on commodity hedges and non-cash gains (losses) related to disposal of assets. See "Free Cash Flow, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) excluding non-cash items and Proportionately Combined Metrics" above for a further discussion.

(5) 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 non-cash items, Free Cash Flow or results generally as a function of acquiring this noncontrolling interest.

(6) In July 2015, our Board requested, and our Manager agreed, that $67.8 million of the performance fee for the quarter ended June 30, 2015 be settled in cash in July 2015 to minimize dilution. The remaining $67.8 million obligation was settled and reinvested in 944,046 shares by the Manager on August 1, 2016 using the June 2016 volume weighted average share price of $71.84.

Macquarie Infrastructure Corp - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - November 1, 2016

Attached files

Macquarie Infrastructure Corp Reports