Macquarie Infrastructure's CEO Discusses Q3 2012 Results - Earnings Call Transcript

| About: Macquarie Infrastructure (MIC)
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Macquarie Infrastructure Company Trust (NYSE:MIC) Q3 2012 Earnings Call November 1, 2012 8:00 AM ET


Jay A. Davis – Managing Director, Investor Relations

James Hooke – Chief Executive Officer

Todd Weintraub – Chief Financial Officer


Andrew Gadlin – CJS Securities, Inc.

John Ellison – BB&T Capital Markets

Brendan Maiorana – Wells Fargo Advisors LLC

Sameer Rathod – Macquarie Capital

Louie Reformina – Waterfront Capital Partners LLC

Ian A. Zaffino – Oppenheimer Securities


Good day and welcome to the Macquarie Infrastructure Company Third Quarter 2012 Earnings Conference Call. Today’s call is being recorded.

At this time, I would like to turn the conference over to Mr. Jay Davis, Managing Director, Investor Relations. Please go ahead, sir.

Jay A. Davis

Thank you, Raleigh. Thank you, everyone, and good morning. Welcome once again to Macquarie Infrastructure Company’s earnings conference call, this covering the third quarter of 2012.

Our call today is being webcast and is open to the media. In addition to discussing our quarterly financial performance on this call, we published a press release summarizing our results and filed the financial report on Form 10-Q with the Securities and Exchange Commission. These materials were released last evening and may be downloaded from our website,

Before turning the proceedings over to Macquarie Infrastructure Company’s Chief Executive Officer, James Hooke, let me remind you that this presentation is proprietary and all rights are reserved. Any recording, rebroadcast or other use of this presentation, in whole or in part, without the prior written consent of Macquarie Infrastructure Company, 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 and is not a solicitation of an offer to buy or sell any security or instrument.

This presentation contains forward-looking statements. We may, in some cases, use 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. A description of known risks that could cause our actual results to differ appears under the caption Risk Factors in our Form 10-K. 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. The forward-looking events discussed in this presentation may not occur. These forward-looking statements are made as of the date of this presentation. We undertake no obligation to publicly update or revise any forward-looking statements after the completion of this presentation, whether as a result of new information, future events or otherwise, except as required by law.

With that, it is my pleasure to introduce Macquarie Infrastructure Company’s Chief Executive Officer, James Hooke.

James Hooke

Thank you, Jay. Good morning and thank you all for participating in our earnings conference call this morning. Let me begin by saying that our thoughts and our prayers are with all those whose lives have been affected by the severe storm here in the Northeast. The MIC staff and those who work for our operating companies have all being accounted for, and thankfully we have no reports of severe injuries or worst at this time.

It certainly has been a challenging few days for MIC and our operating businesses. We’ve seen the full force of Mother Nature over the past week and seen our emergency and contingency plans tested. Last weekend, while the East Coast was focused on the possible impact of Hurricane Sandy, our team in Hawaii was dealing with the tsunami warning resulting from a 7.7 magnitude earthquake off Alaska. Fortunately that turned out to a very minimal impact on the islands.

As the weekend progressed and the week began, we turned our attention to Hurricane Sandy. Although, we don’t yet know the full extent of the damage caused by the storm at this point, it’s clear that it’s had an impact on both IMTT’s operation at Bayonne and Atlantic Aviation’s operations at Teterboro, Farmingdale, Bridgeport and the New York City Heliport. The heliport was particularly hard hit.

Importantly, so long as our people and their families are all safe, we’ll work with our insurers and contractors to take care of the property damage. We’ve been in regular contact with the management teams at Atlantic Aviation and IMTT. In relation to IMTT, we received a full briefing from CEO, Tommy Coleman, and COO, Rick Courtney late yesterday. At this point, we know the following about IMTT: operations of IMTT Bayonne have been interrupted in part because the Coast Guard has closed the harbor, the Buckeye and Colonial pipelines are closed, the rail system is closed, and the electricity utility is down.

Importantly, all product is secure and all storage tanks save one appear to have been unaffected. Two of the facility’s 11 barge berths were damaged as was one tanker berth. We had divers in the water on Tuesday to inspect the deepwater berths, and they reported no obstructions. While the gangway on Pier 1 needs to be lifted from the water and reconnected, this should be done in about a day’s work. The contractor scheduled to arrive on Tuesday to commence repairs was turned away by the Coast Guard as the harbor was closed. Until the harbor re-opens, we can’t do this work – repair work, but it should be relatively straightforward. With the harbor closed, we can’t use the berth anyway.

Remember, Bayonne has 19 berths and docks, of which only three sustained damage. Contrary to one online article yesterday afternoon, at this time we’re not worried about our ability to receive or dispatch product by water. While these berths are damaged, they can be repaired relatively easily, and there are manageable workarounds in the interim.

The site experienced heavy flooding from the storm and tidal surge, and there is water damage to electrical equipment and to various components of the site. Until electricity supply recommences, we will not be able to fully assess the damage to our pumps and electrical equipment. We do not yet know when the electricity supply will recommence from PSEG and ConEd.

At this time, none of the damage would appear to prevent the resumption of operations of the facility once the harbor is reopened, the Buckeye and Colonial pipelines reopen, the rail system recommences, and the electrical utility service resumes. While it will take us time to fully repair the site and ramp up to 100% efficiency, we should be operational soon. IMTT is bringing equipment in from other sites and around the country to assist in coming back online as quickly and efficiently as possible.

However, importantly, IMTT is also helping the Bayonne community get back on its feet. With gas stations closed, IMTT is providing gasoline and diesel to police, fire and emergency services in Bayonne. IMTT is also providing diesel for emergency generators in the community. For instance, to a local Liberty Science Center that allowed it to keep its rare fish aquarium operational through the storm, preserving the lives of some very rare and important species.

The management at Bayonne and IMTT have worked around the clock to minimize damage to the facility, and get it up and running again as quickly as possible. We are grateful to them. It’s quite clear that this event will result in IMTT incurring its full deductible on insured losses of $2 million, and there may be additional losses of which we are not aware at this point.

Water damage or restrictions on operations resulting from flooding is also the primary issue at Atlantic Aviation’s operation in the Northeast as well. We’ve been in regular contact with CEO Louis Pepper, and Glen Gross, Vice President, Regional Operations.

Our Teterboro FBO did have water damage on Tuesday. The runways at Teterboro were partially underwater and our generator sustained damage. While the airport reopened on Wednesday afternoon, we expect our location to recommence operation today depending on access to electricity.

Facilities at Bridgeport and Connecticut have been shutdown due to flooding, and we have an estimate that the airport will reopen on Friday. Our Farmingdale FBO on Long Island has been damaged, although the airport has been reopened during daylight hours, and is serving as the staging area for the Federal Emergency Management Agency, FEMA, and Coast Guard efforts.

Our East 34th Street Heliport on the east side of Manhattan was also severely damaged. We have no estimate yet on when it will resume service. I would note that offsetting these is our facility at Stewart Airport in New York, about an hour north of New York City, where activity has been brisk as a result of it being one of the few places to land in the New York Metropolitan area.

The management team at Atlantic has also worked around the clock to minimize harm to our sites and our customers, and return our FBOs to full operation again as soon as safe. We’re grateful to them. In all, we feel fortunate that our people came through this ordeal relatively unscathed and that for the most part, our businesses will be up and running very soon.

We clearly have insurance that we expect will cover a significant portion of the impact, but we’ll provide more guidance to shareholders when we’ve had more time to better quantify the impact of the damage.

Beyond the impact of Hurricane Sandy, there are four significant elements of our result that I want to focus on this morning. First, the continued strong performance of our businesses through the third quarter. While there are a number of items creating noise in our headline results that I’ll summarize later, the underlying results were pleasing.

We have not seen any significant swelling in our business. The second significant element of our results is the full receipt of distributions from IMTT. Third is our ability to increase our dividends to $2.75 per share on the back of both of these outcomes; and fourth, our updated guidance with respect to the payment of cash taxes, federal income taxes at the holding company level.

We now believe that MIC will not have a material federal cash income tax liability until early 2015. We had previously expected to incur federal income tax early in 2014. Before I go into any more detail, for those of you with limited time and multiple earnings calls this morning, I’ll begin with a short summary of our results this quarter. Once again, each of our four businesses delivered financial performance during the quarter consistent with or better than our expectations.

Hawaii Gas generated strong growth in aggregate contribution margin of 10.1%. The improved performance was driven by a reduction in our LNG input cost on the unregulated side of the business, and a modest increase in the volume on the regulated side of the business. Underlying free cash flow increased by 20.1%.

Operating costs, particularly health care benefits and overtime, rose during the quarter, and the business also incurred costs in connection with rebranding as Hawaii Gas and in relation to filings with the Federal Energy Regulatory Commission, the FERC, regarding the proposed importation of LNG into Hawaii. With nine months down, we are confident that Hawaii Gas will generate EBITDA for the full year consistent with our guidance of between $55 million and $57.5 million.

IMTT’s results reflect continued improvement in storage pricing and a consistent level of utilization. Pricing improved 9.2% during the quarter, and is now up 6.9% for the year. The pricing improvement, along with new storage capacity put in service this year, resulted in terminal revenue growing at 8.5% in the third quarter versus 7.1% on a year-to-date basis. We expect average storage rates to be up about 7% for the full year.

Contributions from OMI Environmental Services were, again, very soft as there have been fewer oil spills this year. Good for the environment, but not as good when you’re looking at year-on-year results comparisons. Gross profit was down $3.3 million for the quarter from OMI.

IMTT’s expenses, particularly repairs and maintenance, were higher in the third quarter of this year, reflecting the impact of Hurricane Isaac on facilities along the lower Mississippi River. The hurricane predominantly damaged some of the tank and pipeline insulation at these facilities. As a result, IMTT’s free cash flow increased by 4.9% for the quarter, but remained substantially higher, up 26.5% on a year-to-date basis.

Excluding the Hurricane Isaac damage related costs, free cash flow for the third quarter would have increased by approximately 12.5%. We continue to expect IMTT will generate EBITDA for the full year of between $230 million and $240 million. Although, the increased costs related to the hurricanes, and some Bayonne tank conversion costs that I’ll discuss in a few minutes, may push the number to the lower end of the range.

District Energy’s results reflect the annuity like nature of the business. Gross profit was flat with last year during the third quarter, but still up 9.3% year-to-date as a result of the mild winter in Chicago this year. Free cash flow decreased in the third quarter of 2012 on higher maintenance CapEx this year compared with last year. Not surprisingly, District Energy is on target to deliver EBITDA as previously estimated at around $22 million for the full year.

Atlantic Aviation benefited from continued increases in the number of general aviation flight movements in the United States. The improved activity resulted in growth in both volume of fuels sold and the margin on those sales.

General aviation gross profit increased 5.4% in the third quarter of 2012, compared with the third quarter of 2011. Atlantic is still feeling the effects of the warm winter this year. De-icing gross profit is down more than 67% year-on-year, although non-fuel gross profit is up for the quarter and year-to-date periods, this has clearly constrained the growth in this line item.

The business made its final payment of the year to MIC under the 50/50 splitting of free cash flow term of its current credit facility. Atlantic Aviation paid $14.6 million to each of MIC and Atlantic’s lenders in mid-October. The payments of debt principal reduced Atlantic’s leverage to 5.53 times on a pro-forma basis at quarter-end.

During the year, MIC received a total of $37.8 million in distributions from Atlantic Aviation, considerably more than the $25 million we had anticipated at this time last year. As planned and foreshadowed, the increase – the interest rate hedges in place on Atlantic Aviation’s debt expired a couple of weeks ago. The business is now sweeping 100% of its excess cash to debt principal prepayments.

Absent a material downturn in the economy, we continue to expect EBITDA at Atlantic Aviation to be – for 2012 to be between $130 million and $135 million. We reported $0.69 per share in proportionately combined free cash flow for the quarter, compared with $0.79 per share in 2011. Underlying free cash flow, normalized for the $0.19 per share Hawaii Gas swap rate payment was $0.88 per share or a 10.7% increase year-on-year.

Through nine months, our businesses have generated a headline $2.57 per share in proportionately combined free cash flow. We continue to expect that our businesses will produce a total of $3.70 per share in proportionately combined free cash flow normalized for the swap rate payment at Hawaii Gas for the full year.

Our headline proportionately combined free cash flow will be approximately $3.51 per share for the full year. The rise in our share price and the increase in dividend in August for MIC’s total shareholder return erase any historical underperformance relative to its MSCI Utilities Index benchmark.

As a result, MIC’s manager will be paid an outperformance fee for the third quarter of $23.5 million. The fee shows up as a component of the P&L line item fees to manager and results in a GAAP net loss for the quarter. However, the fee will be reinvested in additional LLC interests, so it is a non-cash item.

Last but by no means least, based on the performance of our business, the continued performance of our businesses, the MIC board has authorized an increase in our quarterly cash dividend from $0.625 per share to $0.6875 per share for the third quarter. I prefer to think of it as an annualized $2.75 per share.

Given that not all of the cash being generated by our businesses is available for distribution, we will continue to support the dividend with a portion of the cash on the balance sheet. With the cash balance at more than $170 million, I’m comfortable saying the dividend is clearly sustainable.

In general, I’ve characterized the third quarter as a continuation of the positive trends we’ve seen underlying each of our businesses this year, albeit with a bit more background noise than I would have liked. Importantly, we have seen no significant slowing in our businesses.

For those of you with a bit more time, I’ll progress with the agenda and turn to an update on matters relating to the distributions from IMTT, as well as to provide some additional color on the performance of our businesses. It goes without saying that we are pleased that our co-investor in IMTT has support of the payment of distributions consistent with the Shareholders’ Agreement between the parties. That means that we have now received all of the distributions to which we were entitled for the first and second quarters of the year, a total of $50.3 million. You may recall that we previously received $18.2 million of distributions for the first and second quarters.

We also received yesterday a distribution of $15.2 million for the third quarter of 2012. The distribution was approved unanimously by the IMTT Board last week. After a period of disagreement, we can once again focus on growing the business and the distributable cash flow it produces. We look forward to helping IMTT continue to prosper. Importantly, we believe we have a framework for an agreement that will result in the continued payment of all distributions from IMTT.

As I’ve said on a number of occasions, the receipt of distributions from IMTT consistent with the Shareholders’ Agreement was the first of two key catalysts to unlocking additional value in MIC. The second and the remaining catalyst is the successful refinancing of Atlantic Aviation, more on that particular issue in just a moment.

The receipt of all the dividends due from IMTT means that MIC now has a holding company cash and cash equivalents of approximately $170 million. As I’ve said in comments about the dividend increase this quarter, we continue to expect that a portion of the cash on the balance sheet will be used to support our quarterly cash dividend through to the point at which we can refinance Atlantic. Clearly, with $170 million in cash on hand, we have ample resources.

The remaining item then has to do with the timing and terms of refinancing of Atlantic Aviation, and the point of which we then have access to the cash flows being generated by that business. Here’s what we know at this point: the existing Atlantic Aviation facility matures in October 2014.

Between now and then, the interest rate payable on the term loan has dropped from a hedged 6.55% to an unhedged LIBOR plus 1.725%. As a form of insurance against the rapid rise in LIBOR, which we don’t foresee, we’ve purchased an interest rate cap at 2.25% for two years on $550 million of debt. It cost us roughly $350,000 and if we never need it, I’ll still consider it money well spent.

The excess cash being generated by the business will be applied to the reduction of debt principal between now and then – between now and the maturity date. All else being equal, the continued growth in EBITDA and the reduction of debt principal should result in the leverage at Atlantic being inside four times at the end of 2013.

What that means is we have time to evaluate our options with respect to the refinancing of Atlantic Aviation. We’re weighing up the pros and cons of maintaining the current debt package, knowing that we could not refinance and maintain the very low interest rate LIBOR plus 1.725% or reduce the leverage as fast as we will with the low cost facility in place.

At this time, we know that the debt markets today are attractive and that that may or may not be the case in the next two years, and we believe that a refinancing would simplify the MIC story. In short, for now, we will continue to assess our options. I’ll continue with the second portion of my prepared remarks and some color – additional color on the performance of our businesses during the quarter and nine months ended September. At Hawaii Gas, total contribution margin increased 10% in the third quarter.

The unregulated portion of the business benefited from a lower cost of propane that served to offset both higher costs and a slight decrease in the volume of gas sold. The decrease was all caused by one commercial customer being offline for refurbishment. The regulated portion of the business reported growth in volume of fuel sold, but a decline in contribution margin primarily as a result of higher transportation costs.

Both portions of the business continued to benefit from the reasonably healthy Hawaiian economy. Tourism, our proxy for the state economy there, has grown consistently for the past 10 months. While there’s not a perfect correlation between tourism and the volume of gas sold in Hawaii, it certainly helps to have hotels, laundries and restaurants doing well.

In addition to transportation costs, certain other operating expenses were higher during the third quarter as well. For example, labor costs – labor-related costs in production, transmission and distribution all increased. Hawaii Gas also incurred costs in connection with rebranding of the business and in preparation of its filings with the FERC for LNG importation. Although FERC costs and the cost of equipment related to LNG projects are likely to be relatively modest in the future, they won’t go away completely until we have our LNG initiative up and running.

One thing that will help further improve the financial performance of Hawaii Gas is the successful refinancing of the business that we hope to complete in August of this year. As the business replaced $160 million bank debt package with a combination of $80 million of five-year bank debt and $100 million of 10-year senior notes, the weighted average cost of the debt is expected to decrease by approximately $2.4 million per year. In percentage terms, the all-in cost dropped from 4.9% to 3.6%.

Further, in October, the business received approval from the Hawaiian PUC for a $60 million revolving credit facility at the operating company. The revolver will be available to fund a portion of the growth needs of the business as well as general corporate purposes. Bottom line, with a leverage level of a little over three times and with staggered debt maturities, Hawaii Gas is securely capitalized at this time.

In terms of the FERC filings, specifically, notice of Hawaii Gas application was issued on September 28. That initiated a three-week period for intervention and comment that ended on October the 19. There were few comments, none of which appeared to have been material and Hawaii’s Governor, Abercrombie, provided a letter of support for the project. We’re optimistic that Hawaii Gas will have both the requisite approvals and the equipment in place by the end of this year or the start of next year to begin importing LNG on a small scale.

Some of you have asked about the situation with Tesoro in Hawaii, and I understand that Tesoro earnings call is about to commence now as well, and whether or not they’re moving forward with their announced sale of the refinery there, the answer is until the earnings call which starts now, we don’t know anything more than you do. As a result, we continue to prepare for an event – for any eventuality, whether there are two operating refineries on Oahu, one or none, we have to be sure that Hawaii Gas is prepared to continue to fulfill its commitment to its customers. One of the means of this preparation is the FERC filing and the importation of LNG.

Given the performance of Hawaii Gas through the three quarters of the year, we continue to expect the business to generate EBITDA excluding non-cash items of between $55 million and $57.5 million in 2012. Now, as we disclosed in our earnings release yesterday, proportionately combined free cash flow for the third quarter of 2012 as well as our guidance for the full year was adversely affected by $0.19 per share by swap break fee payments incurred in connection with the refinancing of the debt at Hawaii Gas.

These payments were related to the previously announced refinancing of the business’ debt facilities. The payments totaled $8.7 million, and reduced proportionately combined free cash flow by, as I’ve said, $0.19 per share. The impact was reflected in both our quarterly results and our guidance for the full year, the latter being reduced from $3.70 to $3.51. It also reduced Hawaii Gas’ free cash flow by $0.19 per share from $0.18 per share or up 18.5% versus last year to negative $0.01 per share.

By way of background, the floating rate debt at Hawaii Gas was originally swapped in 2007 to its maturity in mid-2013. As of the refinancing, the swaps were out of the money and we were obligated to pay the $8.7 million that was due from the time of refinance to the maturity in mid-2013. We have the choice of financing the break payment as part of a blend-and-extend approach to the refinancing or paying the break in cash upfront.

We chose the latter on the basis that, one, we had the cash on hand; and two, the all-in cost of the debt at Hawaii Gas going forward would be lower as a result. We’re comfortable that this was the right thing to do for shareholders even though the impact on headline reported free cash flow is negative.

At IMTT, we again saw a top line growth driven by improvement in storage rates. The improvement in terminal revenue in the third quarter was driven by an increase in average storage rates of 9.2%, and an increase in the amount of storage and service this year. The 9.2% increase in average storage rates in the third quarter was a good outcome, and pulled the average rate of the year up to just under 7%. We now expect average storage rates to increase by right around 7% for the full year.

Utilization rates were slightly down on the third quarter of last year at 93.3% and down sequentially from the second quarter of this year, as a larger amount of capacity was offlined for cleaning and inspection in the third quarter compared with the first half of the year. Partially offsetting the improvement in terminal gross profit was a week of a normal contribution from IMTT’s OMI Environmental Services unit.

As I’ve said in the past, financial results of OMI can and do very wildly depending on the level of spill activity in a given year. Clearly, there hasn’t been a whole lot of cleanup activity in 2012, and the business is operating in a slightly cash flow negative range through three quarters.

Expenses were also up during the quarter and had a negative impact on terminal EBITDA. In particular, IMTT incurred repair costs in connection with the damage sustained during Hurricane Isaac. As many of you know, giant tanks full of liquids tend not to be affected by storms that hit the Gulf Coast, but Isaac was a slow-moving high-wind storm and did do some damage to things like pipe and tank insulation.

In the end, these results in repair cost totaling a little less than the $2 million insurance deductible. Excluding this expense, terminal EBITDA would have been up 13% in the year, sorry, for the third quarter, and up 13% for the nine-month – 13.2% in the nine-month period.

Looking ahead, it’s safe to say that IMTT’s results for the fourth quarter will also reflect increased repairs and maintenance costs in the wake of Hurricane Sandy, probably, and the insurance deductible on those is $2 million. In addition to these expenses, IMTT will also see an increase in expenses having to do with the conversion of some 1.2 million barrels of storage capacity at Bayonne from residual oil or six oil to two oil.

I noted last quarter that the continued operation of the oil refineries in the Northeast was helping to improve our visibility into the pricing of storage in the New York market. At that time, I said that we would continue to assess the desirability of converting some residual product storage at Bayonne. Over the past couple of months, we’ve concluded that it would be in IMTT’s long-term best interest to begin to convert a portion of the residual oil storage at Bayonne to clean product storage. We can achieve decidedly better rates on clean product storage and we believe that reducing the amount of six oil capacity in New York Harbor will enhance pricing for that product.

As a reminder, converting six oil tanks involves cleaning the tanks and related pipes. So we incur some upfront OpEx to facilitate higher storage rates on the new contracts. Consistent with IMTT’s previously stated policy regarding the deployment of growth CapEx, the clean product tanks are already under contract before we incur the cleaning costs. However, I want to make clear that this is – in this case, the cleaning costs are an operational expense not CapEx. Nonetheless, including all of these various unbudgeted costs, we still forecast EBITDA being within the range of our forecast of between $230 million and $240 million.

To summarize, IMTT’s operational performance during the third quarter reflects continued strong fundamentals. The underlying business generated results consistent with both the first half of the year and our expectations for the full year. IMTT is now current with respect to dividend payments we’re entitled to and we’re optimistic that we have a framework to move forward.

And last, we’re moving to take advantage of opportunities to position IMTT for improved performance in the future. Consistent with the first half of the year, the weather in Chicago during the third quarter was warmer this year than last. As a result, the business recorded consumption revenue net of electricity costs passed through to customers that was about 4.5% higher this year. Capacity revenue increased with the increase in the number of customers being served by the system and the price escalators that are part of the existing contracts.

Gross profit for the third quarter was flat compared with 2011, but remains up by 9.3% year-to-date. The third quarter included a smaller electricity load abatement payment this year versus last. In addition, other direct expenses that flow into gross profit were higher this year due to the timing of certain maintenance activities.

Please remember that we have a 50.01% interest in this business. We like not having surprises at our businesses and it’s not surprising that District Energy will deliver full year results consistent with our guidance of between $21 million and $22 million in EBITDA.

Atlantic Aviation posted continued performance improvement during the third quarter despite a slowing in the number of general aviation flight movements in the U.S. as indicated by the data collected by the FAA. Importantly, we again saw activity at the airports at which we operate and our market share continued to grow. The way I look at Atlantic is on a same-store basis. This is because we have both bought and sold FBOs in the last 12 months.

On a same-store basis, the volume of general aviation jet fuels sold by Atlantic increased 3.8% in the third quarter versus the same period last year. On top of that, the average margin on these sales increased by 1.4%. The resulting increase in fuel gross profit was partially offset by decreases in non-fuel and non-general aviation gross profit. In particular, the year-to-date figure continues to reflect the impact of de-icing being down by two-thirds this past winter.

As I mentioned, the FAA continues to report variability in monthly general aviation flight movements. In general, within the third quarter, August showed an improvement on the data for 2011, while July and September were softer. However, much of this is attributable to things like the day on which Labor Day fell or on or whether the Jewish holidays were in September or October is difficult to decipher.

If we take a longer-term view, the trailing 12-month flight activity through September 2012 is pretty close to the same as the trailing 12-month flight activity through September 2011. As always, I remind you that the FAA data is indicative but not perfectly correlated with Atlantic’s performance.

Our internal data on the other hand shows that the number of general aviation flight movements at the airports on which Atlantic has a presence to have increased slightly this year versus last. And as we saw in the first six months of this year, the proportion of those aircraft owners and operators choosing to use Atlantic for FBO services increased as well. In a pretty flat environment for general aviation activity across the industry, both activity levels and market share rose for Atlantic Aviation. We continue to see this as a reflection of our focus on safety and topnotch service coupled with the popularity of the regions in the airports at which Atlantic operates.

We’ve seen a growth in the rate of same-store year-on-year gross profit growth and the EBITDA growth this year. Same-store gross profit was up 2.1% in Q1, 3.9% in Q2, and 4% in Q3. Similarly, same-store EBITDA was up 6.6% in Q1, 5.5% in Q2, and 8.3% in Q3. This momentum is pleasing.

Atlantic is not immune to the effects of wage and benefits inflation we have seen across our businesses. We saw a bit of that come through in the third quarter. Although on a year-to-date basis, these have been offset by lower credit card fees and insurance costs.

In fact, if we annualize the SG&A at Atlantic at the end of the third quarter, it looks as though it will again be right around the $175 million for this year. That would be the third year in a row that the management team has succeeded in finding a way to offset the impact of inflation and contract escalators through additional expense cuts. That’s really a tremendous achievement.

The solid operating result for the quarter enabled Atlantic to pay down an additional $14.6 million of its debt facility on October 16. Had the payment been made as of the end of the quarter, the leverage level of the business would have been reduced to 5.53 times net debt-to-EBITDA at that point. Atlantic has distributed more than $37 million to MIC in 2012 based on its performance over the trailing four quarters ended September 30. This compares favorably with the $25 million we expected at this time last year.

As the business is now within two years of the maturity of its debt facility, it’s sweeping all of its excess cash to the reduction of debt principal and not paying – making further distributions to MIC. As I described a few minutes ago, the real question has to do with the timing of the refinance of Atlantic’s debt and that is something we continue to evaluate.

Trading at Atlantic for the first few weeks of the fourth quarter has been good. Activity levels through late October have been consistent with our expectations, and we’re confident that the business will deliver full year results in line with our guidance for EBITDA of between $130 million and $135 million this year, obviously depending upon the impact of Hurricane Sandy.

As noted earlier in the call, there is more noise than usual in the MIC result for this quarter. While I don’t like to play the game of let me whine about how good our results would have been without all the bad stuff, I do want to point out some of the bad stuff for this quarter, so that people can book end as order of magnitude, and also because I find such whining to be therapeutic.

At Hawaii Gas, we had the $8.7 million or $0.19 per share impact of the swap break payments and more than $1 million spent on LNG and rebranding. At IMTT, we had $2 million in increased repairs and maintenance costs caused by Hurricane Isaac in the lower Mississippi, and we had negative contributions from our OMI Environmental Services.

Our OMI’s gross profit for the quarter was down $3.3 million on 2011 and its EBITDA was down by even more. We’ve modified our guidance for proportionately combined free cash flow for the full year for the impact of the swap break payments.

We intend to provide guidance for 2013 in conjunction with our results released for the full year 2012 in late February. As I’ve said earlier in the call, we’ll update shareholders on the impact of Hurricane Sandy when we know the full impact, but I provide – tried to provide you with some shape at the start of the call about the scope of the damage, and remember that at both Atlantic and at IMTT, we are well insured. That’s a look at our operating businesses and their performance today.

Stepping back, I’ve characterized the third quarter as a good one, with each of our businesses continuing to perform on an underlying basis at levels consistent with our expectations. There were one or two items that had an adverse impact on the headline numbers, but overall, the results for the quarter reflect more of the same performance. With two months left to go, we’re confident that each of our businesses will hit their EBITDA targets for the year. Underlying proportionately combined, the amount of cash generated by our businesses in that case will increase by about 17% over 2011 levels.

We are receiving full distributions from IMTT and we have a framework for a lasting resolution to this issue. We’re now focusing on the second of our two key initiatives that we believe will unlock additional value in MIC, namely the Atlantic Aviation refinancing. Thank you for your support and your continued confidence in our ability to deliver on our commitment to building shareholder value.

At this point, I’ll ask that our operator open the phone lines for your questions and our CFO, Todd Weintraub and I will be happy to answer any questions you might have.

Question-and-Answer Session


(Operator Instructions) Our first question comes from Andrew Gadlin of CJS Securities. Please go ahead.

Andrew Gadlin – CJS Securities, Inc.

A question. I wanted to follow-up regarding the damage from Hurricane Sandy. It sounds like you’re insured from the majority of the damage or actually a good portion of it. Do you have a sense for how much more beyond your insurance deductible the damage could be and the timing of when you’ll be back to business as usual?

James Hooke

Thanks, Andrew. Look, it’s a – it’s a good question. The thing I would say in this – in relation to this is it’s a moving target. Tommy Coleman and Rick Courtney gave us good briefing yesterday and Dick Fisette, who is the terminal manager. Dick has been working – I don’t think he slept since the storm, and they’ve done a tremendous job in both preserving the assets and getting things back up on line. The insurance deductible is $2 million, so I’d say the potential hit is that $2 million. There maybe a little bit more that falls outside the scope of it, but at this point in time, we think we’re pretty well insured and pretty well covered. In terms of when things get back up and operational.

The electricity utility is saying maybe some time over the weekend or on Monday. The auto, sorry, the New York Harbor is probably closed until at least Friday if not longer. We don’t have any visibility into when Colonial and Buckeye pipeline will be up and running. So if you ask me to sort of take a step in the dark, on the back of that, I would say it’s probably the middle – sometime early to the middle of next week before things are sort of properly up and running.

We’re really keen to get the electricity back on so that we can actually determine how many and which pumps we need to replace. We’ve got obviously a number of spare pumps in inventory and we’ve been moving pumps from around the country, from our other sites and from other suppliers. So there’s a bit of lead time to actually when you work out which ones the saltwater damaged you’ll need to replace. Some of the ones that we know have damage were in the process of sort of cleaning and seeing if we can rehabilitate. But at this point in time, you know the guys are doing all they can do.

To some extent, we’re also bringing diesel pumps in as well so that we’re less beholding on the electricity. But to some extent when the IMTT Bayonne gets up and operational, it’s more in the hands of the Coast Guard opening up the harbor and the electricity utility than anything IMTT is doing. These guys have a phenomenal commitment to customer service.

So the first opportunity is that customers have to try and move product in and out of our facility. I’m sure they will be bending over backwards to accommodate it, but my stab in the dark is sort of early next week. Our assessment of what the various authorities are doing at this point is trying to delay the time at which they bring services back online, and I think the longer they keep the harbor closed, their view is the more they can really get a whole bunch of cleanup done in one quick effort.

I’m amazed at what both the emergency services, but also our own teams have been able to achieve just during yesterday and the day before in terms of cleanup. So I’m still hoping that by – certainly by this time next week, we’re relatively back to normal, but time will tell, and that’s an issue that hits both Atlantic and IMTT.

At Atlantic, look, the potential insurance deductible is probably in the sort of $300,000 range, but until we know the exact nature of the damage and the exact location, I give that as sort of shape, which is sort of, I think there was some shareholders who on the back of that news that, there was a news article that came out online yesterday. There was a bit of a sort of panic about. I’m not quite sure why people got excited about that as they did, from our perspective, that article focused on berth damage at IMTT. And as I said in my prepared remarks, whilst the guys at IMTT are losing sleep because they are repairing things, I don’t think they’re really losing sleep about access to berths and dock damage. So I hope that’s given people a bit more shape around what we’re expecting to see.

Andrew Gadlin – CJS Securities, Inc.

Yeah, thanks. And just in terms of financial impact or…

Todd Weintraub


Andrew Gadlin – CJS Securities, Inc.

…really to your business in terms of the go forward operations. How would you differentiate between Atlantic Aviation, where it sounds like there’s a bit of business interruption versus what you have at IMTT?

Todd Weintraub

Yeah, I think that’s a good way of characterizing it probably at this point in time. I think certainly at East 34th Street, the heliport will have a business interruption. It’s a pretty small site in the scheme of things. They toiled heroically at East 34th Street to make not much money, so it’s not going to be a – I don’t think it’ll have a significant P&L impact. I think if you look at sort of Bridgeport and Teterboro, that’s probably – especially Teterboro is where we want to kind of get up and running as soon as we can. I think we’ve had some offsetting windfall because Stewart has been much busier than it normally is because it’s the only airport available. So there’s a bit of swings and roundabouts in all of this. And I’m also expecting to a degree, though time will tell whether this is a valid expectation, that we’ll have a bit of a sewage-backing activity in the next couple of days.

As typically storms like this, everyone has to put off a whole bunch of travel, and then there’s sort of a degree of pent-up demand for people to get out there and hit the road again when they’ve got to catch up on the business that they lost for last week. So there will be some business interruption at East 34th Street. I suspect a bit at Bridgeport, and there has been a bit at Teterboro. How much of that is sort of, there’s a natural sort of elasticity in the timing of demand that we see it sort of snap back. Hard to say at this point in time, but I think – and this may change and I want to caveat that as more information becomes available, we’ll share it with people.

I think what we’ve seen is, the storm has been catastrophic to people’s lives in the Northeast, and it’s done damage to our property. But at this point in time we don’t see it as having a – it will clearly have some financial impact as a one-off, but we don’t view at this point that that impact is going to be hugely material.

Andrew Gadlin – CJS Securities, Inc.

Got it. And then IMTT, I mean, I assume you’re still collecting your typical rates, rent rates for the tanks even if the customers can’t have access to it. Is that right?

James Hooke

Look, sure, the way I characterize that is, if they’re storing their products in our tanks and we’re keeping that product really safe, so we are providing this service. It’s a bit like if you rent an apartment building and because of the crane that’s on 57th Street, they won’t let you into your apartment, you’re still renting your apartment and you got your furniture in there. So that would be the sort of analogy I would draw that we’re sort of doing it, and we’re putting an enormous effort into keeping people’s product safe, secure. We’re keeping the heating going of the tanks that need heating. So there’s an enormous amount of work going in, and I think our customers appreciate that. I mean, it’s not – if the harbor is closed, as influential as the IMTT management is, they can’t open New York Harbor. I don’t think our customers kind of get that.

Well, I hope they do. So look, it is a – it’s a moving – it’s all kind of moving, and we’re trying to get as much information as we can and that information you sort of – it’s a bit like on a broader scale with the storm, each hour brings a new anecdote.

Andrew Gadlin – CJS Securities, Inc.

Got it. Thank you very much.

James Hooke

Thanks, Andrew.


Our next question comes from John Ellison of BB&T Capital Markets. Please go ahead.

John Ellison – BB&T Capital Markets

Good morning, guys.

James Hooke

Good morning, John.

John Ellison – BB&T Capital Markets

One question I had is, kind of related to the nature of your insurance for each of your businesses. I want to know, does your insurance only cover damaged property or are operating costs considered as well?

James Hooke

In each – I think the first thing, so without going in too much detail, damaged property is the main thing we’re focused on. We’ve got a bit of business interruption in insurance, but if you think about the number of days that it typically has to cut in by I don’t get too excited by the sort of insurance windfall. I’m sure given how heavily insurance companies have taken it in the short-term over the last week that there will be a little bit of to and fro between everyone and their insurer. But I’m pretty comfortable, we’ll collect from our insurers what we’re entitled to, given the nature and the strength and the quality of the relationships we have with those insurers through insurance procurement. But we do have some business interruption in insurance, but it sort of typically cuts in after a few days, a fair few days that I think, within the sort of three to five days that we’ll be – five to six days we’ll be offline. I don’t know that it will move the needle too much one way or the other.

John Ellison – BB&T Capital Markets

Right. And then l guess switch topics, for Hawaii Gas, do you plan to transition using mostly LNG in the long-term, and if so, could you give some color on the timeline for that transition and discuss the potential CapEx required?

James Hooke

Yeah look, I think at this point in time, we don’t know the answer to that. We certainly are trying to create that optionality. The reason I say that is obviously, whether we transition all of the current naphtha supply that supplies the SNG plant in Oahu to LNG, is contingent on the number of approvals and the acceptance of the Hawaiian community and regulators broadly.

We’d like to, so the stage we’re announcing now is the sort of emergency backup. If we move down the track to a sort of more full scale implementation of LNG to both not just displace our own naphtha use, but also to supply gas to the electricity generating sector in Hawaii, which is something we would love to do. Then we are talking about a more substantial capital commitment, but that’s in the sort of three-year time horizon rather than anything immediately, and that sort of three years from when you get approval and when you get approval is a moving target.

John Ellison – BB&T Capital Markets


James Hooke

So that amount is sort of a long way off in the distance. It’s probably in the $200 million-ish range as where it’s a $300 million, as to whether we do that all ourselves or in partnership with someone. There’s a lot of moving parts. We will probably project finance that sort of development. So I don’t think in terms of our capital management at the moment, it’s really – I mean, it’s on our radar screen, but it’s not in the Excels. We’ve got it in the back of mind. We don’t have it in Excel spreadsheet as price when that cash is going out the door.

The reason I’d say we’d like to do it is actually it really does benefit Hawaii enormously, and the reason we sort of think it’s worth pursuing and making the investment and the effort we’re making at the moment is we sort of think it’s one of those things that’s aligned, which is – will be great for our business and we think it’s got a good probability of success because we think it’d be good for Hawaii. If it wasn’t going to be good for Hawaii, it would be one of those things you are pushing uphill with a straw, but instead I think, we’ve got hopefully a good chance of having it, but there is a number of discussions that have got to take place in Hawaii to bring it above.

John Ellison – BB&T Capital Markets

Okay. Well, thank you so much.

James Hooke



Our next question comes from Brendan Maiorana of Wells Fargo. Please go ahead.

Brendan Maiorana – Wells Fargo Advisors LLC

Good morning, guys.

James Hooke

Hi, Brendan.

Brendan Maiorana – Wells Fargo Advisors LLC

James. Hey, James a question for you. So just broadly, if I look at IMTT, you guys have done $172 million of EBITDA for the year. Your guidance is $230 million to $240 million at the midpoint. It suggests that you’ve got EBITDA which is moving up in the fourth quarter, and so I presume that that confidence of the fourth quarter EBITDA guidance is just given that you’ve got these long-term contracts that are in place, and even if you don’t get some of the ancillary revenues and more of the periodic income, you still feel really good at the low end. Is that a fair characterization?

James Hooke

Yeah, and I think that’s a very fair characterization. We’ve got some CapEx tanks that we’re constructing that come online in the back end of the year. And we start earning when they come online. We’ve got the full year benefit of price escalators that have already come online. So we should see some good momentum on the earnings – on the EBITDA side, so we’re confident at the bottom end.

Brendan Maiorana – Wells Fargo Advisors LLC

Do you think that the impact from the storm can actually make the availability of supply of tanks – make demand a little bit tighter? I mean, can this be something that causes less new supply long term, and actually makes either a longer term, could potentially be a positive for your business?

James Hooke

I think that’s a really good question, and it will take us time to know. I think one of the things I’d say is it should potentially be, and one of the reasons I say that is, I think everyone over time starts to run their supply chains leaner and leaner and tighter and tighter, expecting that sort of stable world will continue as it normally does, and so people at the margin sort of cut back on the amount of inventory they have in their supply chain because they don’t want to have too much working capital.

I think what we’re going to see now, and you sort of see gasoline in the New York market suddenly becoming quite tight, and there are these stories as to where people are going to be able get gasoline from, all of a sudden these people realize that actually the inventory levels you need to hold have to take into account some degree of external shock to the supply chain. So I think these things probably move in cycles.

But I certainly think anyone who’s been through this, and if there is this – there’s more potential for extreme weather going forward, then I think, people are going to need to think through how much storage they have and they probably have run it down to a level where they may want to rethink that. So that would be the thesis on which things get a little bit tighter going forward, but we’d sort of need to see that play out.

Brendan Maiorana – Wells Fargo Advisors LLC

Okay. And with respect to the, your 50% partner in the business and the dispute resolution, is it now – are – have you talked to the other shareholders and is it – I mean, is there any concern or is there any consideration that the disputes that happened earlier in the year are going to crop up again or are you guys with like mind with respect to distributions going forward?

James Hooke

Yeah, look, I think we’re on the same page. I think we’ve gone through a period of discussion disagreement. We’ve had very good discussion and engagement all this year and I give them sort of credit for even while were in disagreement, we were still talking. And so I think we’re sort of cautiously optimistic that we’re now moving forward and we’re all on the same page. And certainly we’ve had good discussions and I think there’s – we all know where the others coming from and we have a good understanding of what we want to do and how we want to take the business forward.

Brendan Maiorana – Wells Fargo Advisors LLC

Sure. And then, just last one for me. I mean, I guess, there’s an order of congratulations, given that the performance fee is now payable. So that’s been in several years of making up that – the share price declines and a lot of nice increases. Has there been any – do you have any sense of what the managers’ view may be of potentially taking the fees both the base fees and future performance fees in cash as apposed to stock as they’re currently doing?

James Hooke

Let me deal with the performance fee. One I think the managers’ practice is pretty well articulated that it will take the performance fees in cash, I’m sorry, in stock. And so, that’s my understanding there. On the base fees, I think my – there’s a sort of commitment to take the base fees in stock until Atlantic is refinanced. Post what happens after Atlantic is refinanced, don’t have a clear heads up yet as to what the manager will do.

But obviously in the process of refinancing Atlantic and the nanosecond after it’s finished, we’ll have discussions on that. So I think what we’ve done is make sure that when we size the distribution that we’re paying now at $2.75, we sized it such that if the manager chose to turn off taking it in shares and took it in cash the distribution would be sustainable, whilst we’re obviously nudging behind the scenes to see what we can do. So I’ll probably get kicked for saying this.

Brendan Maiorana – Wells Fargo Advisors LLC

Okay. So, if you just look at your businesses without – or – if you look at your existing operations and what do you think the core growth rate is in a normalized economic environment because there’s been a lot of movement in your business in the capital structure, in the number of businesses that you have over the past couple of years. I mean, it’s been difficult to sort of think about steady state. But if you just think sort of steady state, what do you think the level of cash flow growth that your current type of operation should be able to spin off annually?

James Hooke

Sure. The way I sort of look at it is historically from like the back end of 2008 to today. We’ve done about 14%, 15% free cash flow growth from the four businesses we have today in the proportion we have. And that’s got a degree of cyclicality because obviously Atlantic went down and neither has come back up from the back end of that. So on a trailing 12 month basis to December 2008 to trailing 12 month basis this year, we’re sort of being in that 14%, 15% range. I think that necessarily slows to a degree.

And so the figure that I use partly because I’m a little lazy on this sort of stuff is 10% free cash flow growth per year because it’s easy to do the math on. But I think that’s roughly where it will come at. I don’t think 15% if you look at the nature of the businesses we hold. I don’t think it’s going to continue to grow at that rate. Having said that, if you look at the businesses, Atlantic, we see good recovery going on and continuing to go on, at Hawaii Gas, we see further upside from where we’re at today, we’ve got a number of initiatives in the pipeline. At IMTT, we still see good pricing power. I don’t think that we’re on track to do like 7% this year, which is going to be similar to what we did in 2010, but down on 2011, but still good pricing power.

So I don’t think we’ll probably be at that and we’ve also got good CapEx projects coming online at IMTT that deliver earnings growth. So I don’t think we’ll be at the, I think it’s hard to sustain 15% per year free cash flow growth, but we’re going to get 17% this year in an underlying basis. So the number I use from a sort of steady state basis is 10% because it’s – partly because it’s lower, we’re at most and partly because it’s just easy.

Brendan Maiorana – Wells Fargo Advisors LLC

Yeah, so I mean do you think 10%, there’s probably some fees that I mean, maybe if your underlying business is actually generating 12% or 13%, there’s probably some fees that will get you down to 10%? And the way we would think about your company is, you’ve got that 10% kind of cash flow growth and then you’ve got your dividend as your total return opportunity. Do you think that your – is that story resonating yet with yield oriented investors or do you still think you’ve kind of got the opportunistic investors that just see the value of the shares today?

James Hooke

I think there’s two things I’d say, we’re transitioning and so we’re going through that period of transition. I think we’ve – as we talk to more yield oriented people, I think the story definitely resonates. I think when I said that refinancing Atlantic I think will make the story resonate still further. But I think one of the challenges that some of the yield oriented folk have is they love the story, but they didn’t look at the liquidity and the stock and the average days trading. And they find it difficult just to get enough volume. I think what’s happening there is, I love them dearly.

Our current shareholders are being very loyal and there’s therefore not much liquidity because I think they see value well in excess of where we are today. And then we see other folks sort of wanting to get in, but there’s not that much liquidity. The one benefit of sort of articles like yesterday’s erroneous article on the damage to IMTT is, it suddenly puts a little bit of liquidity in your stock and I think like in a heartbeat, it put liquidity into our stock. But I think we’re seeing transition in the register. I think it’ll just take time and I think because the guys, the feet-folks who didn’t understand the story, I think by definition better than people who aren’t in and they see good value growth as we continue to get our house in order.

Brendan Maiorana – Wells Fargo Advisors LLC

Okay. That was very helpful. All right, thanks, guys.

James Hooke

Thank you.


Our next question comes from Sameer Rathod of Macquarie. Please go ahead.

Sameer Rathod – Macquarie Capital

Questions. First on additional acquisitions, I guess, you’ve gotten to the point where you’re earning a performance fee. It seems like that IMTT issue is behind you. Can you give us some thoughts on what kind of additional acquisitions you would do? Would they be in existing business lines or would they’d be something new?

James Hooke

Yeah. It’s a good question Sameer, thanks. Thank you for it. I think the way I see things at the moment and I think the board are on this page is, we see a lot of upside for our existing shareholders from the portfolio we have today in getting our house in order. So we’re not hugely excited about issuing capital where we’re at today because actually we think our shares should improve. So the focus for us is on dealing with final issue of getting our house in order as I would characterize it, which is the refinancing of Atlantic and getting the capital structure of Atlantic right.

I think we’ve got the capital structure of the other businesses pretty right and Atlantic’s not. Once the capital structure of Atlantic is right, I think we can do two things; one, we can increase the dividend; and secondly, we can then hopefully, see the yield compressed still further as people realize that it is a much simplified and safer story. And I think it’s at that point that we would look to get into – when we grow up, we might look to go shopping at some stage, but we’re not out there at this point in time. We look at everything that we can just to see what’s happening in the market, but we’re not shopping at the moment.

Sameer Rathod – Macquarie Capital

Great, great. Maybe I want to focus; my next question is on the performance fees focusing on that a little bit more. To my understanding, it’s 20% of the outperformance to the U.S. MSCI Utilities Index, is that still right?

James Hooke

That’s correct.

Sameer Rathod – Macquarie Capital

Okay. Okay. Okay, that’s it from me. Thanks.

James Hooke

Okay. Thanks, Sameer.


Our next question comes from Louie Reformina of Waterfront Capital. Please go ahead.

James Hooke

Hi, Louie.

Louie Reformina – Waterfront Capital Partners LLC

Hey, all question is been answered. Thanks though.

James Hooke



Our next question comes from Ian Zaffino of Oppenheimer. Please go ahead.

Ian A. Zaffino – Oppenheimer Securities

Thank you. Just two quick questions and the first one would be a follow-up on the just the revived aviation. As you went shopping would you look at aviation as kind of a source of funds?

James Hooke

When you say as a source of fund, I’m not sure I get that.

Ian A. Zaffino – Oppenheimer Securities

Sorry, and would you shop that piece of business?

James Hooke

Oh, you mean, spin it out?

Ian A. Zaffino – Oppenheimer Securities

Yeah, sell it, spin it out, something. Because we do have to monetize it in a way that you could raise funds to go buy something else to go shopping?

James Hooke

Yes, look, I think, as we say in relation to all our four portfolio companies. We love them all dearly and we’re committed to them all. But obviously we considered the strategic options with all of them. And that’s clearly one that comes up because Atlantic is the most different of any of the four businesses and we’d always keep that option on the table if it made sense. But I think at this point in time, it’s not actively on our radar screen as something we’re pursuing, but it’s always there as an option.

Ian A. Zaffino – Oppenheimer Securities

Okay. And then as far as just going back to IMTT on the – how you might be impacted by Sandy? It seems like you’re still reiterating at least the bottom end of the guidance. That means that the impact is somewhere less than $10 million on EBITDA side. Is that the way to think about it?

James Hooke

Yeah. Yeah.

Ian A. Zaffino – Oppenheimer Securities

Okay. All right, thanks.

James Hooke

Thanks for that, and look I hope things in Long Island okay for you.

Ian A. Zaffino – Oppenheimer Securities

Yeah, yeah, they’re getting there – they’re getting there. The building is still flooded though, so a couple of weeks for that.

James Hooke



I’m showing no further questions at this time. I’d like to turn the conference back over to Mr. James Hooke for any closing remarks.

James Hooke

Look, thank you once again for your participation in our update call and for your continued support of MIC. As always, we welcome your comments and follow-up questions. I’d like to thank the lenders to all of our businesses. They’re key business partners to us, and I enjoy working with them to grow and strengthen our business.

I’d like to thank the management and staff and personnel in our businesses who continue to work hard and passionately with us as they do, especially the team at IMTT and Atlantic this quarter, who have dealt with the Sandy issue.

I’d also like to thank our Chief Accounting Officer and Vice President of Finance, Rob Troy who hasn’t been home since Sunday night, has been in here preparing the queue and the press release for filing given the damage out to Long Island. He’s wearing an, I Love New York clothing because the only shops you could find clean clothing at were the tourist shops that were in Midtown, but a fantastic commitment even from someone in the back office in finance to get the results forward. We look forward to providing you with an update on our results for the full year in February and prior to that as events require.

As always, please feel free to contact us with any questions you may have along the way or any suggestions as to the way we could improve that business. Thank you.


Ladies and gentlemen, this does conclude today’s conference. You may all disconnect. And have a wonderful day.

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