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Macquarie (MIC) Q2 Earnings Beat Estimates, Revenues Up Y/Y

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Macquarie Infrastructure Company’s (MIC - Free Report) second-quarter 2018 adjusted earnings came in at 45 cents per share, beating the Zacks Consensus Estimate of 41 cents by 9.8%. Also, the figure was higher than 32 cents per share reported a year ago.  Lower taxes, reduction in management fees as well as unrealized gains on derivative instruments drove the bottom line, along with modest revenue growth.

Macquarie Infrastructure Company Price, Consensus and EPS Surprise

 

Macquarie Infrastructure Company Price, Consensus and EPS Surprise | Macquarie Infrastructure Company Quote

The company generated revenues of $478.1 million, which rose 8.9% year over year and also beat the Zacks Consensus Estimate of $441.1 million. The top line was driven by solid operational growth in the Atlantic Aviation segment. Service revenues grew 9% year over year and product revenues rose 8.7%.

Segment Details

Revenues from the International-Matex Tank Terminals (IMTT) segment came in at $129.4 million, down 5.7% year over year. It represented 27.1% of the company’s second-quarter revenues. The segment’s EBITDA declined 10% year over year to $74 million, due to a decline in capacity utilization levels.

The Atlantic Aviation segment generated revenues of $232.9 million, up 18.3% year over year and accounting for 48.6% of the company’s overall revenues. The segment’s EBITDA rose 5.1% over the comparable period last year to $60.3 million, driven by higher general aviation flight activity and contributions from acquired fixed base operations.

The Contracted Power segment’s revenues came in at $41.4 million, up 3.1% year over year. It represented 8.6% of second-quarter revenues. The segment’s EBITDA rose 20.1% from the prior-year quarter’s tally. Improved wind resources and higher tariff-based revenues from the thermal power generation facility drove the performance.

Revenues in the MIC Hawaii segment were up 14.6% year over year to $75.6 million. It represented 15.7% of overall quarterly revenues. The segment’s EBITDA plummeted 21.4%, from prior-year quarter and was hurt by higher expenses.

Operating Costs

In the reported quarter, Macquarie’s cost of services and cost of product sales increased 22.2% and 17.2% year over year, respectively. Selling and administrative expenses also increased 7.2% from the year-ago quarter’s tally. Overall, operating expenses rose 12.2% to about $406 million.

Other Developments

As earlier announced, Macquarie was undertaking initiatives for the repurposing and repositioning of certain IMTT assets, to better align the unit according to shifts in global demand and trade flows. Particularly, the company expects to repurpose up to 3 million barrels of storage capacity at IMTT away from primarily heavy and residual oils to gasoline and distillates, chemicals and vegetable and/or tropical oils.

In July, the company entered into anagreement to sell 100% of Bayonne Energy Center to NHIP II Bayonne Holdings LLC. The transaction is expected to be concluded in fourth-quarter 2018.  This apart, in April, IMTT concluded the sale of its subsidiary OMI Environmental Solutions, Inc.

Liquidity & Cash Flow

Exiting the quarter, the company had cash and cash equivalents of $54 million and long-term debt of about $3.3 billion. The company’s adjusted free cash flow for the quarter fell 10.3% year over year to $126.6 million, hurt by increase in interest expenses, taxes and maintenance capital expenditures.
Macquarie authorized a cash dividend of $1.00 per share for the second quarter of 2018, payable Aug 16 to shareholders of record as on Aug 13.

Guidance

Macquarie provided guidance for 2018 EBITDA and currently expects the same in the range of $670-705 million.

Zacks Rank & Other Stocks to Consider

Macquarie currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the same space are Crane Company (CR - Free Report) , Carlisle Companies Incorporated (CSL - Free Report) and Honeywell International Inc. (HON - Free Report) . All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Crane Company surpassed estimates in each of the trailing four quarters with an average beat of 3.03%.

Carlisle Companies exceeded estimates in each of the trailing four quarters with an average beat of 12.85%.

Honeywell International surpassed estimates in each of the trailing four quarters with an average beat of 2.44%.

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