Macquarie Infrastructure Company revenues plummet(3)

Macquarie’s North America-focused listed infrastructure fund saw revenues fall 33 percent to $184.1m in the first quarter, but management assured investors that its portfolio business’ cash generation remained ‘attractive’ despite the downturn.

First quarter 2009 revenues at Macquarie Infrastructure Company (MIC) fell 33 percent to $184.1 million versus the first quarter 2008, but management assured investors that the firm is generating attractive levels of cash and is on track to deleverage its business by 2013.

The New York Stock Exchange-listed infrastructure investment firm, whose largest asset pool consists of 72 aircraft fueling stations across the US, also saw a 21 percent decrease in its gross profit to $88.6 million versus the first quarter of 2008.

The decline was driven primarily by reduced demand for general aviation and airport parking services, MIC said in a statement. MIC's aircraft fueling business generated $75.0 million of gross profit, versus about 95 million in the first quarter of 2008.

“We’re not going to try to call the bottom in terms of the market for general aviation jet services but the fact that we did not see further declines in activity and gross profit should be viewed as relatively positive,” Peter Stokes, MIC’s chief executive officer, said during a conference call, adding that the firm’s overall cash generation was “relatively stable” and “attractive”.

The aircraft fueling business generated about $9 million of cash which will be used for debt reduction, $8 million of which was used to reduce debt principal in accordance with the firm’s deleveraging efforts.

Stokes said those efforts are on target to get the firm’s debt below a ratio of six times debt-to EBITDA (earnings before interest, tax, depreciation and amortisation) if the business sustains its current performance. The firm reported EBITDA before non-cash items of $25 million for the quarter (negative $6 million after non-cash impairments and losses). It is currently geared at 7.2 times debt-to-EBITDA, Stokes said.

“Ultimately, the business itself is geared to get through tough times,” Stokes added.

The firm is also not committing any more capital toward its airport parking business, which it earlier indicated may seek bankruptcy protection. MIC’s total contingent obligations toward that business stand at $9 million and will decline to $4.5 million by September, Stokes said.

After the earnings were announced, analysts at Wachovia raised their estimates for MIC's 2009 cash available for distribution from $1.53 per share to $1.65 per share. MIC has frozen its dividend payments during the deleveraging process, though, and the analysts estimate that MIC's airport fueling business will have to make an additional $100 million of debt reduction before the end of 2010 in order to again make cash distributions.

Stokes also clarified to investors that his decision to leave the firm was motivated solely by personal reasons.

“I am returning with my family to Australia and I would emphasize that the decision is purely mine. It’s something that we’ve been planning for quite a long time. We’ve had a great 12 years in here New York but Sydney is ultimately home,” Stokes said.

MIC shares ended the day flat at $3.4 per share.