Q1 2020 Earnings Call

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Ladies and gentlemen, thank you for standing by and welcome welcome to the Macquarie Infrastructure Corporation first quarter 2020 earnings Conference call.

At this time all participants are in listen only mode. After the speakers presentation, there will be a question and answer session.

Ask a question during the session you will need to press Star then one on your Touchtone telephone. Please be advised of today's conference is being recorded.

If you require any further assistance please press star zero I.

I'd now like to hand, the conference over to your Speaker today, Jay Davis, Managing director Investor Relations. Please go ahead.

Thank you and welcome to Macquarie Infrastructure Corporation's earnings Conference call. This doubling the first quarter of Twentytwenty.

Oh goal today is being webcast Andy's open to the media. In addition to discussing our financial performance on this call published a press release summarizing the results and filed the financial report on form 10-Q, with the Securities and Exchange Commission.

These materials were released this morning in copies may be down from our website at www Dot Macquarie Dot Com Slash MRC.

Before turning the proceedings over to Macquarie infrastructure Corporation's Chief Executive Officer, Christopher Frost, Let me remind you that this presentation is proprietary and all rights or reserved any recording rebroadcast or other uses this presentation in old or impart without the prior written consent of Macquarie infrastructure Corporation is program.

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This presentation is based on information generally available to the public and does not contain any material nonpublic information.

The presentation has been prepared solely for informational purposes and is not a solicitation to have an offer to buy or sell any security or instrument.

This presentation contains forward looking statements we make in some cases use works that conveying uncertainty of future events or up comes to identify these forward looking statements, including those used to describe the anticipated specific overall impacts of Covance 19.

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 forms 10-K and tend to 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 us if the data at 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.

During today's call we referenced the non-GAAP measures earnings before interest taxes, depreciation and amortization or EBITDA and free cash flow as defined by us.

A reconciliation of these non-GAAP measures to the most comparable GAAP measures can be founded the tables attached to our earnings press release.

In addition to Christopher Frost participating in today's call is Macquarie infrastructure Corporation's Chief Financial Officer, Liam Stewart with.

With that it is my pleasure to welcome EMI sees Chief Executive Officer, Christopher Frost.

Thank you Jay and thanks to those of you joining our call. This morning.

Hi yield your families have remained safe and well to previous period.

The first quarter of Twentytwenty will shortly go down as one of the most extraordinary periods in modern history.

Each of us sustain affected by the coated with 19 pandemic and associated economic slowdown in ways. We could not have mentioned as recently as the started this year.

While we don't know how the pandemic and its effects will play out, particularly with respect to the timing of any recovery, we will be forthcoming about al assumptions and what we know today.

Am I see our response has been focused on both dealing with its a mediocre fakes, adding surely accompanying thats businesses are positioned to weather the pandemic and associated economic slowdown.

We have four key priorities first protecting the health and safety valve employees and customers second keeping up businesses operating safely and efficiently.

Third enhancing our liquidity in part through cost reductions and core protecting the value of our pricing businesses, which will enable us to proceed with the pursuit of strategic alternatives in a manner consistent with maximizing value for shareholders.

I will address the first three priorities before handing over to lead to discuss our financial results and the measures we have undertaken to address the current environment.

I will then comment on out to shoot a strategic alternatives before opening the call up to your questions.

Unless these businesses are providers of essential services and important members of the communities in which they operate.

To protect our employees and customers we have implemented remote working for those whose jobs can be conducted offside and may changes in our field operations to enable our employees to do their work, while maintaining appropriate physical distance.

And with physical persistency was not possible, we have increased the frequency of cleaning and disinfecting and the use of personal protective equipment.

How businesses have remained opened an operational Atlantic aviation continues to support general aviation as well as cargo and medical flights.

Hawaii gas is delivering gas to the residents of Hawaii and 90 historic Manhandling that equaled the quick commodities and I would love to take this opportunity to publicly saying how employees for their service during this extraordinary period.

I have remained focused on delivering the essential services provided by our businesses that have been selfless and focused on the safe and efficient execution of their responsibilities.

Regarding our third priority.

We have taken decisive steps to increase our liquidity.

Yes, we drew down on our Nic and Atlantic Aviation revolving credit facilities in order to increase our available cash balance.

Second we made the difficult the prudent decision to suspend our quarterly cash dividend.

Which will result in our tightening substantial capital should suspension Romanian plays through the balance of the year.

Third, we repaid and simultaneously amended the Atlantic aviation revolving credit facility.

As a result, there is no leverage base maintenance covenant in the debt facility. This greatly reduces any default risk by Atlantic aviation.

Before we move swiftly to meaningfully reduce costs.

I would also note that we do not expect to receive any material benefits from the cares Act.

As a result of these steps even if the level of activity saving April purposes for the balance of the year.

Based on our current and forecast for natural resources, we believe that we will be able to fund our operations and contractual commitments without additional capital and without using the funds drawn on our holding company revolving credit facility.

Starting in mid March the limitations on travel implemented by governments to could this for their pipeline team have reduced demand for the products and services provided by our Atlantic Aviation and am I see a wide businesses.

I'd like to KVH SUNS Prime resource of gross profit about 60% is fuel sales.

He also linked to plot activity and clot activity has declined by approximately 18%. This and this time last year.

Approximately 20% of Atlantic's gross margin was generated from hangar rental income buddies likely to persist even in the current circumstances.

The remaining gross margin is the result of providing services associated with quite activity services, such as aircraft, claiming deicing or catering.

Although the performance of Nic, Hawaii folding into tourism and tourist visits to Hawaii have dropped to nearly zero.

A sizable portion of its businesses, serving the everyday needs of Hawaii's residents, but.

The business continues to meet the obviously safe reliable gas products using basic applications like cooking and hot water heating.

This has resulted in aggregate decline in guest sales across the business of between 30 and 40%.

Partially offsetting the downturns at Atlantic Aviation and Nic, Hawaii is improved contribution per mined TT.

I am TT has benefited from increased amount for storage as a result of the global supply demand imbalance in petroleum products and storage availability.

Storage utilization is expected to increase to over 95% by mid may tend to average in the low ninetys percent range for the full year.

No the price volume teens large terminals, so essentially fully leased.

Storage rates achieved on new and renewing leases have been consistent with expectations and some customer support forward contract renewal dates they have by reducing line tt's lease renewal risk over the balance of the year.

Partially offsetting the increase in demand has been reductions and ancillary services, such as throughput blending and housing.

The timing and extensive anywhere.