Macquarie Infrastructure Holdings, LLC
Q3 2013 Earnings Call Transcript

Published: 30 Oct 2013

[Operator:]

Good day, and welcome to the Macquarie Infrastructure Company's third quarter 2013 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 Davis:]

Thank you, Ben, and thank you. Welcome once again to Macquarie Infrastructure Company's earnings conference call, this one covering the third quarter of 2013. Our call today is being webcast, and is open to the media. In addition to discussing our quarterly financial performance on this call, we've published a press release summarizing our results and filed a 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, at www.macquarie.com/mic. 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, and 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 and 10-Q. Our actual results, performance, prospects or opportunities could differ materially from those expressed and/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 statements and 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 statement 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. And thank you, as always, to those of you online participating in our earnings conference call. We appreciate you taking time to join our call, especially given the number of calls that take place during this particular week. For all of you conspiracy theorists who may be trying to infer something interesting from the timing of our call this quarter, on Tuesday rather than Thursday, let me set the record straight on that matter. We moved this quarter's call to Tuesday morning rather than Thursday morning to accommodate a business-planning meeting with our Board of Directors in Hawaii this week, where we intend to push forward our LNG efforts. I fly out later today. Nothing more than that. We expect to return to our historically normal reporting calendar in 2014. For those of you who may have a need to participate in multiple calls this morning, I'll begin with a quick summary of our results, before providing a more detailed commentary. In short, I'd characterize the third quarter as a solid quarter, in which we met or exceeded the majority of our targets. In addition to continued good organic growth, we deployed, and continue to deploy, additional capital in each of our businesses where we see opportunities to drive incremental cash generation. And we have a robust pipeline of opportunities under development and consideration. The headlines for the third quarter include, first, the authorization of a cash dividend of $0.875 per share. The dividend will be paid on November 14 to holders of record on November 11. Second, underlying free cash flow in the third quarter of 2013, compared with the third quarter of 2012, was up 14%. The headline growth of 78% is correct, but does not adjust for the swap breakage costs incurred by Hawaii Gas in the third quarter of 2012. Third, the financial results at IMTT, EBITDA up 13.8% versus the prior comparable period, or prior comparable quarter, speak to continued demand for bulk liquid storage and related services. Importantly, the maintenance capital expenditure issues that constrained cash flow growth last quarter at IMTT did not recur this quarter. Free cash flow increased 31% over the third quarter in 2012. Fourth, the financial performance of Atlantic Aviation continues to reflect the positive trends that were evidenced through the second quarter. EBITDA and free cash flow were up 13% and 74% respectively in the third quarter versus the third quarter of 2012. The increase in free cash flow reflects, in part, the fact that the interest rate hedges on Atlantic debt that rolled off at this time last year. Importantly, Atlantic is starting to share its load of MIC's year on year growth story. Fifth, the continued build out of our contracted power generation business. We added two new solar power facilities to the business during the quarter, and a third facility just after quarter end. In less than a year, that business has grown to be -- now be a reportable segment within our financial statements. Sixth, as we foreshadowed after we refinanced Atlantic Aviation in May, MIC is now in the process of pivoting from focusing on business operations and balance sheet management to the growth CapEx pipeline at our portfolio companies. To that end, I am pleased to report that this year; we have spent $58.6 million in the first three quarters on proportionately combined growth CapEx, up 40.7% on the first three quarters of 2012. More pleasing to me is that we also have commenced, or committed to spend another approximately $70 million on projects across our portfolio, and that we are actively considering a pipeline of more than $100 million in additional projects. While we're only one quarter into this new operations and growth focused phase of our evolution, I'm pleased with the progress we've made, while noting that there is a lot more work to be done. So there was a fair bit of work going on here over the summer. The most important among these, however, was the continued good cash generation by our existing businesses. For the 12 months ended September 30, MIC generated $4.09 per share in proportionately combined free cash flow. That puts us within sight of the range of our full year guidance for that metric, as we head into the final quarter of the year. With that as a summary, I'll turn to a discussion of each of our operating businesses in more detail, starting with IMTT. The third quarter was good for IMTT in terms of both EBITDA and free cash flow growth. Recall that IMTT's free cash flow performance in the second quarter wasn't as good as it should have been, as a result of some significant maintenance capital expenditures. We said in August, while unfortunate and poorly managed, we didn't see these as an indication of long-term negative maintenance CapEx trends for the business. We also said that we would be keenly focused on this aspect of IMTT's performance going forward. After much prompting by us, management at IMTT turned their attention to the maintenance CapEx issue as well. That is not to say that the issues have been fully and adequately addressed yet. However, the results for the quarter show some progress with maintenance CapEx for the quarter, coming in at $14.5 million, more in line with historical norms for the third quarter. We continue to expect that IMTT will spend between $80 million and $85 million on maintenance CapEx for the year, and therefore, expect that the expenditures in the fourth quarter will be higher than in the third. Of course, we would also expect to receive the tax benefits associated with deployment of the CapEx before year-end. We continue to believe that there are substantial aspects of IMTT's operations, especially financial planning and analysis capabilities that must be substantially improved. If these improvements are implemented, and we will continue to push to see that they are, we believe we will have better visibility into capital expenditures generally, and maintenance CapEx in particular at IMTT. Looking at the P&L of IMTT for the period, we see terminal revenue up more than 8%, and terminal gross profit up more than 13%, reflecting the operating leverage in this business. In other words, an incremental dollar of terminal revenue did not result in a corresponding increase in direct expenses. In the third quarter, $9 million in year on year revenue growth converted into $8.2 million in year on year gross profit growth. Year to date, the improvement in terminal revenue and gross profit was substantially similar to the improvement for the quarter. Unlike prior quarters, however, the factors contributing to the improved result were slightly different. Where pure storage related price increase had been the primary driver historically, in the third quarter, we saw the impact of an unbundling of pricing for some of the various components of storage. As a result, the pure storage pricing improvement reported for the quarter was a positive 2.1%, bringing the 9-month figure to 5.1%. Now, historically, the pricing for storage has been a bundled figure that includes things like a number of inventory turns for throughput, pumping, some blending, infrastructure usage like dock usage, and the like. We're seeing a trend among some customer contracts towards separating some of these various components into a more a la carte approach to contracting. This is borne out in the results, when we passed the terminal revenue line into what was pure storage, and what were ancillary services in the third quarter. There, we see that although revenue growth was consistent with the prior quarter and 9-month periods, pure storage was a smaller component of the growth, and ancillary services was much larger. Specifically, in the third quarter and 9 month periods in 2012, revenue for ancillary services rose by just 4.7% and 3.2%. In 2013, however, revenue from ancillary services grew by 19.4% and 15.1% respectively. In 2012 and 2013, we have seen similar levels of top line growth at the terminal business, but with a different mix of bundled pricing and unbundled pricing in each year. It's important to understand that the majority of this unbundled ancillary revenue is both contracted and not throughput related. It includes take or pay pricing for dock access, infrastructure usage contracts, take or pay rail access availability payments that are not linked to throughput, and the like. These ancillary revenue contracts have similar durations to storage contracts, or in some cases, even longer durations than the average storage contract. For the third quarter, approximately 90% of the incremental ancillary revenue stream was, indeed, contracted revenue. Now, an obvious question, of course, is what does this mean from a quality of earnings point of view for IMTT? Are we more likely to see increased volatility in terminal revenue or gross profit at IMTT? The answer is we don't think so. The ancillary services are a necessary part of the storage and handling of bulk liquids at IMTT. For example, you can't move the products being shipped by rail from the shale gas regions of the country into storage, and not incur rail access charges. As these are contracted take or pay revenue streams, we are confident and comfortable that the quality of earnings at IMTT remains as good as it has been. To put this into context, in the third quarter of 2012, we saw 8.5% terminal revenue growth. And in the third quarter of 2013, we saw 8.1% terminal revenue growth. While the headline storage for barrel rates was substantially different, 6.9% and 2.1% respectively, we still saw a similar rate in top line growth as this unbundling occurred. And as I have said, 90% of that incremental ancillary revenue in Q3 2013 was contracted. We're providing a similar level of contracted take or pay services, but under a different label. In short, headline pricing is becoming a less effective and less meaningful proxy for the health of IMTT's overall terminal business. Even with the unbundling of pricing, we still saw 8.1% revenue growth, and 13.8% year on year EBITDA growth for the quarter. Of course, pricing isn't the only driver of improved performance at IMTT, and IMTT did have more storage capacity, more than 1 million barrels in service this year compared to last. Although, as we've been discussing throughout the year, capacity utilization has been running below historic norms as a result of two large tanks on the lower Mississippi being out of service for planned cleaning and inspection. As forecast, for a period of the second quarter, IMTT had two 500,000-barrel tanks out of service, in addition to a number of smaller tanks. One of the large 500,000-barrel tanks was returned to service in October, but the other tank of the same size remained offline, and will do so for many months for its scheduled cleaning and inspection. So we expect storage utilization to remain below historically normal levels into the middle of 2014, depending on the amount of time it takes to bring the 500,000-barrel tank back online. Looking out over the remainder of the year, we expect IMTT to continue to generate growth in gross profit, EBITDA and free cash flow, within the range of our previous guidance. We're all fortunate not to have experienced another Hurricane Sandy this year, and on this, the one-year anniversary of the event, we are certainly thankful for that. IMTT is projecting a slight increase in taxes for the full year 2013 versus 2012. However, as we've seen in the past, this estimate is subject to revision, based on the amounts and timing of capital expenditures, and when the related projects are placed in service. The Board and management of IMTT are continuing to evaluate opportunities for deployment of additional capital in the growth of the business. As is our practice, when we have advanced those opportunities to the point of a signed contract, we will publicize the fact typically in the liquidity and capital resources section of our periodic filings with the SEC. In summary, IMTT recorded strong financial results for the third year, including good top line growth, moderate expense increases, and improved management of maintenance capital expenditures. All of these items translated into growth in free cash flow for the quarter of approximately 31%, compared with the third quarter in 2012. Based on the performance of the business, the IMTT Board declared a dividend on October 24th of $20.5 million per shareholder. We expect that the dividend will be paid on or about Wednesday of this week. Atlantic Aviation. Turning to Atlantic Aviation, I can now say something I've not been able to say during my tenure as CEO of MIC. Atlantic Aviation has recorded three consecutive quarters of positive EBITDA growth. That feels pretty good. I'd like to be able to say something like that too in February, and based on the way October has started, I'm confident I shall. The third quarter was quite similar to the second, in the sense that it was a gain driven by modest improvement in general aviation flight activity, combined with increased fuel margins, market share gains, effective cost control, and reduced interest expense combining, leading to attractive growth in EBITDA and free cash flow. General aviation flight activity industry-wise, as reported by the FAA through August, increased slightly. However, activity at the airports on which Atlantic operates has been up by as much as four times the industry. We continue to believe that this reflects both the popularity of the destinations at which Atlantic operates, and the quality of service and amenities associated with the brand. Even so, the increases in flight activity have been in the low single digit range. However, an increase in margin per gallon and market share gains contributed to a nearly 6% rise in gross profit for the period. We've been able to grow our top line faster than industry flight activity through these pricing and market share gains. Further, the operational leverage in this business was again in evidence this quarter. Continued effective cost management -- Atlantic is on track to record a fifth consecutive year of flat SG&A -- led to growth in EBITDA of 13% for the quarter, and just under 10% year to date. Notwithstanding the increases in volumes, both the number of planes served and the volume of fuel pumped, we've been able to absorb this increased activity within our cost base. Given the pass-through nature of the cost of jet fuel, we consider gross profit to be the top line for Atlantic Aviation. And we've seen some good and interesting margin trends coming out of the business. In 2013, for the first nine months of the year, Atlantic Aviation's EBITDA margin has been 45.5%. It was 43% in 2012. In contrast -- sorry. I contrast that with an EBITDA margin of Atlantic Aviation through the first nine months of 2007 of 46.7%. It dropped to as low as 37.6% in the first nine months of 2009. And here's the kicker. EBITDA at Atlantic Aviation is at $140 million for the trailing 12 months ended September 30. It peaked in 2008 at $144 million, again, on a trailing 12-month basis. And flight activity then was running at about 4.5 million movements per year. On a trailing 12-month basis, we've seen about 3.8 million-flight movements. So EBITDA has recovered to near 2007, 2008 levels, but we still have a considerable ways to go to get back to where we were in terms of flight activity. We are hopeful that the recovery still has a ways to go. If it does, the growth in flight activity could translate into substantial improvement in the financial performance of Atlantic Aviation. Of course, Atlantic Aviation also benefited from a lower debt balance and a lower cost of debt this year versus last. Cash interest this year was less than half what it was last year, a fact that contributed to the growth in free cash flow in the third quarter of just over 74%, compared with the third quarter in 2012. Recall that it was this time last year in October that the interest rate hedges that were in place at Atlantic Aviation rolled off, and the cost of debt dropped to the underlying L+1.725%. That means, naturally, that the period on period improvement in free cash flow in the fourth quarter will not be quite so dramatic, although, assuming the way the gods continue to smile on us, we won't have the increased maintenance capital expenditures or the reduced flight operations in the fourth quarter of this year that we did in 2012 after Hurricane Sandy hit four of our FBOs. Atlantic Aviation is also expected to generate results for the full year within the range of guidance we've previously provided. Not only did Atlantic have a good third quarter, but they've started the fourth quarter strongly as well. Trading thus far during the month of October is ahead of what we saw in the quarter and year to date periods ended September 30. In addition to the solid trading this month, on Friday, Atlantic entered into an agreement to acquire the general aviation services facility known as Hangar 10, at the Kansas City downtown airport. While the transaction is subject to the review and approval of the airport authority, we're optimistic that this outstanding facility will soon be the 63rd operation in the Atlantic network. Hangar 10 is the preeminent operator at Kansas City, and will fit well into the Atlantic family. Jim Stowers, the founder of Hangar 10, and one of the famous Stowers family of Kansas City, brought Hangar 10 exclusively to Atlantic, as he thought that Atlantic best reflected the operational qualities and values he was looking for. Consistent with our portfolio-wide emphasis on deployment of capital and with growth projects, we've been investing in Atlantic Aviation throughout the year. To date, we've put more than $11.4 million to work, including projects that were commenced in 2012. In addition, Atlantic has $20 million worth of projects underway in fuel storage farms and related fuel supply chain logistics. These fuel farms predominantly serve Atlantic. We're not looking to get into the third party airport storage business at this time. We like investing in such fuel logistics infrastructure for defensive reasons, and offensive reasons. Defensively, it gives us some better control over our supply chain as refineries come offline in the next few years to address the maintenance they have deferred during the current US refining renaissance. Offensively, they enable us to take some of the margin that is being earned upstream of our existing business. And we continue to invest in upgrading Atlantic Aviation's facilities and services. As has been the case for some time, our investment in terminals and hangar upgrades and expansions have accorded the business an increase in the average remaining lease life across its portfolio. The average is now 18.3 years into the future, and we are optimistic we will have secured another lease extension by the time we report our full year results. In light of the impressive EBITDA growth and the attractive capital investment opportunities we see in this space, we have decided to upsize Atlantic's existing debt facility. While we are continuing to target a net debt to EBITDA ratio of 3.5 times, we have the capacity to increase the facility by $50 million, and still stay within our target leverage range. To that end, after this call concludes, we'll be kicking off the debt upsizing process. Atlantic Aviation made another investment in customer service during the quarter, with the upgrade and relaunch of the business' website, Atlanticaviation.com. The site features a user-friendly look and feel, and an altogether new online reservation system. Also, there are undoubtedly those of you who will be in the New York area for the 2014 Super Bowl at MetLife Stadium in East Rutherford, New Jersey. And you'll be inclined to make -- and you may be inclined to make a reservation at Atlantic's Teeterboro, Long Island or Westchester facilities in connection with that event. Please be advised, however, that reservations for the Super Bowl are being handled by phone only. Given the traffic being expected for the Super Bowl, I would strongly urge you to reserve a slot at one of our FBOs soon, as the capacity is filling very rapidly. In summary, Atlantic Aviation put together another solid result in the third quarter of 2013, and is off to a strong start in the fourth quarter. We're supporting the continued expansion of the business with a commitment of growth capital for projects generating appropriate returns. Moving now to Hawaii Gas, the headwinds that held Hawaii Gas back in the second quarter subsided in the third quarter, as we had indicated they would. As a result, the business generated a modest growth in EBITDA of 2% versus the prior comparable period, and underlying free cash flow growth of 10.8%. The uncertainty related to the announced sale of the Tesoro refinery resolved itself, with the closing of that transaction last month. Management at Hawaii Gas successfully negotiated a new naphtha feedstock supply agreement, and perhaps most importantly, demand for gas products continues to grow, as evidenced by the increase in volume of gas sold. Last quarter, we discussed a couple of matters that had introduced the appearance of volatility in demand at Hawaii Gas. These were the facts that, firstly, a single large customer was offline whilst its co-gen plant was being repaired, and secondly, the shutdown and announce sale of the Tesoro refinery had caused the business to retool certain elements of its supply chain, only to have Tesoro resume operations at the refinery before the sale to Par Petroleum. While the LPG customer has yet to restore its co-gen facility to full operation, the completion of the sale of the Tesoro refinery to Par Petroleum appears to have, for now, removed the supply chain uncertainty. Hawaii Gas negotiated a new naphtha feedstock supply agreement covering the period October 1 through March 31, 2014. That agreement was subsequently transferred to Par Petroleum following the sale of the refinery. Not surprisingly, management personnel will now turn their attention to the extension of the agreement beyond the end of March. Expenses were closer to normal in the third quarter, with the business incurring relatively less expense in relation to its LNG project. Through the nine months, of course, expenses at Hawaii Gas continue to reflect both the LNG related costs incurred earlier in the year, and the severance costs incurred earlier in the summer. Free cash flow increased substantially during the period, driven by lower taxes and a slight decrease in maintenance CapEx. Interest expense declined as a result of the successful refinancing of the business in August of last year. The reported increase in free cash flow looks to be off the charts, but adjusting for the swap break costs incurred in 2012 beyond the line free cash flow generated by Hawaii Gas grew by about 11%. Regarding the LNG project, Hawaii Gas continues to move forward with a variety of initiatives in support of seeing liquified natural gas as a component of the energy complex in Hawaii. In particular, the business refiled an application with the Hawaiian Public Utilities Commission, seeking authorization to transport LNG in 6,500-gallon cryogenic containers from the US mainland to Hawaii. The Commission is expected to issue a ruling on the application before the end of the year. We and the management team at Hawaii Gas continue to believe that the use of LNG is a backup to our existing synthetic natural gas system, and potentially, as a primary input in to power generation on the islands, will be positive for both the customers of Hawaii Gas and the economy of the island generally. Trading to date in October has been good at Hawaii Gas, and consistent with the guidance we've previously provided. At District Energy, the story was essentially unchanged in the third quarter versus the first half of the year. The relatively cooler weather this year versus last manifested itself in a reduction in consumption revenue. In addition, of course, District Energy's result have been adversely affected by a customer having elected to manage its own cooling. We haven't yet, but we do expect to enter mediation with this customer in relation to recovery of unamortized lease principal to which we believe we're entitled. Offsetting the decline in consumption revenue was an increase in capacity revenue that reflects contractual increases in rights, and new customers being added to the system over the course of the prior 12 months. We noted in our 10-Q that we are pursuing the refinancing of District Energy's long-term debt. Assuming the debt markets continue to be open and receptive to the financing of infrastructure assets, we expect to conclude this process in the early part of 2014. Aside from the customer issue, and assuming continued seasonally normal weather, we're comfortable that District Energy is likely to perform in a manner consistent with expectations for the full year. MIC Solar. Those of you who reviewed our press release of our filing on -- for the 10-Q will have noticed year our newest year, MIC Solar, is now a reportable segment on its own, and no longer part of our Corporate and Other. As a consequence, you will also see that we have calculated free cash flow for this segment in the same manner as other businesses, rather than looking just at the distributions from the projects in the portfolio the way we had in the prior two quarters. And you'll probably notice that the segment was cash flow negative in the third quarter. And then you ask yourself, what in the world are these guys at MIC doing, investing in a cash drag? In fact, what we've been doing is growing the business. In particular, we deployed about $15 million in acquisition of a share of two new solar power generation facilities during the quarter, and another $6 million in a third facility in October. These facilities, one in Arizona and two in California, are still in development, although all three are expected to be online and generating electricity right around the end of the year. As a consequence of our efforts, we incurred investment-related expenses for these three facilities acquired in September and October of about $2 million, which were not capitalized, and for which we had no offsetting revenue. The expenses were significant enough relative to the cash generated by the two original facilities. However, the whole business was cash flow negative for the quarter. However, having now incurred these expenses, we would expect that unless we made another investment in MIC Solar in the fourth quarter, that business would again be cash flow positive. As noted in our 10-Q, if we stopped investing in new solar projects at this point at MIC Solar, we would expect the business to generate between $1.6 million and $1.8 million per year in free cash flow. I do expect that we'll continue to invest in contracted power generation opportunities via MIC Solar, subject to finding projects with economics similar to those, which we've invested in today. As noted in our press release, we think we have visibility into a pipeline of additional projects worth $35 million or more. The facilities that make up the MIC Solar portfolio are capable of generating approximately 57 megawatts of clean electric power. As I have said previously, we're approaching this somewhat cautiously, focusing on small, relatively small projects, as we learn where all the pitfalls might be. To date, though, we're pleased with the progress we have made and the contribution to our financial results that we expect these projects to make. Corporate. Since I'm sure someone will ask about our Corporate segment, and the fact that it appears to be a cash flow generator on a year to date basis, let me say that, no, the Corporate center is not also a profit center. What you see in our Corporate segment is the offset of the federal income tax liability generated by our consolidated entities, Atlantic Aviation and Hawaii Gas. Before I wrap up the formal portion of our call and open the lines to your questions, I did want to spend a bit of time on the subject of growth, and growth investment we have been or could be making in the future. As we've been saying throughout the year, the drivers of our growth in business, typically price and volume, have been undergoing a change. Pricing power has been moderating for some of our businesses, for example, at IMTT and Hawaii Gas, whilst it's been accelerating at Atlantic Aviation. However, as I outlined at the start of our call, we're keenly focused on increasing the amount of growth capital we're deploying in our business, since we have successfully right-sized our balance sheet at the end of May. Our pivot to growth, as I call it. Year to date through September 30, our businesses have invested, in aggregate, $58.6 million, proportionately combined in growth projects. That includes certain projects that were commenced in 2012. Importantly, though, that figure does not include roughly $15 million deployed in MIC Solar in the third quarter, and collectively, that's more than 30% more than which was spent on growth during the first nine months of last year. It includes investments in additional storage capacity and related infrastructure at IMTT, fuel supply chain logistics and facility upgrades at Atlantic Aviation, LPG storage capacity and components of the LNG initiative at Hawaii Gas, and connections of new customers to District Energy. Importantly, if we look beyond these investments, our businesses have committed to an additional roughly $70 million worth of growth projects. Beyond that is a pipeline of additional opportunities having an aggregate value of more than $100 million, again, on a proportionately combined basis that we could undertake. Obviously, that figure doesn't include the significant $300 million-odd investment that we would have to be made in LNG import facility in Hawaii, or some of the very substantial projects that have been discussed at IMTT. Nor does it include acquisitions by MIC Solar or Atlantic Aviation. What it says, however, is that we see the potential to grow MIC free cash flow per share at rates comparable to those we and our investors have enjoyed over the past several years, if we continue to find such investment opportunities. Our 5-year CAGR for free cash flow per share through the end of 2012 was 12.5%. At the midpoint of our estimate for free cash flow per share for 2013, the year on year growth in free cash flow per share would be approximately 13%. I'd make two comments in relation to MIC's free cash flow per share growth in the next five years versus the last five years. First, more of the free cash flow growth will come from Atlantic in the next five years than it did in the last five. From 2007 to 2012, Atlantic's EBITDA and free cash flow grew by 1.5% per year, and 3.4% per year respectively. Part of the explanation for that anemic growth is the financial crisis that occurred in that period. However, year to date, EBITDA is up 9.9% versus that 1.5% 5-year CAGR. So Atlantic is already, and we believe will continue to be, a bigger source of MIC free cash flow growth than it has been. Second, growth CapEx will play a more important role in delivering growth in the next five years than it has in the last five. So while the source might be somewhat different going forward, attractive opportunities to drive incremental free cash flow growth remain. Importantly, we have the capacity to undertake these initiatives without stressing our financial position. For example, at quarter end, our leverage across the entirety of MIC was 3.5 times, excluding Solar and the Corporate segment. And we have access to ample debt capacity at each business. In fact, as noted earlier in the call, shortly after we finish this call, I'll be on a call with potential investors in upsizing the debt at Atlantic Aviation. Recall that they facility that was put in place in May included an accordion facility that provided for an access to an additional up to $50 million of revolving debt. Assuming we have the support of the market, we expect to be able to deploy that additional capital in projects of the time I have mentioned today. Once again, I'd characterize the third quarter and year to date performance of our business as operationally solid. Those Group solid operations generated substantial step-up in the amount of free cash flow generated compared with the result for the third quarter last year. The fundamental drivers of continued good performance are intact, and MIC remains on track relative to our guidance for the full year. Our focus has shifted from addressing issues such as strengthening our various balance sheets and refinancing the debt facilities at each of our businesses, to investing in growth. Against that backdrop, our priorities remain, firstly, facilitating growth through operational improvement at each of our businesses. Secondly, the deployment of our substantial resources into additional growth projects at each of our existing businesses, and thirdly, the continued development of our contracted power generation business. With that, let me ask the operator to open the phone lines for your questions.

[Operator:]

(Operator instructions). Our first question comes from the line of Ian Zaffino of Oppenheimer. Your line is open. Please go ahead.

[Ian Zaffino:]

Hi, great. I'm hopeful that you guys reserved a slot for me at Teeterboro for the Super Bowl. Put my name down, please. (LAUGHTER)

[James Hooke:]

I presume you'll be flying your personal jet, rather than the Oppenheimer jet, Ian.

[Ian Zaffino:]

That's exactly right. So, the question would be, as you look at sort of the accelerated depreciation, the deprong [ph] depreciation rolling off, and particularly the IMTT level, and I guess there are ways to deprong [ph] to shelter that. But have you looked at sort of alternative capital structures over at IMTT? You know walk us through the potential for that, sort of what your thoughts are, that -- and just any other details you could give us.

[James Hooke:]

Yes, look, I think at this point in time, IMTT's tax structure is likely to remain as is. There are what I would call different, more out there paths in terms of an MLP conversion or a REIT conversion. However, I think they would require a restructuring of the ownership of the business. And so, given that you've got the two existing owners to date, I don't see those as on the cards for the time being. I think the two things I'd note about IMTT's taxes are as follows. Firstly, it's heavily influenced by the rate of capital deployment, whether that's maintenance CapEx or growth CapEx. So with the large $500 million undrawn revolver capacity IMTT has. It has the ability to invest in growth projects to provide a further tax shield going forward, and probably the most prospective location for those growth CapEx is in the lower Mississippi, especially at our Geismar facility, that has exposure to the booming petrochemical complex. So I think that's the first. I think the second would be that notwithstanding the bonus depreciation, even when the – you know given there are no NOLs there, there's still a level of depreciation and amortization that IMTT that would provide a level of tax shield without that. But I think, you know, several folks have referred us to the MLP or the REIT structure. The -- I think that would -- that's not on the radar screen for now. But even absent bonus depreciation, you still get five to seven-year depreciation on long-term assets, which, you know, is a pretty good depreciation schedule. So for the time being, I don't think there's anything on the cards.

[Ian Zaffino:]

Okay, and then the following question would be on, just returning cash to shareholders, as far as shareholder distributions. You know how do you think about that? I know you were thinking about maybe potentially moving to sort of like a semi-annual dividend increase. You know what is your thoughts on that? And then, just as you look at what your free cash flow this year is, it was somewhat depressed, because you had some Sandy-related CapEx. And so, the free cash flow was high, higher than your $4.10 to $4.20. How are you looking at that as you look at your 80% to 85% payout ratio? What does the dividend look like? I don't know, six months out or three months out? Or just walk us through that process a little bit more. Thanks.

[James Hooke:]

Sure. The first thing that I would say, the dividend that we increased to $3.50, this will now be the second, only the second quarter where that's paid. It was put up, as you know, for the second quarter, and now the third. I think the Board take a sort of qualitative and quantitative view of the dividend, and so, we've given guidance that our payout ratio would be 80% to 85% of free cash flow. I think there are some in the midstream energy space who like to target a quarterly penny or a nickel increase in their dividend, so that they can say that they've had 34 consecutive quarters of dividend growth. I think the MIC view will be a little more holistic than that, and essentially look at sort of step-ups in the dividend less frequently, I would have thought, than that. But I think that over time, the Board will say, where is the business performing today, what are the cash needs of the business, and what does the outlook look like, and then raise the dividend or review the dividend based on that outlook. Some have said, have asked us the question, would it be underlying free cash flow that they look at, excluding anomalies. Is it 80% to 85% of a forward-looking free cash flow, or trailing free cash flow? And I would say, given that, we're only one quarter into this new dividend, we haven't addressed those questions yet. I suspect the full year result will be the next window where we look at that. But I think in terms of some of the more nuanced questions like those that flow from what we've said on dividends, we just -- we're still in the process of reviewing all of that.

[Ian Zaffino:]

Okay, great. Thank you very much.

[James Hooke:]

Thanks.

[Operator:]

Thank you. Our next question comes from the line of Christine Cho of Barclays. Your line is open. Please go ahead.

[Christine Cho:]

Good morning.

[James Hooke:]

Good morning, Christine.

[Christine Cho:]

Can you talk a little bit more about the unbundling of services at IMTT? Is it an industry trend, or more specific to you guys? And what's driving the nice growth for ancillary services versus the slowdown on the growth of rental rates? I would think that the growth for both would be a little more correlated.

[James Hooke:]

Yes, as I said in the script, I think I kind of view this as a different label on similar customers, services. There are some customers with us who we provide services to who, for instance, we don't do any storage for. They just pay us for dock access, and they pay us in sort of a 4-year lead term rate of access to the docks. There are others who used to bring product in via the dock who now want to -- who want a substantial rail access to the existing tanks that they had. But not only did they want rail access, they wanted guaranteed rail access, so that they could guarantee that there would be a rail slot available for them, so that they could get their own supply chain working. And then, so basically agreed to pay availability payments for rail slots on a take or pay basis, when we renewed the contract. And so some of those people, rather than when we come time to renew their contract, stepping up the headline price of the storage, we will step up the price for a new ancillary service that we provide to them, so that we still get the same total economics. In terms of correlation between them, this is not sort of what I would call your traditional throughput ancillary revenue stream that when someone's really pumping a whole bunch of volume, your throughput line goes up. And to that extent, that would be more where I would expect to see the correlation, rather than in the services. And then finally, I'd say, in the chemicals space, and we've -- you know, chemical is becoming a more important part of IMTT's business as we grow our facility at Geismar, but also at other locations where we store chemicals. And in the chemical space, again, storage is not, per se, a meaningful metric. And the example that I would give is, we invested $230-odd million in the Geismar logistics facility in the lower Mississippi. I think if you look at the technical storage barrel capacity we got from that, it was 750,000 barrels, which would make it the most expensive 750,000 barrels one could build. That is much more a logistics facility, and so people who use that facility will pay us an amount that's not so much storage-related as a contracted service-related stream for access to that infrastructure. So over time, I would say a couple of things. Firstly, with the increase in rail, it wouldn't surprise me that we see a further decoupling or unbundling of this. Secondly, as the chemical business grows, on the lower Mississippi, especially, I would continue to see some of that unbundling continue to take place. I think what we've said, though, it is -- and I sort of want to characterize it, is, in terms of demand, there's clearly been a degree of slowing, and we've talked about that slowing over the last year or two. However, what we wanted to make clear in today's earnings call is that that slowing is not anywhere near as stark as that 2.1% pricing figure would indicate, and that a lot of this ancillary revenue stream is contracted. In fact, 90% of the incremental revenue stream was contracted. So what we were trying to do in this quarter is point out to people that, as you've seen, we're sort of seeing a result in 2011 -- sorry, 2013, that's very consistent with the top line growth we saw in 2012, and that that 2012, 2013 top line growth is slightly lower than you had seen in the 2009, 2010, 2011 period. And we'd always said that that 10% per annum pricing wouldn't continue in perpetuity. What we're seeing is a slowing that we've continued to see last year and this year, and we've guided people to. However, it's not as stark as that headline 2.1% figure suggests. Having said that, we obviously had to disclose the 2.1% figure, because everyone's used to seeing it, so they would have said, why are you hiding the ball if they didn't. And we don't actually think there's a ball to be hidden in this case, given that the ancillary revenue streams are growing the way that they did. Is it an industry-wide trend or an IMTT specific one? I think the jury is still out. And the reason I say the jury is still out on that is, I don't think anyone else in the space discloses anywhere near the degree that we do, so we don't have visibility into their practices. Secondly, I don't know that that many people have the exact same business mix that we do, because there are those in the MLP space that don't really have as much chemical exposure as we do, because a lot of MLP revenue is not -- a lot of chemical revenue is not MLP qualified. So I'm not able to really comment yet. I don't even know -- it's not clear that it will necessarily be a trend for IMTT, but because of the role of rail and the role of chemical, I suspect it probably will be, but we'll have greater visibility of that, within a -- over a 12 month timeframe than we have today.

[Christine Cho:]

Okay, that was very helpful. Have you broken down, I guess, at IMTT, the revenue between what's coming from storage and what's coming from ancillary services?

[James Hooke:]

We haven't in anything that we've disclosed, no.

[Christine Cho:]

Okay. And you wouldn't be willing to disclose it today?

[James Hooke:]

Tempted – though I am. I think at this point in time, I can already feel my business partner in Louisiana kicking me under the table from Louisiana to New York. So I suspect, no, they wouldn't appreciate that.

[Christine Cho:]

Okay, okay.

[James Hooke:]

But it's a very tempting offer. Thank you.

[Christine Cho:]

The FBO acquisition in Kansas City, are you the sole FBO there, or is there another one onsite?

[James Hooke:]

No, there's Signature – the secondary chain, from a quality perspective, in the US. Signature also operates at that location. And so fortunately, customers will now be able to shop up to Atlantic at Kansas City.

[Christine Cho:]

Okay. And then my last question is, you talk about the CapEx, the maintenance CapEx in 2014 for IMTT returning to the range of levels observed in 2010 through 2012. Can you remind us if this is what you guided to last quarter, or is this lower?

[James Hooke:]

No, this is what we guided to last quarter.

[Christine Cho:]

Okay, okay. Thank you.

[James Hooke:]

Thanks.

[Operator:]

Thank you. Our next question comes from the line of Brendan Maiorana of Wells Fargo. Your line is open. Please go ahead.

[Brendan Maiorana:]

Yes. Thanks, good morning.

[James Hooke:]

Hi, Brendan.

[Brendan Maiorana:]

Hey, James. So I was intrigued by your comments about the level of growth as you kind of look out over the next several years. I was wondering if you could kind of frame up for us -- so, if we look at same store EBITDA growth at the segment level, what do you think that's likely to be? I mean, we don't need details by segment, but just overall. Do you think that's a number that's probably a little bit better than inflation, if we look at the same store basis over the next few years?

[James Hooke:]

Yes. Unless inflation really skyrockets, yes. And look, what I would say is, you sort of -- I would say, IMTT this year delivered -- or, this quarter, delivered 13.4% EBITDA growth. Hawaii was slow, but has been coming through that -- Hawaii was probably inflation-like, but coming through that period of supply chain disruption. And Atlantic has accelerated to 13% EBITDA growth. District Energy doesn't really grow. And EBITDA on the Solar business is a slightly nebulous concept. But I would have thought, between the big three of IMTT, Atlantic and Hawaii Gas, you would probably see IMTT temper relative to this quarter. You would see Hawaii Gas increase substantially, increase relative to this quarter, and Atlantic, it's hard to say exactly how long the recovery will continue at these levels. But we don't see it dissipating any time soon. So if you put IMTT, Atlantic and Hawaii Gas together in that blend, you come up with a fair bit more than inflation, I would have thought.

[Brendan Maiorana:]

Yes. I mean, maybe that's kind of -- and we're sort of thinking about this. The question is kind of a multi-year outlook, so maybe that's kind of mid-single digits. Maybe you could even do a little bit better than that, I guess, if we put your leverage at the business on top of that, at -- call it 30%. That probably gives you same store free cash flow per share is kind of high single digits, just from the existing asset base. Is that a fair way to think about it over the next several years?

[James Hooke:]

Yes. If you're excluding -- if you're saying same store and excluding growth CapEx, then I think, yes. I think the way I would back into it is the converse, which is to sort of say, to achieve double digit free cash flow growth per share, we'll need to deploy growth CapEx at each of those businesses. So I guess the converse of that is, absent that growth, CapEx growth, you're going to be in a single digit number rather than a double-digit number, and it will be the growth CapEx that gets you to the double-digit number.

[Brendan Maiorana:]

Yes, so then I kind of want to think about the growth CapEx a little bit, too. So the returns that you're getting on that growth CapEx, sort of at the asset level, I think you typically kind of get a cash flow yield that's in the low double digits. Is that a fair way to think about it over the next few years?

[James Hooke:]

It depends project to project, and it depends vertical to vertical. So, some of the contracted revenue stream businesses, depending on the life of the contract, may be high single digit in terms of cash yield, and others would be low double digit.

[Brendan Maiorana:]

So, if I look at your retained cash flow, I look at the dividend relative to the -- call it $4.15 midpoint of free cash flow, you know, this year, you're probably around $30 million, $35 million of retained cash flow, but you've got a lot of growth CapEx that sounds like it's in the pipeline. And to keep leverage low, which you guys have worked really hard to do, and are in a great position now from a balance sheet perspective, how do you we think about the funding of that growth CapEx over the next few years, given what you want to do with the dividend and the free cash flow outlook?

[James Hooke:]

Sure. So, the way, I think, for the sources of capital to fund growth CapEx, the first two are what I would call capital, and one of those is the 15% to 20% of free cash flow that's retained. The second is the -- a little over $60 million of cash that we're currently sitting on. And so those are the two buckets of capital. And then, I look at the debt capacity that each of the businesses has, and assuming that the EBITDA growth and that the returns on these projects are the same, we have an ability to sort of lever up that growth capital at each of the businesses with the undrawn revolver capacity. Hawaii Gas has sort of $60 million in undrawn revolver, Atlantic has $70 million, and IMTT has sort of $500 million. So in that range, we have more than enough revolver capacity to match that growth capacity in terms of the capital from the $60 million on hand and the retained free cash flow that supplements that.

[Brendan Maiorana:]

Would you guys think about -- it sounds like there could be a couple of very large projects that could hit, too, and then there's growth. Because you get attractive returns, hopefully the growth projects accelerate. Just as we sort of think about maybe news flow over the next several quarters, do you think about putting an ATM program in place that may allow you to issue some capital into the market without doing a large follow on offering, just as a way to manage the balance sheet? Or is that something that's not really likely in the cards?

[James Hooke:]

Look, I -- the two answers I'd give to that are, I do think those things are attractive for the sort of businesses that we have, where you're potentially looking to deploy capital, sort of bite sized nuggets. We already have a dividend reinvestment plan and a direct stock purchase program on our website available -- not that many people -- my guess is, not that many people use it, but there is that alternative. I think it's premature, however, having said that, I think they're kind of attractive is, with the $60 million of cash that we're sitting on, and the free cash flow that we will generate and retain in the business, it's not on the -- you know, it's not on the radar screen now, because we're not in a cash crunch, but it is -- just to be transparent, yes, I -- those things are intriguing to me, if and when we got to the point of needing to look at them. But we've got a fair bit in cash for now that we don't.

[Brendan Maiorana:]

Yes, fair enough. Okay. Thanks a lot.

[James Hooke:]

Thank you for your question. Hello, then?

[Operator:]

Our next question comes from the line of Sameer Rathod of Macquarie. Your line is open. Please go ahead.

[Sameer Rathod:]

Yes, hello, and good morning. Two quick questions on MIC Solar. First, will this be exclusively solar plants, or will this be any type of contracted power? Because it seems like you're using that term interchangeably.

[James Hooke:]

Yes, well picked up. It won't be any time of contract to bear in that, realistically, I can't see us doing anything in the coal or the nuclear space, so I want to rule those out. I would say overall, however, to the extent we could find attractive returns over time, we're not ideologically wedded to solar. The two things I think that I would say is, one, we probably want to get to scale in solar before we dipped our toe in elsewhere. The second is, at the moment, in contracted power, we can't see attractive returns anywhere other than small sale contracted solar. I think when we look at wind on a risk/return basis, we don't necessarily like what we see on a risk-adjusted basis. The return is okay, but we -- we're not yet comfortable with the risk. And on a combined cycle gas, which is obviously a great generating capacity, we see those projects just being bid to too lower returns. The thing that we like about the solar is, on a risk-adjusted return basis, we're signing 20 and 25 year PPAs in a lot of the combined cycle gas. The off-take for that is sort of 10-year contracts, which is a little bit lower than we think. And in terms of the pricing that you've got to assume on the merchant risk, we just don't like what we see there at the moment. And that's probably, when we say we don't like what we see there at the moment, more our own ignorance and lack of understanding than anything else. But that's why I would say, at the moment, our intention is to focus on solar, but reserve the right if we see something attractive elsewhere when we get to scale to move into it.

[Sameer Rathod:]

Right, right. I guess, you know since you guys are pivoting more towards growth, what kind of competition are you seeing for potential acquisitions? And specifically, I guess, in the contracted power solar space, problem with IPO, let's say, NRG yield, it seems like a lot of people are interested in contracted power. But in general, what kind of competition are you seeing for that, that's out there?

[James Hooke:]

Yes, so I would say -- and this gets to the part as to why we're focusing on smaller scale solar projects. In the larger scale projects, and by large scale, I'm going to draw an arbitrary line at around 50 megawatts or more, we see competition that is so fierce that we don't see attractive returns to be made there. In the smaller scale projects, we see more attractive returns, and one of the reasons we're able to get those attractive returns is the way that we've structured our deal in this space with our partnership with Chevron, means that facilities under that 50 megawatt size, we think we have a, to a degree, a one-stop shop that we can provide to people who are developers as a good off-take. But by and large, when you get bigger than that, we're seeing -- you know, I think by virtue of the fact we haven't bought anything bigger than 20 megawatt size, you can deem from that that when we get bigger than that, the competition is looking too fierce at the moment, from a -- in a -- we could win one of those cost of capital shootouts, but you then find yourself thinking, God, I just won the cost of capital shootout. So, yes, that's why we're sticking the way we're sticking.

[Sameer Rathod:]

So just so you're now thinking two, three, four years out, obviously, if you acquire solar assets today, they move the needle. But once you get to, let's say, a portfolio of these solar assets, would you have to go larger to keep growing that business? Are there going to be enough 50-megawatt / solar plants four years out that you'll be able to grow the solar business?

[James Hooke:]

Yes, look, because -- I think the answer is, there will be enough projects for us to continue to keep growing prudently. One of the things I like about having a portfolio of companies is, in any given year, we can deploy some capital, a lot of capital, or no capital in that vertical, depending on the attractiveness of it. Others who are sort of pure plays are randomly stuck into -- they've got to invest in the space, even if it's a dud space to invest in. And the example I would give there is, in the period, sort of 2008 through 2013, IMTT hasn't made a single acquisition of a bolt-on facility, despite deploying $800 million of growth CapEx. Because actually, being a buyer in that time wasn't a good thing to do, but there was the opportunity to deploy capital making tanks rather than buying tanks, because the price they were going for was too high. Similarly, I would say, across the board for the MIC portfolio more broadly, whilst we're looking to grow, the fact that we're looking to grow and deploy CapEx on five different fronts makes it a lot safer, because at any given moment in history, it's probably barking mad to deploy it in at least one or two of those spaces. And so, we have the optionality that that provides us. Overall, I don't see, across our entire portfolio, we have more opportunities than we have balance sheet and capability to pull off, and that's a good position to be in, because I prefer the opportunities to be chasing the capital, than the capital be chasing the opportunities.

[Sameer Rathod:]

Okay, thank you. Have a great day.

[Operator:]

Thank you. Our next question is from Stephen Errico of Locust Wood Capital. Your line is open. Please go ahead.

[Stephen Errico:]

How are you? Thank you for taking the question. I just wanted to follow up on the Solar business. What type of returns -- you know, you talked about investing about $30 million in the business and the free cash flow next year being about $1.8 million. So I think it's about a 6% return. Is that an unlevered return? And what type of return are you targeting in that business?

[James Hooke:]

Yes, if you look at the returns we're targeting, sort of 12% to 13% IRRs, in terms of the return, you've got -- that's being pulled down by the diligence costs and the corporate costs as we grow that business and the non-capitalized costs. And also, you've also got to remember that in some of these projects, there's a return of capital that's to occur, which is, once the projects get the construction phase, end of construction phase, and they're generating, a part of that cash gets flipped back to us and recycled. So the permanent capital in that business is not as high as the headline bigger.

[Stephen Errico:]

All right, so you think it's a 12% to 13% IRR type of business?

[James Hooke:]

Yes, that's typically what we're looking at.

[Stephen Errico:]

Okay, great. Thank you very much.

[Operator:]

Thank you. (Operator instructions) Our next question comes from the line of Basil Jones of BB&T Capital Markets. Your line is open. Please go ahead.

[Basil Jones:]

Hey, guys, this is Basil Jones, on for Rob. Thanks for taking my call today. I had a follow up follow up on Aviation growth CapEx. Certainly, are there any other additional services that you could offer that you're not at the moment? I realize you mentioned the increased interest and fuel supply logistics. But could you cite any other areas where you could commit capital going forward to enhance the Atlantic offers?

[James Hooke:]

Yes, look, I think if you said -- at Atlantic Board meetings, our two biggest priorities in terms of growth CapEx for that business are new locations like Kansas City, where we've selectively, in an individual site, sort of bought on an one-off basis. And secondly, what I'd call fuel supply chain logistics, whether that's fuel farms at these locations at which we operate, or anything else. They're the two biggest chunks of capital. There are ancillary other capital that we look at in smaller bite sizes, which is new hangars at certain locations. We built a new hangar at PWK in Chicago last year. And so we're looking at those hangars where we can sign tenants up to 10-year initial term contracts to give us the return of and return on capital. The only other businesses -- and so that's very core to what we do. The other businesses that some in the FBO place play in are maintenance and charter. And those are just two spaces we did not want to go. So I would say the spaces that you see us deploying capital, whether it's been buying new FBOs, getting slightly more vertically integrated in the fuel supply chain for our own businesses, or new hangars and terminal upgrades, that's where the capital will be deployed.

[Basil Jones:]

Okay, great. Helpful. And then secondly, you noted that EBITDA margins in Aviation are close to 2007 levels, but fly hours are still a little depressed. Assuming fly hours tick up about 3% to 4%, do you think EBITDA margins in this segment could reach the 49% to 50% range going forward? I mean, do you see a structural ceiling there?

[James Hooke:]

I'm not sure if I see a structural ceiling, but I do see that EBITDA margins have higher to go, if we see that flight activity coming up. I think the two things that I'd point to there that I'm really pleased and happy for the team there, who have done a great job, is this is going to be the fifth consecutive year of $175 million of SG&A of that business. And when you think about the increased flight activity that they have absorbed to still hold that cost flat, they've done a great job. I think that gets harder and harder every year, but what it does show is, this -- I think there was some questions in 2010 I used to get, which was, when the flight activity comes back, doesn't the volume -- doesn't all the costs just rise, and it's profitless activity? The answer is no. On an incremental basis, it's still highly profitable incremental activity, and that's why -- you know, absent some change or shock to the system, I think EBITDA margins can go further. I never like to think in terms of where they naturally max out, because I think that's just a continual source of management, to see if we can redefine where those limits are.

[Basil Jones:]

Okay, and then one final question, if you don't mind. The timing of the LNG facilities for light gas. Do you have -- can you put out any color on when that might move forward, and what MIC's potential role might be there, and how these economics could work?

[James Hooke:]

At this point in time, I think that what we're seeing is that the cost to build an LNG terminal of the sort that's being considered there, is in the $300 million range. There's a lot of moving pieces in all of that, in terms of the political landscape in Hawaii, the various customers and the off-takers. I think we would like to see a fairly core role for us in all of that. As to how all that unfolds, in one sense, LNG in Hawaii has been like the Groundhog Day experience of MIC earnings calls, where it's always a quarter or two away from happening. One of the things I'd say, having been doing business now in Hawaii for almost five years is, you have to be patient. And things move slowly there until they move, and then they move very rapidly. So at this point, having burnt myself previously on this, I'm not going to give guidance as to when or how something will move there. All I can say is, we still think we are making -- we have deluded ourselves into thinking that we're making progress there, and so we continue to inch forward. How long it takes before the dam wall breaks, not confident enough to say. But we do think there's a good opportunity there, and the reason we're so comfortable and confident in pushing on is, it just makes eminent sense for Hawaii. And therefore, if it makes eminent sense for Hawaii, it sort of falls into the category of a good idea that should just be pursued.

[Basil Jones:]

All right, great. Thanks, guys. Operator Thank you. And with no further questions in queue, I'd like to turn the conference back over to Mr. James Hooke for any closing remarks.

[James Hooke:]

Well, thank you very much for your support and your continued confidence in our ability to deliver on our commitment to building shareholder value. I also want to thank the management team and staff at each of our businesses, and the lenders of each of our businesses, and especially, welcome the new lenders at Atlantic Aviation, and hopefully welcome some more lenders later today at Atlantic Aviation as we seek to upsize that facility. They're very important business partners to us. We look forward to providing you with an update of our results for the fourth quarter and full year in February, and prior to that as circumstances warrant. In addition to our normal reporting, we expect to have completed our business planning process for the upcoming year, and as a result, should be in a position to provide you with initial guidance of 2014. As always, feel free to contact us with any questions you may have along the way. Thank you, and have a good day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program, and you may all disconnect. Have a great rest of your day.