Reportable Segments | 3 Months Ended |
Mar. 31, 2014 |
Reportable Segments [Abstract] | ' |
Reportable Segments | ' |
10. Reportable Segments |
The Company's businesses consist of three reportable segments: Hawaii Gas, Atlantic Aviation and Contracted Power and Energy. The Company also has a 50% investment in IMTT, which is accounted for under the equity method. Prior to 2013 year-end, the Company reported the solar power generation businesses and the district energy business in separate reportable segments. The Company assessed its businesses and operating segments and determined to combine these two businesses into one reportable segment covering the Company's long-term Contracted Power and Energy segment, which the Company believes better reflects how these businesses are managed and allocated capital. |
Financial information for IMTT's business as a whole is presented below ($ in thousands): |
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| | As of, and for the Quarter Ended, March 31, | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | |
Revenue | | $ | 148,078 | | | $ | 131,485 | | | | | | | | | | | | | | | | | |
Net income | | $ | 30,981 | | | $ | 23,330 | | | | | | | | | | | | | | | | | |
Interest expense, net | | | 7,133 | | | | 6,606 | | | | | | | | | | | | | | | | | |
Provision for income taxes | | | 21,102 | | | | 17,121 | | | | | | | | | | | | | | | | | |
Depreciation and amortization | | | 18,274 | | | | 18,422 | | | | | | | | | | | | | | | | | |
Other non-cash expenses | | | 1,983 | | | | 75 | | | | | | | | | | | | | | | | | |
EBITDA excluding non-cash items(1) | | $ | 79,473 | | | $ | 65,554 | | | | | | | | | | | | | | | | | |
Capital expenditures paid | | $ | 29,621 | | | $ | 50,774 | | | | | | | | | | | | | | | | | |
Property, equipment, land and leasehold improvements, net | | | 1,275,656 | | | | 1,227,703 | | | | | | | | | | | | | | | | | |
Total assets | | | 1,387,624 | | | | 1,352,411 | | | | | | | | | | | | | | | | | |
| -1 | EBITDA consists of earnings before interest, taxes, depreciation and amortization. Non-cash items that are excluded consist of impairments, derivative gains and losses and all other non-cash income and expense items. | | | | | | | | | | | | | | | | | | | | | | |
All of the business segments, including the two businesses within Contracted Power and Energy, are managed separately and management has chosen to organize the Company around the distinct products and services offered. |
IMTT provides bulk liquid terminal and handling services in North America through ten terminals located on the East, West and Gulf Coasts, the Great Lakes region of the United States and partially owned terminals in Quebec and Newfoundland, Canada. IMTT derives the majority of its revenue from storage and handling of petroleum products, various chemicals, renewable fuels, and vegetable and animal oils. Based on storage capacity, IMTT operates one of the largest third-party bulk liquid terminals businesses in the United States. |
The revenue from the Hawaii Gas segment is included in revenue from product sales. Revenue is generated from the distribution and sales of synthetic natural gas, or SNG, and liquefied petroleum gas, or LPG. Revenue is primarily a function of the volume of SNG and LPG consumed by customers and the price per thermal unit or gallon charged to customers. Because both SNG and LPG are derived from petroleum, revenue levels, without organic growth, will generally track global oil prices. The utility revenue of Hawaii Gas reflects fuel adjustment charges, or FACs, through which changes in fuel costs are passed through to customers. |
The Atlantic Aviation business segment derives the majority of its revenues from fuel sales and from other airport services, including de-icing, aircraft hangarage and other aviation services. All of the revenue of Atlantic Aviation is generated at airports in the U.S., of which there were 63 at March 31, 2014. Revenues from Atlantic Aviation are included in revenue from product sales and service revenue. |
The Contracted Power and Energy business segment derives revenue from the solar power generation and district energy businesses. Revenues from the solar power generation businesses are included in revenue from product sales. As of March 31, 2014, the Company has invested in five utility-scale photovoltaic power generation facilities that are located in the southwest United States that are expected to have an aggregate generating capacity of 57 megawatts of wholesale electricity to utilities. Owners of solar photovoltaic power generation facilities sell substantially all of the electricity generated from these facilities at a fixed price to electric utilities pursuant to a long-term (typically 20 - 25 years) PPAs. |
Revenues from the district energy business are included in service revenue and financing and equipment lease income. Included in service revenue is capacity revenue, which relates to monthly fixed contract charges, and consumption revenue, which relates to contractual rates applied to actual usage. Financing and equipment lease income relates to direct financing lease transactions and equipment leases to the business' various customers. Finance lease revenue, recorded on the consolidated condensed statement of operations, is the interest portion of lease payments received from equipment leases with various customers primarily in Las Vegas. The principal portion of the cash receipts on these equipment leases are recorded in the operating activities of the consolidated condensed cash flow statements. The district energy business provides its services to buildings primarily in the downtown Chicago, Illinois area and to a casino and a shopping mall located in Las Vegas, Nevada. |
Selected information by segment is presented in the following tables. The tables do not include financial data for the Company's equity investment in IMTT. |
Revenue from external customers for the Company's consolidated reportable segments was as follows ($ in thousands): |
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| | Quarter Ended March 31, 2014 | | | | | | | | |
| | Hawaii Gas | | Atlantic | | Contracted Power and Energy | | Total Reportable Segments | | | | | | | | |
Aviation | | | | | | | | |
Revenue from Product Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Product sales | | $ | 34,206 | | | $ | 145,937 | | | $ | 3,658 | | | $ | 183,801 | | | | | | | | | |
Product sales - utility | | | 35,145 | | | | - | | | | - | | | | 35,145 | | | | | | | | | |
| | | 69,351 | | | | 145,937 | | | | 3,658 | | | | 218,946 | | | | | | | | | |
Other Revenue | | | | | | | | | | | | | | | | | | | | | | | | |
Service Revenue | | | - | | | | 48,024 | | | | 8,478 | | | | 56,502 | | | | | | | | | |
| | | - | | | | 48,024 | | | | 8,478 | | | | 56,502 | | | | | | | | | |
Financing and Lease Income | | | | | | | | | | | | | | | | | | | | | | | | |
Financing and equipment lease | | | - | | | | - | | | | 747 | | | | 747 | | | | | | | | | |
| | | - | | | | - | | | | 747 | | | | 747 | | | | | | | | | |
Total Revenue | | $ | 69,351 | | | $ | 193,961 | | | $ | 12,883 | | | $ | 276,195 | | | | | | | | | |
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| | Quarter Ended March 31, 2013 | | | | | | | | |
| | Hawaii Gas | | Atlantic Aviation | | Contracted Power and Energy | | Total Reportable Segments | | | | | | | | |
Revenue from Product Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Product sales | | $ | 32,085 | | | $ | 140,344 | | | $ | 1,686 | | | $ | 174,115 | | | | | | | | | |
Product sales - utility | | | 36,921 | | | | - | | | | - | | | | 36,921 | | | | | | | | | |
| | | 69,006 | | | | 140,344 | | | | 1,686 | | | | 211,036 | | | | | | | | | |
Other Revenue | | | | | | | | | | | | | | | | | | | | | | | | |
Service Revenue | | | - | | | | 43,796 | | | | 8,319 | | | | 52,115 | | | | | | | | | |
| | | - | | | | 43,796 | | | | 8,319 | | | | 52,115 | | | | | | | | | |
Financing and Lease Income | | | | | | | | | | | | | | | | | | | | | | | | |
Financing and equipment lease | | | - | | | | - | | | | 1,055 | | | | 1,055 | | | | | | | | | |
| | | - | | | | - | | | | 1,055 | | | | 1,055 | | | | | | | | | |
Total Revenue | | $ | 69,006 | | | $ | 184,140 | | | $ | 11,060 | | | $ | 264,206 | | | | | | | | | |
In accordance with FASB ASC 280 Segment Reporting, the Company has disclosed earnings before interest, taxes, depreciation and amortization ("EBITDA") excluding non-cash items as a key performance metric relied on by management in the evaluation of the Company's performance. Non-cash items include impairments, derivative gains and losses and adjustments for other non-cash items reflected in the statements of operations. The Company believes EBITDA excluding non-cash items provides additional insight into the performance of the operating businesses relative to each other and similar businesses without regard to their capital structure, and their ability to service or reduce debt, fund capital expenditures and/or support distributions to the holding company. EBITDA excluding non-cash items is reconciled to net income or loss. |
EBITDA excluding non-cash items for the Company's consolidated reportable segments is shown in the tables below ($ in thousands). Allocations of corporate expenses, intercompany fees and the tax effect have been excluded as they are eliminated on consolidation. |
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| | Quarter Ended March 31, 2014 | | | | | | | | |
| | Hawaii Gas | | Atlantic Aviation | | Contracted Power and Energy | | Total Reportable Segments | | | | | | | | |
Net income (loss) | | $ | 6,195 | | | $ | 10,555 | | | $ | (1,415 | ) | | $ | 15,335 | | | | | | | | | |
Interest expense, net | | | 1,787 | | | | 9,565 | | | | 2,645 | | | | 13,997 | | | | | | | | | |
Provision for income taxes | | | 4,027 | | | | 4,915 | | | | 599 | | | | 9,541 | | | | | | | | | |
Depreciation(1) | | | 1,946 | | | | 6,802 | | | | 5,110 | | | | 13,858 | | | | | | | | | |
Amortization of intangibles | | | 312 | | | | 8,131 | | | | 322 | | | | 8,765 | | | | | | | | | |
Other non-cash expense (income) | | | 724 | | | | 68 | | | | (765 | ) | | | 27 | | | | | | | | | |
EBITDA excluding non-cash items | | $ | 14,991 | | | $ | 40,036 | | | $ | 6,496 | | | $ | 61,523 | | | | | | | | | |
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| | Quarter Ended March 31, 2013 | | | | | | | | |
| | Hawaii Gas | | Atlantic Aviation | | Contracted Power and Energy | | Total Reportable Segments | | | | | | | | |
Net income (loss) | | $ | 6,707 | | | $ | 10,612 | | | $ | (118 | ) | | $ | 17,201 | | | | | | | | | |
Interest expense, net | | | 1,705 | | | | 4,099 | | | | 1,877 | | | | 7,681 | | | | | | | | | |
Provision for income taxes | | | 4,483 | | | | 7,398 | | | | 1,963 | | | | 13,844 | | | | | | | | | |
Depreciation(1) | | | 1,846 | | | | 5,892 | | | | 3,215 | | | | 10,953 | | | | | | | | | |
Amortization of intangibles | | | 312 | | | | 7,979 | | | | 337 | | | | 8,628 | | | | | | | | | |
Loss on disposal of assets | | | - | | | | 106 | | | | - | | | | 106 | | | | | | | | | |
Other non-cash expense (income) | | | 662 | | | | (68 | ) | | | (2,181 | ) | | | (1,587 | ) | | | | | | | | |
EBITDA excluding non-cash items | | $ | 15,715 | | | $ | 36,018 | | | $ | 5,093 | | | $ | 56,826 | | | | | | | | | |
| -1 | Depreciation includes depreciation expense for the district energy business, a component of the Contracted Power and Energy segment, which is reported in cost of services in the consolidated condensed statements of operations. | | | | | | | | | | | | | | | | | | | | | | |
Reconciliation of total reportable segments' EBITDA excluding non-cash items to consolidated net income before income taxes are as follows ($ in thousands): |
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| | Quarter Ended March 31, | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | |
Total reportable segments EBITDA excluding non-cash items | | $ | 61,523 | | | $ | 56,826 | | | | | | | | | | | | | | | | | |
Interest income | | | 64 | | | | 94 | | | | | | | | | | | | | | | | | |
Interest expense | | | (14,011 | ) | | | (7,686 | ) | | | | | | | | | | | | | | | | |
Depreciation(1) | | | (13,858 | ) | | | (10,953 | ) | | | | | | | | | | | | | | | | |
Amortization of intangibles | | | (8,765 | ) | | | (8,628 | ) | | | | | | | | | | | | | | | | |
Loss on disposal of assets | | | - | | | | (106 | ) | | | | | | | | | | | | | | | | |
Selling, general and administrative - corporate | | | (1,046 | ) | | | (1,606 | ) | | | | | | | | | | | | | | | | |
Fees to manager | | | (8,994 | ) | | | (29,177 | ) | | | | | | | | | | | | | | | | |
Equity in earnings and amortization charges of investee | | | 14,287 | | | | 10,462 | | | | | | | | | | | | | | | | | |
Other (expense) income, net | | | (554 | ) | | | 1,990 | | | | | | | | | | | | | | | | | |
Total consolidated net income before income taxes | | $ | 28,646 | | | $ | 11,216 | | | | | | | | | | | | | | | | | |
| -1 | Depreciation includes depreciation expense for the district energy business, a component of the Contracted Power and Energy segment, which is reported in cost of services in the consolidated condensed statements of operations. | | | | | | | | | | | | | | | | | | | | | | |
Capital expenditures for the Company's reportable segments were as follows ($ in thousands): |
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| | Quarter Ended March 31, | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | |
Hawaii Gas | | $ | 3,565 | | | $ | 3,463 | | | | | | | | | | | | | | | | | |
Atlantic Aviation | | | 8,725 | | | | 3,674 | | | | | | | | | | | | | | | | | |
Contracted Power and Energy | | | 9,323 | | | | 7,697 | | | | | | | | | | | | | | | | | |
Total | | $ | 21,613 | | | $ | 14,834 | | | | | | | | | | | | | | | | | |
Property, equipment, land and leasehold improvements, goodwill and total assets for the Company's reportable segments as of March 31st were as follows ($ in thousands): |
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| | Property, Equipment, | | Goodwill | | Total Assets |
Land and Leasehold Improvements |
| | 2014 | | 2013 | | 2014 | | 2013 | | 2014 | | 2013 |
Hawaii Gas | | $ | 185,884 | | | $ | 171,400 | | | $ | 120,193 | | | $ | 120,193 | | | $ | 400,040 | | | $ | 393,675 | |
Atlantic Aviation | | | 284,099 | | | | 256,097 | | | | 376,204 | | | | 375,800 | | | | 1,381,448 | | | | 1,306,478 | |
Contracted Power and Energy | | | 384,704 | | | | 291,134 | | | | 17,946 | | | | 18,647 | | | | 487,203 | | | | 369,028 | |
Total | | $ | 854,687 | | | $ | 718,631 | | | $ | 514,343 | | | $ | 514,640 | | | $ | 2,268,691 | | | $ | 2,069,181 | |
Reconciliation of reportable segments' total assets to consolidated total assets ($ in thousands): |
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| | As of March 31, | | | | | | | | | | | | | | | | |
| | 2014 | | 2013 | | | | | | | | | | | | | | | | |
Total assets of reportable segments | | $ | 2,268,691 | | | $ | 2,069,181 | | | | | | | | | | | | | | | | | |
Investment in IMTT | | | 89,434 | | | | 85,682 | | | | | | | | | | | | | | | | | |
Corporate and other | | | 102,513 | | | | 102,871 | | | | | | | | | | | | | | | | | |
Total consolidated assets | | $ | 2,460,638 | | | $ | 2,257,734 | | | | | | | | | | | | | | | | | |