We currently own and operate a diversified portfolio of businesses that provide
services to other businesses, government agencies and individuals primarily in
the U.S. The businesses we own and operate are:
• International-Matex Tank Terminals (IMTT): a bulk liquid terminals
business providing bulk liquid storage, handling and other services to third
parties at ten marine terminals in the U.S. and two in Canada;
• Atlantic Aviation: a provider of fuel, terminal, aircraft hangaring
and other services primarily to owners and operators of general aviation (GA)
jet aircraft at 69 airports throughout the U.S.;
• Contracted Power (CP): comprising a gas-fired facility and controlling
interests in wind and solar facilities in the U.S.; and,
• MIC Hawaii segment: comprising an energy company that processes and
distributes gas and provides related services (Hawaii Gas), and several smaller
businesses collectively engaged in efforts to reduce the cost and improve the
reliability and sustainability of energy, all based in Hawaii.
Our businesses, in general, are defined by a combination of the following characteristics:
• ownership of long-lived, high-value physical assets that are difficult
to replicate or substitute around;
• a platform for the deployment of growth capital;
• broadly consistent demand for their services;
• scalability, such that relatively small amounts of growth can generate
disproportionate increases in earnings before interest, taxes, depreciation
and amortization (EBITDA);
• the provision of basic, often essential services;
• generally predictable maintenance capital expenditure requirements;
and
• generally favorable competitive positions, largely due to high barriers
to entry, including:
• high initial development and construction costs;
• difficulty in obtaining suitable land on which to operate;
• long-term concessions, leases or customer contracts; and
• lack of immediate, cost-effective alternatives for the services provided.
The different businesses that comprise our Company exhibit these above characteristics
to different degrees at different times. For example, macro-economically correlated
businesses like Atlantic Aviation may exhibit more volatility during periods
of economic downturn than businesses with substantially contracted revenue streams.
While not every business that we own will meet all of the general criteria described
above, we seek to own a diversified portfolio of businesses that possesses a
balance of these characteristics.
Bulk liquid terminals provide an important link in the supply chain for a broad
range of liquid commodities (see below). In addition to renting storage tanks,
dock access and intra-modal transportation access, bulk liquid terminals generate
revenue by offering ancillary services including product transfer (throughput),
heating, blending and packaging. Pricing for storage and other services typically
reflects local supply and demand as well as the specific attributes of each
terminal including access to deepwater berths and connections to land-based
infrastructure such as roads, pipelines and rail.
Both domestic and international factors influence demand for bulk liquid terminals
in the U.S. Demand for storage rises and falls according to local and regional
consumption. In addition, import and export activity accounts for a material
portion of the business. Shippers require storage for the staging, aggregation
and/or distribution of products before and after shipment. The extent of import/export
activity depends on macroeconomic trends such as currency fluctuations as well
as industry-specific conditions, such as supply and demand imbalances in different
geographic regions. Demand for storage is also driven by fluctuations in the
current and perceived future price and demand for the product being stored and
the resulting temporal price arbitrage.
Potential entrants into the bulk liquid terminals business face several barriers.
Strict environmental regulations, availability of waterfront land, local community
resistance and initial investment costs may limit the construction of new bulk
liquid terminal facilities. These barriers are typically higher around waterways
near major urban centers. As a consequence, new tanks are generally built where
existing docks, pipelines and other infrastructure can support them, resulting
in higher returns on invested capital compared with development of new facilities.
However, restrictions on land use, difficulties in securing environmental permits,
and the potential for operational bottlenecks due to constraints on related
infrastructure may limit the ability of existing terminals to expand the storage
capacity of their facilities.
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