Brookfield Infrastructure (NYSE: BIP; TSX: BIP.UN) today announced
its results for the first quarter ended March 31, 2020.
|
For the three months ended March 31 |
US$ millions (except per unit amounts), unaudited1 |
|
2020 |
|
2019 |
|
Net income2 |
$ |
119 |
$ |
30 |
|
– per unit3,4 |
$ |
0.13 |
$ |
(0.05 |
) |
FFO5 |
$ |
358 |
$ |
351 |
|
– per unit (pre-split)6 |
$ |
0.86 |
$ |
0.88 |
|
– per unit (split-adjusted)7 |
$ |
0.77 |
$ |
0.79 |
|
Net income for the period benefited from organic
growth across most of our operating groups, contributions from new
investments completed in the last year and gains on our corporate
hedging program. These increases were partially offset by a
one-time item related to deferred taxes at our U.K. operations, and
the depreciation of the Brazilian Real relative to the U.S.
dollar.
Our business generated FFO of $358 million for
the quarter, or $0.77 of FFO per unit (equivalent to $0.86 prior to
our unit split), which was in-line with the prior year levels. FFO
growth was primarily driven by organic growth of 6% and earnings
associated with $1.6 billion of capital deployed during the past
year. These positive factors were partially offset by the sale of
four businesses, impacts related to COVID-19 (“covid”) and the
depreciation of foreign currencies. Virus related impacts were
primarily experienced at our port and toll road operations,
affecting results by $10 million, while the lower Brazilian Real
reduced results by $17 million.
“The first quarter of 2020 brought about
extraordinary challenges on a global scale. Our results were solid
as every operating business we own was deemed an essential service
and has continued operating throughout this period,” said Sam
Pollock, Chief Executive Officer of Brookfield Infrastructure
Partners. “As the economic recovery unfolds over the coming
quarters, we remain confident that our highly-diversified business
is well-positioned both financially and operationally. This will
give us the opportunity to take advantage of market conditions to
acquire high-quality assets for deep value, as we have in the past
during periods of dislocation.”
Segment Performance
FFO from our utilities segment totaled $146
million, compared to $137 million in the prior year. The segment
delivered organic growth of 8%, reflecting the robust nature of our
contracted and regulated cash flows in this segment. This increase
reflects inflation indexation and $310 million of capital
commissioned into our rate base over the past 12 months. Results
also benefited from the first full quarter contribution of the
North American regulated natural gas transmission business acquired
in October 2019. These increases were partially offset by the sale
of our Colombian regulated electricity distribution operation and
the lower Brazilian Real converted to U.S. dollars which lowered
results by $9 million.
Our transport segment delivered FFO of $120
million, down from $139 million in the prior year. Compared to the
first quarter of 2019, results reflect the initial contribution
from our North American operation in addition to strong pricing
across our rail and road networks. These positive impacts were more
than offset by the loss of earnings associated with the sale of a
European port business and an interest in our Chilean toll road
operation. When combined with the impact of a lower Brazilian Real
when converted to U.S. dollars, these factors collectively reduced
results by $18 million. Our North American and Australian container
terminal operations were impacted by lower trade activity from
China due to covid, reducing volumes by 13% and FFO by $5 million
relative to 2019 levels.
The energy segment contributed FFO of $115
million compared to $107 million in the prior year. Results
increased by 12% on a same-store basis, excluding the contribution
from our gas storage operations which, as a result of timing and
weather, earned higher spreads and stored greater volumes in the
first quarter of last year. Our North American residential
infrastructure business benefitted from the signing of 50,000 new
customers and the ongoing success of our “sales to rental” strategy
in the U.S. We also closed the acquisition of the federally
regulated portion of our western Canadian midstream business in
December 2019, with these operations fully contributing to results
in the quarter.
FFO from our data infrastructure segment totaled
$42 million, an increase of 50% from the prior year. Our underlying
businesses continue to perform well with FFO from our French tower
operation increasing due to inflation indexation and new
points-of-presence added to our network. Results also benefitted
from the contribution of our newly acquired data transmission and
distribution operations in New Zealand and the United Kingdom, and
a data storage business in South America.
The following table presents FFO by segment:
|
For the three months ended March 31 |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
FFO by segment |
|
|
|
|
Utilities |
$ |
146 |
|
$ |
137 |
|
Transport |
|
120 |
|
|
139 |
|
Energy |
|
115 |
|
|
107 |
|
Data Infrastructure |
|
42 |
|
|
28 |
|
Corporate |
|
(65 |
) |
|
(60 |
) |
FFO |
$ |
358 |
|
$ |
351 |
|
Update on Strategic
Initiatives
During the quarter we successfully launched
Brookfield Infrastructure Corporation. We are also progressing the
closing of our Indian telecom tower investment and are pursuing new
investment opportunities in the capital markets as private market
transactions have, for the most part, been postponed due to
logistical challenges related to the environment.
I. Brookfield Infrastructure
Corporation (BIPC) – We completed the special distribution
of BIPC shares on March 31 by providing existing unitholders with
one Class A share of BIPC for every nine units of BIP LP. We have
subsequently seen strong support for BIPC shares in the market,
with trading volumes over the first 30 days at over 50% of the
public float and the share price trading in line with the BIP LP
unit price.
We are very pleased with the launch and positive
market reception thus far. Our intention is to fully support the
growth of the BIPC float over time and are actively considering
initiatives in this regard.
II. Indian Telecom Towers – The
closing of our large-scale acquisition of 130,000 telecom towers in
India from Reliance Jio is progressing well and our partner
recently announced a strategic deal with Facebook, enhancing the
overall profile of our main counterparty. The only significant
outstanding approval we need is from the Department of
Telecommunications in India, and this is anticipated in the coming
weeks. We expect to invest up to $500 million of equity (BIP’s
share) in the business alongside our institutional partners.
III. Capital Market Investments
– Since March, we have been actively evaluating a number
of high-quality, publicly traded infrastructure businesses that
have traded off along with the broader market. We believe that
certain companies are trading at a substantial discount to their
intrinsic value. To-date, we have invested approximately $450
million (BIP’s share - $220 million) into the shares of a
handful of companies and hope that some of these will lead to large
scale transactions. If not, we will monetize our stakes as share
prices recover and earn an attractive return in sectors we know
well.
Distribution and Dividend
Declaration
The Board of Directors has declared a quarterly
distribution in the amount of $0.485 per unit, payable on June 30,
2020 to unitholders of record as at the close of business on May
29, 2020. The regular quarterly dividends on the Cumulative Class A
Preferred Limited Partnership Units, Series 1, Series 3, Series 5,
Series 7, Series 9 and Series 11 have also been declared, as well
as the dividend for BIP Investment Corporation Senior Preferred
Shares, Series 1. In conjunction with the Partnership’s
distribution declaration, the Board of Directors of BIPC has
declared an equivalent quarterly dividend of $0.485 per share, also
payable on June 30, 2020 to shareholders of record as at the close
of business on May 29, 2020.
Additional Information
The Board has reviewed and approved this news
release, including the summarized unaudited financial information
contained herein.
Brookfield Infrastructure’s Letter to
Unitholders and Supplemental Information are available at
www.brookfield.com/infrastructure.
Brookfield Infrastructure is a
leading global infrastructure company that owns and operates
high-quality, long-life assets in the utilities, transport, energy
and data infrastructure sectors across North and South America,
Asia Pacific and Europe. We are focused on assets that generate
stable cash flows and require minimal maintenance capital
expenditures. Investors can access its portfolio either through
Brookfield Infrastructure Partners L.P. (NYSE: BIP; TSX: BIP.UN), a
Bermuda-based limited partnership, or Brookfield Infrastructure
Corporation (NYSE, TSX: BIPC), a Canadian corporation. Further
information is available at www.brookfield.com/infrastructure.
Brookfield Infrastructure is the flagship listed
infrastructure company of Brookfield Asset Management, a global
alternative asset manager with over $515 billion of assets under
management. For more information, go to www.brookfield.com.
Please note that Brookfield Infrastructure
Partner’s previous audited annual and unaudited quarterly reports
have been filed on SEDAR and Edgar, and can also be found in the
shareholders section of its website at
www.brookfield.com/infrastructure. Hard copies of the annual and
quarterly reports can be obtained free of charge upon request.
For more information, please contact:
Media:Claire Holland Senior Vice President,
Communications Tel: (416) 369-8236 Email:
claire.holland@brookfield.com |
Investors:Rene Lubianski Managing Director,
Investments Tel: (416) 956-5196 Email:
rene.lubianski@brookfield.com |
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access Brookfield Infrastructure’s First Quarter 2020 Results
as well as the Letter to Unitholders and Supplemental Information
on Brookfield Infrastructure’s website under the Investor Relations
section at www.brookfield.com/infrastructure.
The conference call can be accessed via webcast
on May 8, 2020 at 9:00 a.m. Eastern Time at
https://edge.media-server.com/mmc/p/nah3bhi9 or via teleconference
at 1-866-688-9459 toll free in North America. For overseas calls
please dial +1-409-216-0834, at approximately 8:50 a.m. Eastern
Time. A recording of the teleconference can be accessed at
1-855-859-2056 or +1-404-357-3406 (Conference ID: 8976257).
Note: This news release may contain
forward-looking information within the meaning of Canadian
provincial securities laws and “forward-looking statements” within
the meaning of Section 27A of the U.S. Securities Act of 1933, as
amended, Section 21E of the U.S. Securities Exchange Act of 1934,
as amended, “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations. The words “will”, “target”,
“future”, “growth”, “expect”, “believe”, “may”, derivatives
thereof and other expressions which are predictions of or indicate
future events, trends or prospects and which do not relate to
historical matters, identify the above mentioned and other
forward-looking statements. Forward-looking statements in
this news release may include statements regarding expansion of
Brookfield Infrastructure’s business, the likelihood and timing of
successfully completing the transactions referred to in this news
release, statements with respect to our assets tending to
appreciate in value over time, the future performance of acquired
businesses and growth initiatives, the commissioning of our capital
backlog, the pursuit of projects in our pipeline, the level of
distribution growth over the next several years and our
expectations regarding returns to our unitholders as a result of
such growth. Although Brookfield Infrastructure believes that these
forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not
place undue reliance on them, or any other forward-looking
statements or information in this news release. The future
performance and prospects of Brookfield Infrastructure are subject
to a number of known and unknown risks and uncertainties.
Factors that could cause actual results of Brookfield
Infrastructure to differ materially from those contemplated or
implied by the statements in this news release include general
economic conditions in the jurisdictions in which we operate and
elsewhere which may impact the markets for our products and
services, the ability to achieve growth within Brookfield
Infrastructure’s businesses and in particular completion on time
and on budget of various large capital projects, which themselves
depend on access to capital and continuing favourable commodity
prices, and our ability to achieve the milestones necessary to
deliver the targeted returns to our unitholders, the impact of
market conditions on our businesses, the fact that success of
Brookfield Infrastructure is dependent on market demand for an
infrastructure company, which is unknown, the availability of
equity and debt financing for Brookfield Infrastructure, the impact
of health pandemics such as the COVID-19 on our business and
operations, the ability to effectively complete transactions in the
competitive infrastructure space (including the ability to complete
announced and potential transactions that may be subject to
conditions precedent, and the inability to reach final agreement
with counterparties to transactions referred to in this press
release as being currently pursued, given that there can be no
assurance that any such transaction will be agreed to or completed)
and to integrate acquisitions into existing operations, the future
performance of these acquisitions, changes in technology which have
the potential to disrupt the business and industries in which we
invest, the market conditions of key commodities, the price, supply
or demand for which can have a significant impact upon the
financial and operating performance of our business and other risks
and factors described in the documents filed by Brookfield
Infrastructure with the securities regulators in Canada and the
United States including under “Risk Factors” in Brookfield
Infrastructure’s most recent Annual Report on Form 20-F and other
risks and factors that are described therein. Except as
required by law, Brookfield Infrastructure undertakes no obligation
to publicly update or revise any forward-looking statements or
information, whether as a result of new information, future events
or otherwise.
References to Brookfield Infrastructure are to
the Partnership together with its subsidiaries and operating
entities. Brookfield Infrastructure’s results include limited
partnership units held by public unitholders, redeemable
partnership units, general partnership units and exchange LP
units.
References to the Partnership are to Brookfield
Infrastructure Partners L.P.
1. Please refer to page 12 for results of
Brookfield Infrastructure Corporation.
2. Includes net income attributable to limited
partners, the general partner, and non-controlling interests ‒
Redeemable Partnership Units held by Brookfield, Exchange LP Units,
and class A shares of BIPC.
3. Average number of limited partnership units
outstanding on a time weighted average basis for the three months
ended March 31, 2020 were 293.6 million (2019 – 278.1 million).
4. Results in a loss on a per unit basis for the
three months ended March 31, 2019 as allocation of net income is
reduced by preferred unit and incentive distributions.
5. FFO is defined as net income excluding the
impact of depreciation and amortization, deferred income taxes,
breakage and transaction costs, and non-cash valuation gains or
losses. A reconciliation of net income to FFO is available on page
9 of this release.
6. Average number of partnership units
outstanding on a fully diluted time weighted average basis, prior
to the impact of the special distribution of BIPC. Assuming
the exchange of redeemable partnership units held by Brookfield and
Exchange LP units (prior to the issuance of additional Exchange LP
units as a result of the special distribution) for the three months
ended March 31, 2020, the pre-split diluted units were 418.3
million (2019 – 398.7 million). These weighted averages do not
account for the increase in number of units due to the special
distribution.
7. Average number of partnership units
outstanding on a fully diluted time weighted average basis,
assuming the exchange of redeemable partnership units held by
Brookfield, Exchange LP units, and class A shares of BIPC for
limited partnership units, as if the special distribution had been
completed prior to the periods presented, for the three months
ended March 31, 2020 were 464.8 million (2019 – 443.0 million).
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Financial Position
|
|
As of |
US$ millions, unaudited |
|
Mar 31, 2020 |
|
Dec 31, 2019 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
1,226 |
$ |
827 |
Financial assets |
|
210 |
|
149 |
Property, plant and
equipment |
|
21,895 |
|
23,013 |
Intangible assets |
|
12,712 |
|
14,386 |
Investments in associates and
joint ventures |
|
4,451 |
|
4,967 |
Investment properties |
|
379 |
|
416 |
Goodwill |
|
6,022 |
|
6,553 |
Deferred income taxes and
other |
|
4,009 |
|
5,997 |
Total assets |
$ |
50,904 |
$ |
56,308 |
|
|
|
|
|
Liabilities and
partnership capital |
|
|
|
|
Corporate borrowings |
$ |
2,742 |
$ |
2,475 |
Non-recourse borrowings |
|
17,665 |
|
18,544 |
Financial liabilities |
|
2,385 |
|
2,173 |
Deferred income taxes and
other |
|
9,054 |
|
10,939 |
|
|
|
|
|
Partnership
capital |
|
|
|
|
Limited partners |
|
4,008 |
|
5,048 |
General partner |
|
19 |
|
24 |
Non-controlling interest
attributable to: |
|
|
|
|
Redeemable partnership units held by Brookfield |
|
1,606 |
|
2,039 |
Class A shares of BIPC |
|
625 |
|
- |
Exchange LP units |
|
14 |
|
18 |
Interest of others in operating subsidiaries |
|
11,851 |
|
14,113 |
Preferred unitholders |
|
935 |
|
935 |
Total
partnership capital |
|
19,058 |
|
22,177 |
Total liabilities and
partnership capital |
$ |
50,904 |
$ |
56,308 |
|
|
|
|
|
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Operating
Results
|
|
For the three months ended March 31, |
US$ millions, except per unit information, unaudited |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Revenues |
$ |
2,196 |
|
$ |
1,593 |
|
Direct operating costs |
|
(1,239 |
) |
|
(798 |
) |
General and administrative
expense |
|
(61 |
) |
|
(61 |
) |
Depreciation and amortization expense |
|
(400 |
) |
|
(292 |
) |
|
|
496 |
|
|
442 |
|
Interest expense |
|
(282 |
) |
|
(212 |
) |
Share of earnings from
associates and joint ventures |
|
48 |
|
|
18 |
|
Mark-to-market on hedging
items |
|
198 |
|
|
(18 |
) |
Other
(expense) income |
|
(206 |
) |
|
10 |
|
Income before income tax |
|
254 |
|
|
240 |
|
Income tax expense |
|
|
|
|
Current |
|
(58 |
) |
|
(63 |
) |
Deferred |
|
(48 |
) |
|
(12 |
) |
Net income |
|
148 |
|
|
165 |
|
Non-controlling interest of others in operating subsidiaries |
|
(29 |
) |
|
(135 |
) |
Net
income attributable to partnership |
$ |
119 |
|
$ |
30 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Limited partners |
|
52 |
|
|
(6 |
) |
General partner |
|
46 |
|
|
38 |
|
Non-controlling interest – redeemable partnership units
held by Brookfield |
|
21 |
|
|
(2 |
) |
Basic and diluted earnings (loss)
per unit attributable to: |
|
|
|
Limited partners1 |
$ |
0.13 |
|
$ |
(0.05 |
) |
|
|
|
|
|
1. Average number of limited partnership units outstanding on a
time weighted average basis for the three months ended March 31,
2020 was 293.6 million (2019 – 278.1 million). Earnings (loss) per
limited partnership unit have been adjusted to reflect the dilutive
impact of the special distribution.
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Cash
Flows
US$
millions, unaudited |
|
For the three months ended March 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
Net income |
$ |
148 |
|
$ |
165 |
|
Adjusted for the following
items: |
|
|
|
|
Earnings from investments in associates and joint
ventures, net of distributions received |
|
45 |
|
|
13 |
|
Depreciation and amortization expense |
|
400 |
|
|
292 |
|
Mark-to-market on hedging items, provisions and other |
|
181 |
|
|
54 |
|
Deferred income tax expense |
|
48 |
|
|
12 |
|
Change
in non-cash working capital, net |
|
(100 |
) |
|
25 |
|
Cash
from operating activities |
|
722 |
|
|
561 |
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
Net proceeds from (investments
in): |
|
|
|
|
Operating assets |
|
722 |
|
|
(2,150 |
) |
Associates |
|
– |
|
|
(188 |
) |
Long-lived assets |
|
(376 |
) |
|
(237 |
) |
Financial assets |
|
(153 |
) |
|
– |
|
Acquisition funded on behalf
of parent |
|
– |
|
|
(581 |
) |
Net
settlement of foreign exchange contracts |
|
82 |
|
|
(1 |
) |
Cash
from (used by) investing activities |
|
275 |
|
|
(3,157 |
) |
|
|
|
|
|
Financing
Activities |
|
|
|
|
Distributions to limited and
general partners |
|
(282 |
) |
|
(250 |
) |
Net borrowings
(repayments): |
|
|
|
|
Corporate |
|
393 |
|
|
455 |
|
Subsidiary |
|
159 |
|
|
1,122 |
|
Deposit received from
parent |
|
– |
|
|
367 |
|
Net preferred units and
preferred shares issued |
|
– |
|
|
72 |
|
Net partnership units
(repurchased) issued |
|
2 |
|
|
(26 |
) |
Capital
provided by non-controlling interest, net of distributions, and
other |
|
(792 |
) |
|
1,033 |
|
Cash
(used by) from financing activities |
|
(520 |
) |
|
2,773 |
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
Change during the period |
$ |
477 |
|
$ |
177 |
|
Impact of foreign exchange on cash |
|
(78 |
) |
|
3 |
|
Balance, beginning of period |
|
827 |
|
|
540 |
|
Balance, end of period |
$ |
1,226 |
|
$ |
720 |
|
Brookfield Infrastructure Partners
L.P.Statements of Funds from
Operations
|
|
For the three months ended March 31, |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Utilities |
$ |
193 |
|
$ |
181 |
|
Transport |
|
166 |
|
|
189 |
|
Energy |
|
148 |
|
|
127 |
|
Data Infrastructure |
|
56 |
|
|
36 |
|
Corporate |
|
(61 |
) |
|
(61 |
) |
Total |
|
502 |
|
|
472 |
|
|
|
|
|
|
Financing costs |
|
(151 |
) |
|
(140 |
) |
Other
income |
|
7 |
|
|
19 |
|
Funds
from operations (FFO) |
|
358 |
|
|
351 |
|
|
|
|
|
|
Depreciation and
amortization |
|
(247 |
) |
|
(220 |
) |
Deferred taxes and other items |
|
8 |
|
|
(101 |
) |
Net
income attributable to the partnership |
$ |
119 |
|
$ |
30 |
|
|
|
|
|
|
Notes:Funds from operations in
this statement is on a segmented basis and represents the
operations of Brookfield Infrastructure net of charges associated
with related liabilities and non-controlling interests. Adjusted
EBITDA is defined as FFO excluding the impact of interest expense
and other income or expenses. Net income attributable to the
partnership includes net income attributable to limited partners,
the general partner, and non-controlling interests – redeemable
partnership units held by Brookfield, Exchange LP Units and class A
shares of BIPC.
The Statements of Funds from Operations above
are prepared on a basis that is consistent with the Partnership’s
Supplemental Information and differs from net income as presented
in Brookfield Infrastructure’s Consolidated Statements of Operating
Results on page 7 of this release, which is prepared in accordance
with IFRS. Management uses funds from operations (FFO) as a key
measure to evaluate operating performance. Readers are encouraged
to consider both measures in assessing Brookfield Infrastructure’s
results.
Brookfield Infrastructure Partners
L.P.Statements of Funds from Operations per
Unit
|
|
For the three months ended March 31, |
US$, unaudited |
|
2020 |
|
2019 |
|
|
|
|
|
|
Earnings (loss) per limited
partnership unit1 |
$ |
0.13 |
$ |
(0.05 |
) |
Add back or deduct the
following: |
|
|
|
|
Depreciation and amortization |
|
0.53 |
|
0.50 |
|
Deferred taxes and other items |
|
0.11 |
|
0.34 |
|
FFO per unit2 |
$ |
0.77 |
$ |
0.79 |
|
|
|
|
|
|
1. Average number of limited
partnership units outstanding on a time weighted average basis for
the three months ended March 31, 2020 was 293.6 million (2019 –
278.1 million). Earnings (loss) per limited partnership unit have
been adjusted to reflect the dilutive impact of the special
distribution.2. Average number of partnership units
outstanding on a fully diluted time weighted average basis,
assuming the exchange of redeemable partnership units held by
Brookfield, Exchange LP Units, and class A shares of BIPC for
limited partnership units, as if the special distribution had been
completed prior to the periods presented, for the three months
ended March 31, 2020 was 464.8 million (2019 – 443.0 million).
Average number of units outstanding on a fully diluted time
weighted average basis, excluding the impact of the special
distribution, was 418.3 million (2019 – 398.7 million)
Notes:The Statements of Funds
from Operations per unit above are prepared on a basis that is
consistent with the Partnership’s Supplemental Information and
differs from net income per limited partnership unit as presented
in Brookfield Infrastructure’s Consolidated Statements of Operating
Results on page 7 of this release, which is prepared in accordance
with IFRS. Management uses funds from operations per unit (FFO per
unit) as a key measure to evaluate operating performance. Readers
are encouraged to consider both measures in assessing Brookfield
Infrastructure’s results.
Brookfield Infrastructure Partners L.P.
Statements of Partnership Capital
|
|
As of |
US$ millions, unaudited |
|
Mar 31, 2020 |
|
Dec 31, 2019 |
|
|
|
|
|
Assets |
|
|
|
|
Operating groups |
|
|
|
|
Utilities |
$ |
1,766 |
$ |
2,178 |
Transport |
|
3,236 |
|
3,991 |
Energy |
|
2,928 |
|
3,128 |
Data Infrastructure |
|
1,188 |
|
1,318 |
Cash
and cash equivalents |
|
848 |
|
273 |
|
$ |
9,966 |
$ |
10,888 |
|
|
|
|
|
Liabilities |
|
|
|
|
Corporate borrowings |
$ |
2,742 |
$ |
2,475 |
Other
liabilities |
|
952 |
|
1,284 |
|
|
3,694 |
|
3,759 |
Capitalization |
|
|
|
|
Partnership capital |
|
6,272 |
|
7,129 |
|
$ |
9,966 |
$ |
10,888 |
|
|
|
|
|
Notes:Partnership capital in
these statements represents Brookfield Infrastructure’s investments
in its operations on a segmented basis, net of underlying
liabilities and non-controlling interests, and includes partnership
capital attributable to limited partners, the general partner and
non-controlling interests – redeemable partnership units held by
Brookfield, Exchange LP Units, and class A shares of BIPC.
The Statements of Partnership Capital above are
prepared on a basis that is consistent with the Partnership’s
Supplemental Information and differs from the Brookfield
Infrastructure’s Consolidated Statements of Financial Position on
page 6 of this release, which is prepared in accordance with IFRS.
Readers are encouraged to consider both bases of presentation in
assessing Brookfield Infrastructure's financial position.
Brookfield Infrastructure Corporation
ReportsFirst Quarter 2020 Results
The Board of Directors of Brookfield
Infrastructure Corporation (“BIPC” or our “company”) (NYSE, TSX:
BIPC) today has declared a quarterly dividend in the amount of
$0.485 per class A exchangeable subordinate voting share of BIPC (a
“Share”), payable on June 30, 2020 to shareholders of record
as at the close of business on May 29, 2020. This dividend is
identical in amount per Share and has identical record and payment
dates to the quarterly distribution announced today by BIP on BIP’s
units.
The Shares of BIPC are structured with the
intention of being economically equivalent to the non-voting
limited partnership units of Brookfield Infrastructure Partnership
L.P. (“BIP” or the “Partnership”) (NYSE: BIP; TSX: BIP.UN). We
believe economic equivalence is achieved through identical
dividends and distributions on the Shares and BIP’s units and each
Share being exchangeable at the option of the holder for one BIP
unit at any time. Given the economic equivalence, we expect that
the market price of the Shares will be significantly impacted by
the market price of BIP’s units and the combined business
performance of our company and BIP as a whole. In addition to
carefully considering the disclosure made in this news release in
its entirety, shareholders are strongly encouraged to carefully
review BIP’s letter to unitholders, supplemental information and
its other continuous disclosure filings. BIP’s letter to
unitholders and supplemental information are available at
www.brookfield.com/infrastructure. Copies of the Partnership’s
continuous disclosure filings are available electronically on EDGAR
on the SEC’s website at www.sec.gov or on SEDAR at
www.sedar.com.
Results
The net income and funds from operations (FFO)
of BIPC is fully attributed to the Partnership and the earnings of
BIPC are fully captured in the Partnership’s financial statements
and results.
|
For the three months ended March 31 |
US$ millions, unaudited1 |
|
2020 |
|
2019 |
Net income attributable to the Partnership |
$ |
117 |
$ |
48 |
FFO2 |
$ |
107 |
$ |
105 |
BIPC reported net income for the quarter of $117
million compared to net income of $48 million in the same period
during the prior year. Net income for the current quarter
benefitted from capital commissioned into rate base at our U.K.
regulated distribution business, inflation-indexation at our
Brazilian regulated gas transmission business and a mark-to-market
gain on revaluation of the Shares that the Company is required to
classify as a liability. These positive factors were partially
offset by the impact of the depreciation of the Brazilian Real
relative to the U.S. dollar.
Our business generated FFO of $107 million for
the quarter, representing a 2% increase over the same period during
the prior year. The increase in FFO in the current quarter is
primarily attributable to inflationary-indexation and additions to
rate base, partially offset by the impact of foreign exchange which
decreased FFO by $3 million.
Note: This news release may contain
forward-looking information within the meaning of Canadian
provincial securities laws and “forward-looking statements” within
the meaning of Section 27A of the U.S. Securities Act of 1933, as
amended, Section 21E of the U.S. Securities Exchange Act of 1934,
as amended, “safe harbor” provisions of the United States Private
Securities Litigation Reform Act of 1995 and in any applicable
Canadian securities regulations. The words “believe”,
“expect”, “will” derivatives thereof and other expressions which
are predictions of or indicate future events, trends or prospects
and which do not relate to historical matters, identify the above
mentioned and other forward-looking statements.
Forward-looking statements in this news release include statements
regarding the impact of the market price of BIP’s units and the
combined business performance of our company and BIP as a whole on
the market price of the Shares. Although Brookfield Infrastructure
believes that these forward-looking statements and information are
based upon reasonable assumptions and expectations, the reader
should not place undue reliance on them, or any other
forward-looking statements or information in this news release. The
future performance and prospects of Brookfield Infrastructure are
subject to a number of known and unknown risks and
uncertainties. Factors that could cause actual results of
Brookfield Infrastructure to differ materially from those
contemplated or implied by the statements in this news release
include general economic conditions in the jurisdictions in which
we operate and elsewhere which may impact the markets for our
products and services, the ability to achieve growth within
Brookfield Infrastructure’s businesses and in particular completion
on time and on budget of various large capital projects, which
themselves depend on access to capital and continuing favorable
commodity prices, and our ability to achieve the milestones
necessary to deliver the targeted returns to our unitholders, the
impact of market conditions on our businesses, the fact that
success of Brookfield Infrastructure is dependent on market demand
for an infrastructure company, which is unknown, the availability
of equity and debt financing for Brookfield Infrastructure, the
ability to effectively complete transactions in the competitive
infrastructure space (including the ability to complete announced
and potential transactions that may be subject to conditions
precedent, and the inability to reach final agreement with
counterparties to transactions being currently pursued, given that
there can be no assurance that any such transaction will be agreed
to or completed) and to integrate acquisitions into existing
operations, the future performance of these acquisitions, changes
in technology which have the potential to disrupt the business and
industries in which we invest, the market conditions of key
commodities, the price, supply or demand for which can have a
significant impact upon the financial and operating performance of
our business and other risks and factors described in the U.S.
registration statement on Form F-1 and Canadian prospectus filed in
connection with the distribution of the Shares on March 31, 2020
with securities regulators in Canada and the United States and the
documents incorporated by reference therein, including under “Risk
Factors” in the Partnership’s most recent Annual Report on Form
20-F and other risks and factors that are described therein and in
other documents filed by the Partnership and BIPC with the
securities regulators in Canada and the United States. Except
as required by law, Brookfield Infrastructure Corporation
undertakes no obligation to publicly update or revise any
forward-looking statements or information, whether as a result of
new information, future events or otherwise.
1. Brookfield Infrastructure Corporation was
established on August 30, 2019 by the Partnership. On March 30,
2020, the Partnership contributed its regulated utilities
businesses in Brazil and the U.K. to our company. For the periods
prior to March 30, 2020, the financial statements represent a
combined carve-out of the assets, liabilities, revenues, expenses,
and cash flows of the businesses that were contributed to our
company effective March 30, 2020.
2. FFO is defined as net income excluding the
impact of depreciation and amortization, deferred income taxes,
breakage and transaction costs, and non-cash valuation gains or
losses. A reconciliation of net income to FFO is available on page
17 of this release.
Brookfield Infrastructure
Corporation Consolidated Statements of Financial
Position
|
|
As of |
US$ millions, unaudited |
|
Mar 31, 2020 |
|
|
Dec 31, 2019 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
143 |
|
$ |
204 |
Accounts receivable and
other |
|
350 |
|
|
390 |
Financial assets |
|
56 |
|
|
29 |
Property, plant and
equipment |
|
4,290 |
|
|
4,497 |
Intangible assets |
|
3,032 |
|
|
3,936 |
Goodwill |
|
525 |
|
|
667 |
Deferred tax asset and
other |
|
129 |
|
|
130 |
Total assets |
$ |
8,525 |
|
$ |
9,853 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Accounts payable and
other |
$ |
399 |
|
$ |
487 |
Exchangeable and class B
shares |
|
1,667 |
|
|
– |
Non-recourse borrowings |
|
3,168 |
|
|
3,526 |
Loans payable to Brookfield
Infrastructure |
|
1,046 |
|
|
– |
Financial liabilities |
|
1,009 |
|
|
1,008 |
Deferred tax liabilities and
other |
|
1,379 |
|
|
1,555 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Equity in net assets
attributable to the Partnership |
|
(1,319 |
) |
|
1,654 |
Non-controlling interest |
|
1,176 |
|
|
1,623 |
Total
equity |
|
(143 |
) |
|
3,277 |
Total liabilities and equity |
$ |
8,525 |
|
$ |
9,853 |
|
|
|
|
|
|
Brookfield Infrastructure
CorporationConsolidated Statements of Operating
Results
US$
millions, unaudited |
|
For the three months ended March 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Revenues |
$ |
384 |
|
$ |
403 |
|
Direct operating costs |
|
(62 |
) |
|
(58 |
) |
General and administrative
expense |
|
(6 |
) |
|
(6 |
) |
Depreciation and amortization expense |
|
(76 |
) |
|
(79 |
) |
|
|
240 |
|
|
260 |
|
Interest expense |
|
(32 |
) |
|
(41 |
) |
Mark-to-market on hedging
items |
|
2 |
|
|
2 |
|
Remeasurement of exchangeable
and class B shares |
|
98 |
|
|
– |
|
Other
expense |
|
(14 |
) |
|
(12 |
) |
Income before income tax |
|
294 |
|
|
209 |
|
Income tax expense |
|
|
|
|
Current |
|
(44 |
) |
|
(44 |
) |
Deferred |
|
(49 |
) |
|
(24 |
) |
Net income |
$ |
201 |
|
$ |
141 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Partnership |
|
117 |
|
|
48 |
|
Non-controlling interest |
|
84 |
|
|
93 |
|
|
|
|
|
|
Brookfield Infrastructure
CorporationConsolidated Statements of Cash
Flows
US$
millions, unaudited |
|
For the three months ended March 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
Net income |
$ |
201 |
|
$ |
141 |
|
Adjusted for the following
items: |
|
|
|
|
Depreciation and amortization expense |
|
76 |
|
|
79 |
|
Mark-to-market on hedging items, provisions and other |
|
13 |
|
|
9 |
|
Remeasurement of exchangeable and class B shares |
|
(98 |
) |
|
– |
|
Deferred income tax expense |
|
49 |
|
|
24 |
|
Change
in non-cash working capital, net |
|
(61 |
) |
|
11 |
|
Cash
from operating activities |
|
180 |
|
|
264 |
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
Purchase of long-lived assets, net of disposals |
|
(121 |
) |
|
(95 |
) |
Cash
used by investing activities |
|
(121 |
) |
|
(95 |
) |
|
|
|
|
|
Financing
Activities |
|
|
|
|
Affiliate distributions to
non-controlling interest |
|
(101 |
) |
|
(96 |
) |
Distributions to, net of
contributions from, the Partnership |
|
(33 |
) |
|
(33 |
) |
Proceeds from non-recourse
borrowings |
|
435 |
|
|
57 |
|
Repayments of non-recourse
borrowings |
|
(380 |
) |
|
(20 |
) |
Cash used by financing activities |
|
(79 |
) |
|
(92 |
) |
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
Change during the period |
$ |
(20 |
) |
$ |
77 |
|
Impact of foreign exchange on cash |
|
(41 |
) |
|
(2 |
) |
Balance, beginning of period |
|
204 |
|
|
99 |
|
Balance, end of period |
$ |
143 |
$ |
174 |
|
Brookfield Infrastructure
CorporationStatements of Funds from
Operations
|
|
For the three months ended March 31, |
US$
millions, unaudited |
|
2020 |
|
2019 |
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
Utilities |
$ |
142 |
|
$ |
142 |
|
Corporate |
|
(6 |
) |
|
(6 |
) |
Total |
|
136 |
|
136 |
|
|
|
|
|
|
Financing costs |
|
(19 |
) |
|
(20 |
) |
Other
income |
|
(10 |
) |
|
(11 |
) |
Funds
from operations (FFO) |
|
107 |
|
105 |
|
|
|
|
|
|
Depreciation and
amortization |
|
(38 |
) |
|
(37 |
) |
Deferred taxes and other items |
|
48 |
|
|
(20 |
) |
Net
income attributable to the Partnership |
$ |
117 |
$ |
48 |
|
|
|
|
|
|
Notes:
Funds from operations in this statement is on a segmented basis
and represents the operations of Brookfield Infrastructure
Corporation net of charges associated with related liabilities and
non-controlling interests. Adjusted EBITDA is defined as FFO
excluding the impact of interest expense and other income or
expenses. Net income attributable to shareholders includes
net income attributable to the Partnership prior to and after the
special distribution.
The Statements of Funds from Operations above are prepared on a
basis that differs from net income as presented in Brookfield
Infrastructure Corporation’s Consolidated Statements of Operating
Results on page 15 of this release, which is prepared in accordance
with IFRS. Management uses FFO as a key measure to evaluate
operating performance. Readers are encouraged to consider both
measures in assessing our company’s results.
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