Brookfield Infrastructure (NYSE: BIP; TSX: BIP.UN) today announced
its results for the second quarter ended June 30, 2020.
“Our business has performed well during the
quarter, reflecting the critical nature of our assets and the
regulated and contractual frameworks that support them,” said Sam
Pollock, Chief Executive Officer of Brookfield Infrastructure
Partners. “We are optimistic that the economic recovery will
continue for the balance of 2020. Our strong liquidity position and
access to capital gives us confidence as we evaluate a number of
attractive investment opportunities.”
|
For the three months ended June 30 |
For the six months ended June 30 |
US$ millions (except per unit amounts), unaudited1 |
|
2020 |
|
|
2019 |
|
2020 |
|
|
2019 |
Net income2 |
$ |
(61 |
) |
$ |
98 |
$ |
58 |
|
$ |
128 |
– per unit3,4 |
$ |
(0.25 |
) |
$ |
0.11 |
$ |
(0.12 |
) |
$ |
0.06 |
FFO5 |
$ |
333 |
|
$ |
337 |
$ |
691 |
|
$ |
688 |
– per unit (split-adjusted)6 |
$ |
0.72 |
|
$ |
0.76 |
$ |
1.49 |
|
$ |
1.55 |
Underlying results for the partnership
benefitted from inflation-indexation, capital commissioned into
earnings in the last 12 months as well as the benefit of our asset
rotation strategy. These positive factors were more than offset by
fair value adjustments related to our corporate hedging program
which totaled nearly $90 million for the quarter compared to gains
of approximately $35 million in the same period of 2019. This led
to a net loss for the three-month period ended June 30, 2020 of $61
million compared to net income of $98 million in the prior
year.
During the second quarter, our business
generated Funds from Operations (FFO) of $0.72 on a per unit basis,
down 5% from the prior year. The single largest impact on quarterly
performance was the 27% depreciation of the Brazilian real which
reduced FFO by $30 million. Adjusting for this alone, FFO per unit
would have increased 3% compared to the prior year. Results for the
quarter benefited from our capital recycling strategy. We deployed
$1.2 billion of capital over the last 12 months at an average
going-in FFO yield of 12%. These new investments were primarily
funded with $1 billion of proceeds from asset sales and
refinancing transactions. These positive factors were offset by
lower market sensitive revenues, which were concentrated in our
transport segment because of temporary lockdown measures. Overall,
the impact of the economic shutdown reduced FFO by $27 million,
with most of this being timing related and therefore not a
permanent loss.
Segment Performance
Our utilities segment generated FFO of $130
million, compared to $143 million in the prior year. Results
reflected a higher rate base due to inflation-indexation and
approximately $280 million of capital commissioned in the last 12
months. This segment also benefited from the contribution from our
North American regulated gas transmission business acquired last
October. These contributions were more than offset by a delay in
the recognition of connections revenue at our U.K. regulated
distribution business, the loss of earnings associated with the
sale of an electricity distribution utility in Colombia and the
impact of the weaker Brazilian real.
FFO from our Transport segment was $108 million
compared to $135 million in the prior year. Results reflected
higher volumes across our Australian and Brazilian rail networks,
as well as the contribution from our recently acquired North
American rail operation. These positive factors were more than
offset by the loss of earnings associated with the sale of a
European port business and the partial sale of our interest in our
Chilean toll road operation. Results were also affected by a weaker
Brazilian real and lower volumes following government-imposed
lockdowns, which together reduced results by $29 million. Among
these factors, (i) foreign exchange accounted for $14 million and
(ii) $13 million relates to lower volumes at our toll roads, for
which we expect to be compensated, based on force majeure
protections and ongoing dialogue with local regulators. The true
economic impact from the downturn is therefore limited to $2
million (or less than 1% of BIP’s total FFO) in our port
operations.
Our energy segment generated FFO of $106 million
compared to $96 million in the prior year. Performance was
insulated from the current economic environment, as over 75% of
cash flows are underpinned by take-or-pay contracts with an average
maturity of 11 years. Results benefited from higher transport
volumes at our North American natural gas pipeline, over 55,000 new
customers at our North American residential infrastructure business
and the contribution from the federally regulated portion of our
western Canadian midstream business acquired in December. These
contributions were partially offset by the loss of income
associated with the sale of our Australian district energy
operation completed last November.
FFO from our data infrastructure segment was $43
million, which was 43% higher than the prior year. Our French
telecom business benefited from inflationary price increases and
our build-to-suit tower program, which has added over 200 new
sites. Results also reflected the contribution of earnings
associated with recently acquired data transmission and
distribution operations in New Zealand and the United Kingdom.
The following table presents FFO by segment:
|
For the three months ended June 30 |
|
For the six monthsended June 30 |
|
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
FFO by segment |
|
|
|
|
|
|
|
|
|
|
|
|
Utilities |
$ |
130 |
|
$ |
143 |
|
$ |
276 |
|
$ |
280 |
|
Transport |
|
108 |
|
|
135 |
|
|
228 |
|
|
274 |
|
Energy |
|
106 |
|
|
96 |
|
|
221 |
|
|
203 |
|
Data Infrastructure |
|
43 |
|
|
30 |
|
|
85 |
|
|
58 |
|
Corporate |
|
(54 |
) |
|
(67 |
) |
|
(119 |
) |
|
(127 |
) |
FFO |
$ |
333 |
|
$ |
337 |
|
$ |
691 |
|
$ |
688 |
|
Update on Strategic
Initiatives
During the quarter, we made progress on several
initiatives:
- North American Electricity
Transmission – The sale of our North American electricity
transmission operation closed in July, resulting in $60 million of
proceeds to BIP and an IRR of 21%. We are advancing two other asset
sale processes that we expect will generate over $700 million of
additional liquidity. We believe that essential and de-risked
infrastructure businesses that performed uninterrupted throughout
this recent period will attract strong interest at premium
prices.
- Indian Telecom
Towers – The closing of our large-scale acquisition of
130,000 telecom towers in India from Reliance Jio is expected
shortly. We have received positive feedback recently from Indian
regulators that the remaining approvals are on track. Since we
signed our deal, Reliance Jio has raised approximately $20 billion
of equity capital from technology companies and private equity
investors which has further solidified the credit quality of our
anchor tenant. We will invest approximately $500 million of equity
(BIP’s share) in the business.
- Capital Market
Investments – During the broad market sell-off in March,
we acquired stakes in several high-quality infrastructure companies
at attractive entry points. The ensuing rebound allowed us to
monetize some of our positions and realize substantial profits in a
short period of time. We have fully exited a number of these
investments, realizing total profits of approximately $40 million
(BIP’s share – approximately $25 million). We continue to
accumulate positions in a handful of companies that we hope will
lead to broader strategic initiatives in time.
- U.S. Midstream –
Dislocation in North American energy markets may provide unique
opportunities to invest at value. Our focus is on highly contracted
businesses with solid counterparties, limited exposure to volume
and pricing risk and long-life, critical infrastructure that
complements our existing operations. We believe several
opportunities exist to implement this strategy, both in the public
and private markets.
Lastly, we are very pleased with the market’s
response thus far to Brookfield Infrastructure Corporation (BIPC).
Not only has there been significant demand for these shares but
BIPC was also recently added to the Russell 2000 Index. We
intend to support the growth of BIPC’s public float to improve the
company’s trading liquidity, and recently completed our first
initiative in this regard in coordination with Brookfield Asset
Management, who agreed to sell a portion of its holdings in BIPC.
This successful secondary offering in Canada increased the public
float of BIPC by approximately 15%.
Board of Directors Update
After 13 years on the Board of Brookfield
Infrastructure, the vast majority as Chairman of the Board,
Derek Pannell has stepped down from his current role as
Independent Director and will be retiring. Anne Schaumburg,
Chair of the Board, stated, “I would like to thank Derek Pannell
for his countless contributions to the Board over the past 13
years. His commitment to the success of Brookfield Infrastructure
has been invaluable.”
Distribution and Dividend
Declaration
The Board of Directors has declared a quarterly
distribution in the amount of $0.485 per unit, payable on September
30, 2020 to unitholders of record as at the close of business on
August 31, 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 September 30, 2020 to shareholders of record
as at the close of business on August 31, 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 $525 billion of assets under
management. For more information, go to www.brookfield.com.
Please note that Brookfield Infrastructure
Partners' 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) 956-5196Email:
rene.lubianski@brookfield.com |
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access Brookfield Infrastructure’s Second 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 August 5, 2020 at 9:00 a.m. Eastern Time at
https://edge.media-server.com/mmc/p/7pej8hpa 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: 1976828).
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, Exchange LP units,
and class A shares of BIPC.
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 and
six-month period ended June 30, 2020 were 294.7 million and 294.1
million (2019 – 279.7 million and 278.9 million).
4. Results in a loss on a per unit basis for the
six-month periods ended June 30, 2020 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,
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 and
six-month periods ended June 30, 2020 were 464.9 million and 464.8
million (2019 – 442.8 million and 442.9 million). Average
number of units outstanding on a fully diluted time weighted
average basis, excluding the impact of the special distribution,
for the three and six-month periods ended June 30, 2020 were 418.4
million and 418.4 million (2019 – 398.5 million and 398.6
million).
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Financial Position
|
|
As of |
US$ millions, unaudited |
|
June 30,2020 |
|
Dec 31,2019 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash equivalents |
$ |
1,380 |
$ |
827 |
Financial assets |
|
439 |
|
149 |
Property, plant and
equipment |
|
22,279 |
|
23,013 |
Intangible assets |
|
12,658 |
|
14,386 |
Investments in associates and
joint ventures |
|
4,336 |
|
4,967 |
Investment properties |
|
403 |
|
416 |
Goodwill |
|
6,166 |
|
6,553 |
Deferred income taxes and
other |
|
3,661 |
|
5,997 |
Total assets |
$ |
51,322 |
$ |
56,308 |
|
|
|
|
|
Liabilities and
partnership capital |
|
|
|
|
Corporate borrowings |
$ |
3,074 |
$ |
2,475 |
Non-recourse borrowings |
|
17,860 |
|
18,544 |
Financial liabilities |
|
2,383 |
|
2,173 |
Deferred income taxes and
other |
|
9,262 |
|
10,939 |
|
|
|
|
|
Partnership
capital |
|
|
|
|
Limited partners |
|
3,823 |
|
5,048 |
General partner |
|
17 |
|
24 |
Non-controlling interest
attributable to: |
|
|
|
|
Redeemable partnership units held by Brookfield |
|
1,520 |
|
2,039 |
Class A shares of BIPC |
|
576 |
|
– |
Exchange LP units |
|
12 |
|
18 |
Interest of others in operating subsidiaries |
|
11,860 |
|
14,113 |
Preferred unitholders |
|
935 |
|
935 |
Total
partnership capital |
|
18,743 |
|
22,177 |
Total liabilities and partnership capital |
$ |
51,322 |
$ |
56,308 |
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Operating
Results
US$
millions, except per unit information, unaudited |
For the three monthsended June 30 |
|
|
For the six months ended June 30 |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
1,946 |
|
$ |
1,685 |
|
$ |
4,142 |
|
$ |
3,278 |
|
Direct operating costs |
|
(1,063 |
) |
|
(840 |
) |
|
(2,302 |
) |
|
(1,638 |
) |
General and administrative
expense |
|
(72 |
) |
|
(64 |
) |
|
(133 |
) |
|
(125 |
) |
Depreciation and amortization expense |
|
(375 |
) |
|
(323 |
) |
|
(775 |
) |
|
(615 |
) |
|
|
436 |
|
|
458 |
|
|
932 |
|
|
900 |
|
Interest expense |
|
(247 |
) |
|
(241 |
) |
|
(529 |
) |
|
(453 |
) |
Share of earnings from
associates and joint ventures |
|
11 |
|
|
34 |
|
|
59 |
|
|
52 |
|
Mark-to-market on hedging
items |
|
(75 |
) |
|
52 |
|
|
123 |
|
|
34 |
|
Other
(expense) income |
|
(28 |
) |
|
12 |
|
|
(234 |
) |
|
22 |
|
Income before income tax |
|
97 |
|
|
315 |
|
|
351 |
|
|
555 |
|
Income tax (expense)
recovery |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
(55 |
) |
|
(62 |
) |
|
(113 |
) |
|
(125 |
) |
Deferred |
|
(8 |
) |
|
1 |
|
|
(56 |
) |
|
(11 |
) |
Net income |
|
34 |
|
|
254 |
|
|
182 |
|
|
419 |
|
Non-controlling interest of others in operating subsidiaries |
|
(95 |
) |
|
(156 |
) |
|
(124 |
) |
|
(291 |
) |
Net
(loss) income attributable to partnership |
$ |
(61 |
) |
$ |
98 |
|
$ |
58 |
|
$ |
128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners |
|
(67 |
) |
|
42 |
|
|
(15 |
) |
|
36 |
|
General partner |
|
45 |
|
|
39 |
|
|
91 |
|
|
77 |
|
Non-controlling interest – redeemable partnership units
held by Brookfield |
|
(29 |
) |
|
17 |
|
|
(8 |
) |
|
15 |
|
Non-controlling interest – class A shares of Brookfield
Infrastructure Corporation |
|
(10 |
) |
|
– |
|
|
(10 |
) |
|
– |
|
Basic and diluted (loss)
earnings per unit attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Limited partners1 |
$ |
(0.25 |
) |
$ |
0.11 |
|
$ |
(0.12 |
) |
$ |
0.06 |
|
1. |
Average number of limited partnership units outstanding on a time
weighted average basis for the three and six-month period ended
June 30, 2020 were 294.7 million and 294.1 million (2019 – 279.7
million and 278.9 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 monthsended June
30 |
|
|
For the six months ended June 30 |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
34 |
|
$ |
254 |
|
$ |
182 |
|
$ |
419 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings from investments in associates and joint ventures, net of
distributions received |
|
27 |
|
|
19 |
|
|
72 |
|
|
32 |
|
Depreciation and amortization expense |
|
375 |
|
|
323 |
|
|
775 |
|
|
615 |
|
Mark-to-market on hedging items, provisions and other |
|
84 |
|
|
(44 |
) |
|
265 |
|
|
10 |
|
Deferred income tax expense (recovery) |
|
8 |
|
|
(1 |
) |
|
56 |
|
|
11 |
|
Change
in non-cash working capital, net |
|
87 |
|
|
29 |
|
|
(13 |
) |
|
54 |
|
Cash
from operating activities |
|
615 |
|
|
580 |
|
|
1,337 |
|
|
1,141 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net (investments in) proceeds
from: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating assets |
|
— |
|
|
(40 |
) |
|
722 |
|
|
(2,190 |
) |
Associates |
|
— |
|
|
323 |
|
|
— |
|
|
135 |
|
Long-lived assets |
|
(266 |
) |
|
(276 |
) |
|
(642 |
) |
|
(513 |
) |
Financial assets |
|
(103 |
) |
|
(39 |
) |
|
(256 |
) |
|
(39 |
) |
Disposal of investment held on
behalf of parent |
|
— |
|
|
581 |
|
|
— |
|
|
— |
|
Net
settlements of foreign exchange contracts |
|
1 |
|
|
37 |
|
|
83 |
|
|
36 |
|
Cash
(used by) from investing activities |
|
(368 |
) |
|
586 |
|
|
(93 |
) |
|
(2,571 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Distributions to limited and
general partners |
|
(283 |
) |
|
(251 |
) |
|
(565 |
) |
|
(501 |
) |
Net borrowings
(repayments): |
|
|
|
|
|
|
|
|
|
|
|
|
Corporate |
|
272 |
|
|
(965 |
) |
|
665 |
|
|
(510 |
) |
Subsidiary |
|
72 |
|
|
(275 |
) |
|
231 |
|
|
847 |
|
Deposit received from
parent |
|
— |
|
|
456 |
|
|
— |
|
|
823 |
|
Net preferred units and
preferred shares issued |
|
— |
|
|
— |
|
|
— |
|
|
72 |
|
Net partnership units issued
(repurchased) |
|
3 |
|
|
2 |
|
|
5 |
|
|
(24 |
) |
Capital
provided by non-controlling interest, net of distributions, and
other |
|
(166 |
) |
|
(143 |
) |
|
(958 |
) |
|
890 |
|
Cash
(used by) from financing activities |
|
(102 |
) |
|
(1,176 |
) |
|
(622 |
) |
|
1,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Change during the period |
$ |
145 |
|
$ |
(10 |
) |
$ |
622 |
|
$ |
167 |
|
Impact of foreign exchange on cash |
|
9 |
|
|
5 |
|
|
(69 |
) |
|
8 |
|
Balance, beginning of period |
|
1,226 |
|
|
720 |
|
|
827 |
|
|
540 |
|
Balance, end of period |
$ |
1,380 |
|
$ |
715 |
|
$ |
1,380 |
|
$ |
715 |
|
Brookfield Infrastructure Partners
L.P.Statements of Funds from
Operations
|
For the three monthsended June
30 |
|
|
For the six months ended June
30 |
|
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Utilities |
$ |
174 |
|
$ |
190 |
|
$ |
367 |
|
$ |
371 |
|
Transport |
|
145 |
|
|
184 |
|
|
311 |
|
|
373 |
|
Energy |
|
138 |
|
|
123 |
|
|
286 |
|
|
250 |
|
Data Infrastructure |
|
53 |
|
|
39 |
|
|
109 |
|
|
75 |
|
Corporate |
|
(72 |
) |
|
(64 |
) |
|
(133 |
) |
|
(125 |
) |
Total |
|
438 |
|
|
472 |
|
|
940 |
|
|
944 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
(148 |
) |
|
(154 |
) |
|
(299 |
) |
|
(294 |
) |
Other
income |
|
43 |
|
|
19 |
|
|
50 |
|
|
38 |
|
Funds
from operations (FFO) |
|
333 |
|
|
337 |
|
|
691 |
|
|
688 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
(222 |
) |
|
(234 |
) |
|
(469 |
) |
|
(454 |
) |
Deferred taxes and other items |
|
(172 |
) |
|
(5 |
) |
|
(164 |
) |
|
(106 |
) |
Net
income attributable to the partnership |
$ |
(61 |
) |
$ |
98 |
|
$ |
58 |
|
$ |
128 |
|
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 monthsended June
30 |
|
|
For the six months ended June 30 |
US$, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per limited
partnership unit1 |
$ |
(0.25 |
) |
$ |
0.11 |
|
$ |
(0.12 |
) |
$ |
0.06 |
Add back or deduct the
following: |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
0.48 |
|
|
0.53 |
|
|
1.01 |
|
|
1.03 |
Deferred taxes and other items |
|
0.49 |
|
|
0.12 |
|
|
0.60 |
|
|
0.46 |
FFO per unit2 |
$ |
0.72 |
|
$ |
0.76 |
|
$ |
1.49 |
|
$ |
1.55 |
1. |
Average number of limited partnership units outstanding on a time
weighted average basis for the three and six-month periods ended
June 30, 2020 was 294.7 million and 294.1million, respectively
(2019 – 279.7 million and 278.9 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 and six-month periods ended June 30, 2020 was 464.9
million and 464.8 million, respectively (2019 – 442.8 million and
442.9 million). Average number of units outstanding on a fully
diluted time weighted average basis, excluding the impact of the
special distribution, were 418.4 million and 418.4 million (2019 –
398.5 million and 398.6 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 |
|
June 30, 2020 |
|
Dec 31, 2019 |
|
|
|
|
|
Assets |
|
|
|
|
Operating groups |
|
|
|
|
Utilities |
$ |
1,785 |
$ |
2,178 |
Transport |
|
3,214 |
|
3,991 |
Energy |
|
2,932 |
|
3,128 |
Data Infrastructure |
|
1,217 |
|
1,318 |
Cash
and cash equivalents |
|
999 |
|
273 |
|
$ |
10,147 |
$ |
10,888 |
|
|
|
|
|
Liabilities |
|
|
|
|
Corporate borrowings |
$ |
3,074 |
$ |
2,475 |
Other
liabilities |
|
1,125 |
|
1,284 |
|
|
4,199 |
|
3,759 |
Capitalization |
|
|
|
|
Partnership capital |
|
5,948 |
|
7,129 |
|
$ |
10,147 |
$ |
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
Reports Second 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
$0.485 per class A exchangeable subordinate voting share of BIPC (a
“Share”), payable on September 30, 2020 to shareholders of record
as at the close of business on August 31, 2020. This dividend is
identical in amount per Share and has identical record and payment
dates to the quarterly distribution announced today by BIP on BIP’s
units.
The Shares of BIPC are structured with the
intention of being economically equivalent to the non-voting
limited partnership units of Brookfield Infrastructure Partnership
L.P. (“BIP” or the “Partnership”) (NYSE: BIP; TSX: BIP.UN). We
believe economic equivalence is achieved through identical
dividends and distributions on the Shares and BIP’s units and each
Share being exchangeable at the option of the holder for one BIP
unit at any time. Given the economic equivalence, we expect that
the market price of the Shares will be significantly impacted by
the market price of BIP’s units and the combined business
performance of our company and BIP as a whole. In addition to
carefully considering the disclosure made in this news release in
its entirety, shareholders are strongly encouraged to carefully
review BIP’s letter to unitholders, supplemental information and
its other continuous disclosure filings. BIP’s letter to
unitholders and supplemental information are available at
www.brookfield.com/infrastructure. Copies of the Partnership’s
continuous disclosure filings are available electronically on EDGAR
on the SEC’s website at www.sec.gov or on SEDAR at
www.sedar.com.
Results
The net income and Funds from Operations (FFO)
of BIPC is fully attributed to the Partnership and the earnings of
BIPC are fully captured in the Partnership’s financial statements
and results.
|
For the three monthsended June 30 |
For the six monthsended June 30 |
US$ millions, unaudited1 |
|
2020 |
|
|
2019 |
|
2020 |
|
|
2019 |
Net income attributable to the Partnership |
$ |
(266 |
) |
$ |
48 |
$ |
(149 |
) |
$ |
96 |
FFO2 |
$ |
90 |
|
$ |
108 |
$ |
197 |
|
$ |
213 |
BIPC reported net losses for the quarter of $266
million compared to net income of $48 million in the same period
during the prior year. Earnings for the current period benefited
from capital commissioned into rate base at our U.K. regulated
distribution business and inflation-indexation at our Brazilian
regulated gas transmission business. These positive impacts were
more than offset predominantly by revaluation losses recognized on
the company’s exchangeable shares that are classified as
liabilities under IFRS standards.
Our business generated FFO of $90 million for
the quarter, representing a 17% decrease over the same period
during the prior year. FFO decreased in the current quarter as the
benefits of inflationary-indexation and additions to rate base were
more than offset by the impact of foreign exchange and lower
connections activity at our U.K regulated distribution
businesses.
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. We also exclude from FFO dividends paid on exchangeable
shares of our company that are presented as interest expense, as
well as interest expense on loans payable to the Partnership which
represent the Partnership’s investment in our company. 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 |
|
June 30,2020 |
|
|
Dec 31,2019 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
$ |
161 |
|
$ |
204 |
Accounts receivable and
other |
|
351 |
|
|
390 |
Financial assets |
|
56 |
|
|
29 |
Property, plant and
equipment |
|
4,309 |
|
|
4,497 |
Intangible assets |
|
2,849 |
|
|
3,936 |
Goodwill |
|
499 |
|
|
667 |
Deferred tax asset and
other |
|
129 |
|
|
130 |
Total assets |
$ |
8,354 |
|
$ |
9,853 |
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
Accounts payable and
other |
$ |
419 |
|
$ |
487 |
Exchangeable and class B
shares |
|
1,851 |
|
|
– |
Non-recourse borrowings |
|
3,114 |
|
|
3,526 |
Loans payable to Brookfield
Infrastructure |
|
1,120 |
|
|
– |
Financial liabilities |
|
1,013 |
|
|
1,008 |
Deferred tax liabilities and
other |
|
1,354 |
|
|
1,555 |
|
|
|
|
|
|
Equity |
|
|
|
|
|
Equity in net assets attributable to the Partnership |
|
(1,611 |
) |
|
1,654 |
Non-controlling interest |
|
1,094 |
|
|
1,623 |
Total
equity |
|
(517 |
) |
|
3,277 |
Total liabilities and equity |
$ |
8,354 |
|
$ |
9,853 |
Brookfield Infrastructure
CorporationConsolidated Statements of Operating
Results
US$
millions, unaudited |
For the three monthsended June 30 |
|
For the six months ended June 30 |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
322 |
|
$ |
404 |
|
$ |
706 |
|
$ |
807 |
|
Direct operating costs |
|
(54 |
) |
|
(58 |
) |
|
(116 |
) |
|
(116 |
) |
General and administrative
expense |
|
(8 |
) |
|
(7 |
) |
|
(14 |
) |
|
(13 |
) |
Depreciation and amortization expense |
|
(67 |
) |
|
(77 |
) |
|
(143 |
) |
|
(156 |
) |
|
|
193 |
|
|
262 |
|
|
433 |
|
|
522 |
|
Interest expense |
|
(62 |
) |
|
(40 |
) |
|
(94 |
) |
|
(81 |
) |
Mark-to-market on hedging
items and foreign currency revaluation |
|
(20 |
) |
|
(3 |
) |
|
(22 |
) |
|
(1 |
) |
Remeasurement of exchangeable
and class B shares |
|
(238 |
) |
|
– |
|
|
(140 |
) |
|
– |
|
Other
expense |
|
(15 |
) |
|
(9 |
) |
|
(25 |
) |
|
(21 |
) |
Income before income tax |
|
(142 |
) |
|
210 |
|
|
152 |
|
|
419 |
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
(35 |
) |
|
(43 |
) |
|
(79 |
) |
|
(87 |
) |
Deferred |
|
(17 |
) |
|
(24 |
) |
|
(66 |
) |
|
(48 |
) |
Net income |
$ |
(194 |
) |
$ |
143 |
|
$ |
7 |
|
$ |
284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Partnership |
$ |
(266 |
) |
$ |
48 |
|
$ |
(149 |
) |
$ |
96 |
|
Non-controlling interest |
|
72 |
|
|
95 |
|
|
156 |
|
|
188 |
|
Brookfield Infrastructure
CorporationConsolidated Statements of Cash
Flows
US$
millions, unaudited |
For the three months ended June
30 |
|
|
For the six months ended June 30 |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
(194 |
) |
$ |
143 |
|
$ |
7 |
|
$ |
284 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
67 |
|
|
77 |
|
|
143 |
|
|
156 |
|
Mark-to-market on hedging items, provisions and other |
|
35 |
|
|
18 |
|
|
48 |
|
|
27 |
|
Remeasurement of exchangeable and class B shares |
|
238 |
|
|
– |
|
|
140 |
|
|
– |
|
Deferred income tax expense |
|
17 |
|
|
24 |
|
|
66 |
|
|
48 |
|
Change
in non-cash working capital, net |
|
5 |
|
|
(7 |
) |
|
(56 |
) |
|
4 |
|
Cash
from operating activities |
|
168 |
|
|
255 |
|
|
348 |
|
|
519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of long-lived assets, net of disposals |
|
(63 |
) |
|
(103 |
) |
|
(184 |
) |
|
(198 |
) |
Cash
used by investing activities |
|
(63 |
) |
|
(103 |
) |
|
(184 |
) |
|
(198 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate distributions to
non-controlling interest |
|
(87 |
) |
|
(108 |
) |
|
(188 |
) |
|
(204 |
) |
Distributions to, net of
contributions from, the Partnership |
|
— |
|
|
(39 |
) |
|
(33 |
) |
|
(72 |
) |
Proceeds from non-recourse
borrowings |
|
— |
|
|
51 |
|
|
435 |
|
|
108 |
|
Repayments of non-recourse
borrowings |
|
— |
|
|
(21 |
) |
|
(380 |
) |
|
(41 |
) |
Cash used by financing activities |
|
(87 |
) |
|
(117 |
) |
|
(166 |
) |
|
(209 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
|
|
|
|
|
Change during the period |
$ |
18 |
|
$ |
35 |
|
$ |
(2 |
) |
$ |
112 |
|
Impact of foreign exchange on cash |
|
— |
|
|
3 |
|
|
(41 |
) |
|
1 |
|
Balance, beginning of period |
|
143 |
|
|
174 |
|
|
204 |
|
|
99 |
|
Balance, end of period |
$ |
161 |
|
$ |
212 |
|
$ |
161 |
|
$ |
212 |
|
Brookfield Infrastructure
CorporationStatements of Funds from
Operations
|
For the three monthsended June 30, |
|
For the six months ended June 30 |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
Utilities |
$ |
124 |
|
$ |
146 |
|
$ |
266 |
|
$ |
288 |
|
Corporate |
|
(8 |
) |
|
(7 |
) |
|
(14 |
) |
|
(13 |
) |
Total |
|
116 |
|
|
139 |
|
|
252 |
|
|
275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
(17 |
) |
|
(20 |
) |
|
(36 |
) |
|
(40 |
) |
Other
income |
|
(9 |
) |
|
(11 |
) |
|
(19 |
) |
|
(22 |
) |
Funds
from operations (FFO) |
|
90 |
|
|
108 |
|
|
197 |
|
|
213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
(36 |
) |
|
(37 |
) |
|
(74 |
) |
|
(74 |
) |
Deferred taxes and other items |
|
(320 |
) |
|
(23 |
) |
|
(272 |
) |
|
(43 |
) |
Net
income attributable to the Partnership |
$ |
(266 |
) |
$ |
48 |
|
$ |
(149 |
) |
$ |
96 |
|
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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