CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA)
("CorEnergy" or the "Company") today announced financial results
for the second quarter, ended June 30, 2021.
Second Quarter 2021 and Recent Highlights
- Reported consolidated revenue of $32.3 million for the three
months ended June 30, 2021, the first full quarter of consolidated
financial statements following the Company's transaction with
Crimson Midstream Holdings.
- Increased tariffs 10% on substantially all of Crimson's
regulated pipelines, with all rate increases effective on or before
August 1, 2021.
- Simplified the company’s capitalization with (i) the conversion
of the right held by Crimson Class A-2 Unit holders to exchange
into Series B Preferred Stock to the right to exchange into Class B
Common Stock, (ii) the internalization the Company’s external
manager in exchange for Company securities, and (iii) the right
held by Crimson Class A-1 Unit holders to receive Series C
Preferred Stock was converted to the right to receive Series A
Perpetual Preferred Stock pursuant to the terms of the Crimson
Transaction. The combination of these actions effectively
eliminated the potential of the Series C and Series B Preferred
from being issued by the Company.
Management Commentary
"During the second quarter we made significant progress
following our transaction with Crimson Midstream Holdings," said
Dave Schulte, Chief Executive Officer. "In addition to ongoing
integration activities at the corporate and asset levels, our
stockholders approved the proposal to issue equity contemplated in
the transaction. A substantial portion of this equity is to be held
by management and subordinated to our common shares, evidencing our
confidence in the future financial performance of the business and
creating even greater alignment with the interest of our
stockholders. As a result of these transactions, we have created an
industry leading platform to own and operate or lease
infrastructure assets with desirable REIT characteristics in order
to provide stockholders with dividend stability and prospects for
modest long-term growth."
"The second quarter represented our first full quarter of
activity with our Crimson assets. Production volumes in California
are improving but have not yet returned to pre-COVID levels.
Nonetheless, we expect revenue in the last half of the year to
improve from the second quarter and are maintaining our common
stock dividend at $0.20 annualized per share. Volume benefits from
a return to pre-COVID market conditions in California, near-term
commercial opportunities and the realization of acquisition
efficiencies could enable us to increase our dividend coverage. We
are also actively evaluating additional transactions to deploy
capital in further asset and platform-level expansion opportunities
that we believe would create value for our stockholders through
enhanced scale and diversification. Finally, we are evaluating
economically leveraging our footprint and capabilities to
participate in the ongoing energy transition."
Second Quarter Performance Summary
Second quarter 2021 reflects full impact of the activity from
Crimson. Second quarter financial highlights are as follows:
For the Three Months
Ended
June 30, 2021
Per Share
Total
Basic
Diluted
Net Loss (Attributable to Common
Stockholders)
$
(1,897,133)
$
(0.14)
$
(0.14)
Net Cash Provided by Operating
Activities
$
4,358,342
Adjusted Net Income1
$
3,026,061
Cash Available for Distribution (CAD)1
$
(1,005,387)
Adjusted EBITDA2
$
9,965,109
Dividends Declared to Common
Stockholders
$
0.05
1 Adjusted Net Income excludes special items of $338 thousand
which are not representative of on-going operations; however CAD
has not been so adjusted. Reconciliations of Adjusted Net Income
and CAD, as presented, to Net Income (Loss) and Net Cash Provided
by Operating Activities are included at the end of this press
release. See Note 1 for additional information.
2 Adjusted EBITDA excludes special items of $338 thousand which
are not representative of on-going operations. Reconciliation of
Adjusted EBITDA, as presented, to Net Income (Loss) is included at
the end of this press release. See Note 2 for additional
information.
Outlook
CorEnergy reaffirmed its 2021 outlook and expects to provide its
2022 outlook no later than in connection with the filing of its
Form 10-K for 2021.
Dividend and Distribution Declarations
The Company currently expects all of its 2021 Common Stock and
Preferred Stock dividends will be characterized as Return of
Capital for tax purposes.
Common Stock: A second quarter 2021
dividend of $0.05 per share was declared for CorEnergy's common
stock. The dividend will be paid on August 31, 2021, to
stockholders of record on August 17, 2021.
Preferred Stock: For the Company's
7.375% Series A Cumulative Redeemable Preferred Stock, a cash
dividend of $0.4609375 per depositary share was declared. The
preferred stock dividend, which equates to an annual dividend
payment of $1.84375 per depositary share, will be paid on August
31, 2021, to stockholders of record on August 17, 2021.
Class A-1 Units: For the Company's
Series C Preferred stock, as if they were outstanding, a cash
dividend of $0.5625 per share was declared, prorated through the
June 30, 2021 conversion date. The Class A-1 holders will also
receive a prorated cash distribution, for the period June 30, 2021
to August 31, 2021 based on the declared Series A Preferred
dividend. The Series C Preferred Stock will no longer be treated as
outstanding after the Class A-1 Units became exchangeable into
Series A Preferred Stock.
Class A-2 Units: For the Company's
Series B Preferred stock, as if they were outstanding, an in-kind
dividend of $0.25 was declared. prorated through the June 30, 2021
conversion date. The Class A-2 unit holders will be eligible for a
Class B Common Stock dividend starting with the third quarter of
2021. The Series B Preferred Stock will no longer be treated as
though outstanding after the July 7, 2021 shareholder approval to
convert the right of A-2 Units to exchange into Series B Preferred
Stock to now being exchangeable into Class B Common Stock.
Class A-3 Units: For the Company's
Class B Common Stock, as if they were outstanding, no dividend was
declared.
Second Quarter Results Call
CorEnergy will host a conference call on Monday, August 9, 2021
at 1:00 p.m. Central Time to discuss its financial results. Please
dial into the call at +1-201-689-8035 at least five minutes prior
to the scheduled start time. The call will also be webcast in a
listen-only format. A link to the webcast will be accessible at
corenergy.reit.
A replay of the call will be available until 2:00 p.m. Central
Time on September 8, 2021, by dialing +1-919-882-2331. The
Conference ID is 40741. A webcast replay of the conference call
will also be available on the Company’s website,
corenergy.reit.
About CorEnergy Infrastructure Trust, Inc.
CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a
real estate investment trust that owns and operates or leases
regulated natural gas transmission and distribution lines and crude
oil gathering, storage and transmission pipelines and associated
rights-of-way. For more information, please visit
corenergy.reit.
Forward-Looking Statements
This press release contains certain statements that may include
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements, other than statements of
historical fact, included herein are "forward-looking statements."
Although CorEnergy believes that the expectations reflected in
these forward-looking statements are reasonable, they do involve
assumptions, risks and uncertainties, and these expectations may
prove to be incorrect. Actual results could differ materially from
those anticipated in these forward-looking statements as a result
of a variety of factors, including, among others, failure to
realize the anticipated benefits of the Transaction or
Internalization; the risk that CPUC approval is not obtained, is
delayed or is subject to unanticipated conditions that could
adversely affect CorEnergy or the expected benefits of the
Transaction, risks related to the uncertainty of the projected
financial information with respect to Crimson, CorEnergy’s ability
realize the projected benefits of the Internalization, and those
factors discussed in CorEnergy’s reports that are filed with the
Securities and Exchange Commission. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this press release. Other than as required by law,
CorEnergy does not assume a duty to update any forward-looking
statement. In particular, any distribution paid in the future to
our stockholders will depend on the actual performance of
CorEnergy, its costs of leverage and other operating expenses and
will be subject to the approval of CorEnergy’s Board of Directors
and compliance with leverage covenants.
Notes
1 Management uses CAD as a measure of long-term sustainable
performance. Adjusted Net Income and CAD are non-GAAP measures.
Adjusted Net Income represents net income (loss) adjusted for loss
on impairment of leased property; loss on impairment and disposal
of property; loss on termination of lease; loss on extinguishment
of debt; non-cash lease expense; gain on sale of equipment and
transaction-related costs. CAD represents Adjusted Net Income
adjusted for depreciation, amortization and ARO accretion (cash
flows) and income tax expense (benefit) less transaction costs;
maintenance capital expenditures; preferred dividend requirements
and mandatory debt amortization. Reconciliations of Adjusted Net
Income and CAD to Net Income (Loss) and Net Cash Provided By
Operating Activities are included in the additional financial
information attached to this press release.
2 Management uses Adjusted EBITDA as a measure of operating
performance. Adjusted EBITDA represents net income (loss) adjusted
for items such as loss on impairment of leased property; loss on
impairment disposal of leased property; loss on termination of
lease; gain on extinguishment of debt; gain on sale of equipment;
and transaction-related costs. Adjusted EBITDA is further adjusted
for depreciation, amortization and ARO accretion expense; income
tax expense (benefit) and interest expense. The reconciliation of
Adjusted EBITDA to Net Income (Loss) is included in the additional
financial information attached to this press release.
Consolidated Balance
Sheets
June 30, 2021
December 31, 2020
Assets
(Unaudited)
Property and equipment, net of accumulated
depreciation of $28,973,654 and $22,580,810 (Crimson VIE:
$338,930,724, and $0, respectively)
$
443,457,382
$
106,224,598
Leased property, net of accumulated
depreciation of $237,579 and $6,832,167
1,288,449
64,938,010
Financing notes and related accrued
interest receivable, net of reserve of $600,000 and $600,000
1,149,245
1,209,736
Cash and cash equivalents (Crimson VIE:
$2,989,319 and $0, respectively)
17,695,458
99,596,907
Accounts and other receivables (Crimson
VIE: $11,434,113 and $0, respectively)
14,389,085
3,675,977
Due from affiliated companies (Crimson
VIE: $1,154,499 and $0, respectively)
1,163,633
—
Deferred costs, net of accumulated
amortization of $155,353 and $2,130,334
986,994
1,077,883
Inventory (Crimson VIE: $1,512,398 and $0,
respectively)
1,625,464
87,940
Prepaid expenses and other assets (Crimson
VIE: $4,018,467 and $0, respectively)
10,939,625
2,054,804
Operating right-of-use assets (Crimson
VIE: $5,844,591 and $0, respectively)
5,914,710
85,879
Deferred tax asset, net
4,173,754
4,282,576
Goodwill
1,718,868
1,718,868
Total Assets
$
504,502,667
$
284,953,178
Liabilities and Equity
Secured credit facilities, net of debt
issuance costs of $1,580,091 and $0
$
104,419,909
$
—
Unsecured convertible senior notes, net of
discount and debt issuance costs of $2,713,020 and $3,041,870
115,336,979
115,008,130
Asset retirement obligation
—
8,762,579
Accounts payable and other accrued
liabilities (Crimson VIE: $11,454,583 and $0, respectively)
20,780,331
4,628,847
Management fees payable
304,770
971,626
Due to affiliated companies (Crimson VIE:
$970,469 and $0, respectively)
979,603
—
Operating lease liability (Crimson VIE:
$5,609,946 and $0, respectively)
5,651,002
56,441
Unearned revenue (Crimson VIE $315,000 and
$0, respectively)
6,147,990
6,125,728
Total Liabilities
$
253,620,584
$
135,553,351
Commitments and Contingencies
Equity
Series A Cumulative Redeemable Preferred
Stock 7.375%, $125,270,350 and $125,270,350 liquidation preference
($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,108
and 50,108 issued and outstanding at June 30, 2021 and December 31,
2020, respectively
$
125,270,350
$
125,270,350
Common stock, non-convertible, $0.001 par
value; 13,673,326 and 13,651,521 shares issued and outstanding at
June 30, 2021 and December 31, 2020, respectively (100,000,000
shares authorized)
13,673
13,652
Additional paid-in capital
333,890,657
339,742,380
Retained deficit
(327,513,586
)
(315,626,555
)
Total CorEnergy Equity
131,661,094
149,399,827
Non-controlling interest (Crimson)
119,220,989
—
Total Equity
250,882,083
149,399,827
Total Liabilities and Equity
$
504,502,667
$
284,953,178
Consolidated Statements of
Operations (Unaudited)
For the Three Months
Ended
June 30, 2021
June 30, 2020
Revenue
Transportation and distribution
revenue
$
28,100,343
$
4,382,706
Pipeline loss allowance subsequent
sales
2,915,533
—
Lease revenue
701,525
5,554,368
Other revenue
579,177
29,913
Total Revenue
32,296,578
9,966,987
Expenses
Transportation and distribution
expenses
15,363,410
1,222,135
Pipeline loss allowance subsequent sales
cost of revenue
2,223,646
—
General and administrative
5,381,654
4,325,924
Depreciation, amortization and ARO
accretion expense
3,748,453
3,662,926
Loss on impairment and disposal of leased
property
—
146,537,547
Loss on termination of lease
—
458,297
Total Expenses
26,717,163
156,206,829
Operating Income (Loss)
$
5,579,415
$
(146,239,842
)
Other Income (Expense)
Other income
$
299,293
$
102,038
Interest expense
(3,295,703
)
(2,920,424
)
Gain on extinguishment of debt
—
11,549,968
Total Other Expense
(2,996,410
)
8,731,582
Income (Loss) before income
taxes
2,583,005
(137,508,260
)
Taxes
Current tax expense (benefit)
20,374
(2,431
)
Deferred tax expense (benefit)
135,222
(71,396
)
Income tax expense (benefit),
net
155,596
(73,827
)
Net income (Loss)
2,427,409
(137,434,433
)
Less: Net income attributable to
non-controlling interest
2,014,870
—
Net income (Loss) attributable to
CorEnergy Stockholders
$
412,539
$
(137,434,433
)
Preferred dividend requirements
2,309,672
2,309,672
Net loss attributable to Common
Stockholders
$
(1,897,133
)
$
(139,744,105
)
Loss Per Common Share:
Basic
$
(0.14
)
$
(10.24
)
Diluted
$
(0.14
)
$
(10.24
)
Weighted Average Shares of Common Stock
Outstanding:
Basic
13,659,667
13,651,521
Diluted
13,659,667
13,651,521
Dividends declared per share
$
0.050
$
0.050
Consolidated Statements of
Cash Flows (Unaudited)
For the Six Months
Ended
June 30, 2021
June 30, 2020
Operating Activities
Net loss
$
(8,266,854
)
$
(299,476,801
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Deferred income tax, net
108,822
298,525
Depreciation, amortization and ARO
accretion
7,427,544
9,963,908
Loss on impairment of leased property
—
140,268,379
Loss on impairment and disposal of leased
property
5,811,779
146,537,547
Loss on termination of lease
165,644
458,297
Deferred rent receivable write-off,
noncash
—
30,105,820
(Gain) loss on extinguishment of debt
861,814
(11,549,968
)
Non-cash lease expense
439,246
—
Gain on sale of equipment
—
(3,542
)
Changes in assets and liabilities:
Deferred rent receivable
—
(247,718
)
Accounts and other receivables
541,580
1,216,469
Financing note accrued interest
receivable
(9,926
)
(4,671
)
Inventory
144,113
—
Prepaid expenses and other assets
(2,788,545
)
85,197
Due from affiliated companies, net
(184,030
)
—
Management fee payable
(666,856
)
(8,299
)
Accounts payable and other accrued
liabilities
1,740,265
(613,391
)
Operating lease liability
(673,516
)
—
Unearned revenue
(292,738
)
(607,951
)
Net cash provided by operating
activities
$
4,358,342
$
16,421,801
Investing Activities
Acquisition of Crimson Midstream Holdings,
net of cash acquired
(69,002,053
)
—
Purchases of property and equipment,
net
(9,275,334
)
(85,144
)
Proceeds from sale of property and
equipment
79,600
7,500
Proceeds from insurance recovery
60,153
—
Principal payment on financing note
receivable
70,417
43,333
Net cash used in investing activities
$
(78,067,217
)
$
(34,311
)
Financing Activities
Debt financing costs
(2,735,922
)
—
Repurchases of Series A preferred
stock
—
(161,997
)
Dividends paid on Series A preferred
stock
(4,619,344
)
(4,623,452
)
Dividends paid on Common Stock
(1,232,357
)
(10,921,216
)
Cash paid for extinguishment of
convertible notes
—
(1,676,000
)
Cash paid for maturity of convertible
notes
—
(1,316,250
)
Cash paid for settlement of Pinedale
Secured Credit Facility
—
(3,074,572
)
Distributions to non-controlling
interest
(604,951
)
—
Advances on revolving line of credit
8,000,000
—
Payments on revolving line of credit
(7,000,000
)
—
Principal payments on secured credit
facilities
—
(1,764,000
)
Net cash used in financing activities
$
(8,192,574
)
$
(23,537,487
)
Net change in Cash and Cash
Equivalents
$
(81,901,449
)
$
(7,149,997
)
Cash and Cash Equivalents at beginning of
period
99,596,907
120,863,643
Cash and Cash Equivalents at end of
period
$
17,695,458
$
113,713,646
Supplemental Disclosure of Cash Flow
Information
Interest paid
$
5,750,876
$
5,392,894
Income taxes paid (net of refunds)
(1,286
)
(466,407
)
Non-Cash Investing Activities
Proceeds from sale of leased property
provided directly to secured lender
$
—
$
18,000,000
In-kind consideration for the Grand Isle
Gathering System provided as partial consideration for the Crimson
Midstream Holdings acquisition
48,873,169
—
Crimson Credit Facility assumed and
refinanced in connection with the Crimson Midstream Holdings
acquisition
105,000,000
—
Equity consideration attributable to
non-controlling interest holder in connection with the Crimson
Midstream Holdings acquisition
116,205,762
—
Purchases of property, plant and equipment
in accounts payable and other accrued liabilities
386,009
110,000
Non-Cash Financing Activities
Change in accounts payable and accrued
expenses related to debt financing costs
$
235,198
$
—
Common Stock issued upon exchange and
conversion of convertible notes
—
419,129
Proceeds from sale of leased property used
in settlement of Pinedale Secured Credit Facility
—
(18,000,000
)
Crimson A-2 Units dividends payment in
kind
406,000
—
Non-GAAP Financial Measurements
(Unaudited)
The following table presents a reconciliation of Net Income
(Loss), as reported in the Consolidated Statements of Operations,
to Adjusted Net Income (Loss) and CAD:
For the Three Months
Ended
June 30, 2021
June 30, 2020
Net Income (Loss)
$
2,427,409
$
(137,434,433
)
Add:
Loss on impairment and disposal of leased
property
—
146,537,547
Loss on termination of lease
—
458,297
Gain on extinguishment of debt
—
(11,549,968
)
Non-cash lease expense
260,704
—
Gain on the sale of equipment
—
(7,500
)
Transaction costs
337,948
92,293
Adjusted Net Income (Loss), excluding
special items
$
3,026,061
$
(1,903,764
)
Add:
Depreciation, amortization and ARO
accretion (Cash Flows)
4,160,510
3,988,592
Income tax expense (benefit), net
155,596
(73,827
)
Less:
Transaction costs
337,948
92,293
Maintenance capital expenditures
2,182,155
—
Preferred dividend requirements - Series
A
2,309,672
2,309,672
Preferred dividend requirements -
Non-controlling interest
1,517,779
—
Mandatory debt amortization
2,000,000
882,000
Cash Available for Distribution
(CAD)
$
(1,005,387
)
$
(1,272,964
)
The following table reconciles net cash provided by operating
activities, as reported in the Consolidated Statements of Cash
Flows to CAD:
For the Three Months
Ended
June 30, 2021
June 30, 2020
Net cash provided by operating
activities
$
6,839,503
$
4,654,089
Changes in working capital
144,342
(2,732,950
)
Current tax expense (benefit)
20,374
(2,431
)
Maintenance capital expenditures
(2,182,155
)
—
Preferred dividend requirements
(2,309,672
)
(2,309,672
)
Preferred dividend requirements -
Non-controlling interest
(1,517,779
)
—
Mandatory debt amortization included in
financing activities
(2,000,000
)
(882,000
)
Cash Available for Distribution
(CAD)
$
(1,005,387
)
$
(1,272,964
)
Other Special Items:
Transaction costs
$
337,948
$
92,293
Other Cash Flow Information:
Net cash used in investing activities
$
(5,519,635
)
$
(53,780
)
Net cash used in financing activities
(2,464,404
)
(9,941,070
)
The following table presents a reconciliation of Net Income
(Loss), as reported in the Consolidated Statements of Operations,
to Adjusted EBITDA:
For the Three Months
Ended
June 30, 2021
June 30, 2020
Net Income (Loss)
$
2,427,409
$
(137,434,433
)
Add:
Loss on impairment and disposal of leased
property
—
146,537,547
Loss on termination of lease
—
458,297
Gain on extinguishment of debt
—
(11,549,968
)
Gain on sale of equipment
—
(7,500
)
Transaction costs
337,948
92,293
Depreciation, amortization and ARO
accretion expense
3,748,453
3,662,926
Income tax expense (benefit), net
155,596
(73,827
)
Interest expense, net
3,295,703
2,920,424
Adjusted EBITDA
$
9,965,109
$
4,605,759
Source: CorEnergy Infrastructure Trust, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210809005197/en/
CorEnergy Infrastructure Trust, Inc. Investor Relations Debbie
Hagen or Matt Kreps 877-699-CORR (2677) info@corenergy.reit
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