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.

CorEnergy Infrastructure Trust, Inc. Investor Relations Debbie Hagen or Matt Kreps 877-699-CORR (2677) info@corenergy.reit

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