CORR CorEnergy Infrastructure Trust Inc NEW

CorEnergy Infrastructure Trust, Inc. (“CorEnergy” or the “Company”) today announced financial results for the second quarter, ended June 30, 2018.

Second Quarter Performance Summary

Second quarter financial highlights are as follows:

    For the Three Months Ended June 30, 2018     Per Share Total Basic     Diluted Net Income (Attributable to Common Stockholders)1 $ 5,413,974 $ 0.45 $ 0.45 NAREIT Funds from Operations (NAREIT FFO)1 $ 11,553,145 $ 0.97 $ 0.89 Funds From Operations (FFO)1 $ 12,213,745 $ 1.02 $ 0.94 Adjusted Funds From Operations (AFFO)1 $ 12,348,559 $ 1.04 $ 0.93 Dividends Declared to Common Stockholders $ 0.75

1 Management uses AFFO as a measure of long-term sustainable operational performance. NAREIT FFO, FFO, and AFFO are non-GAAP measures. Reconciliations of NAREIT FFO, FFO and AFFO, as presented, to Net Income Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.

Recent Developments

• Maintained dividend: Declared common stock dividend of $0.75 per share for the second quarter 2018, in line with the previous eleven quarterly dividends
• Pinedale LGS participating rents: Continued receipt of participating rents on the Pinedale LGS
• Grand Isle Gathering System: Tenant, Energy XXI Gulf Coast, announced acquisition by Cox Oil
• MoGas Pipeline: Filed its FERC rate case on May 31, 2018
• Repurchase Program: The Board of Directors authorized the repurchase of up to $10 million of preferred stock over a period of 12 months, effective August 6, 2018. Any such repurchase will be subject to the covenants under our Credit Facility.

"The CorEnergy team was focused on portfolio management activities during the second quarter. We filed a general rate case with the FERC for our MoGas Pipeline and engaged in the evaluation of prospects for the Grand Isle Gathering System,” said CorEnergy President and CEO Dave Schulte. "Success of our stewardship is exhibited in the $1.1 million of participating rents CorEnergy received in the second quarter from the utilization of our Pinedale Liquids Gathering System. We expect to use excess cash flows such as these to reduce our leverage profile, and plan to implement repurchases of preferred shares to accomplish that goal.”

Portfolio Update

Grand Isle Gathering System: On June 18, 2018, the tenant of our GIGS asset, Energy XXI Gulf Coast, announced a definitive agreement to be acquired by the privately held Gulf of Mexico operator, Cox Oil, for approximately $322 million. The transaction is expected to close in the third quarter 2018 and is subject to stockholder approval. Since the announcement of the acquisition, the Company and EGC have had no further discussions about CorEnergy assisting EGC in its efforts to generate adequate liquidity to fund further development.

Pinedale LGS: Despite actual and forward Rockies gas prices pressuring Ultra Petroleum's earnings and market capitalization, UPL continues to see promising results from its horizontal drilling program in the Pinedale field. The company plans to temporarily pause vertical well development and focus drilling on horizontal wells, due to their superior economic returns, and anticipates the development and drilling of 25 to 30 wells in 2018. Success in production resulted in utilization of the Pinedale LGS at levels which resulted in $1.1 million of participating rents in the second quarter.

MoGas Pipeline: On May 31, 2018, MoGas filed a general rate case before the FERC. The proposed change in rates seeks to recover increases in capital, operating and maintenance expenditures incurred, mitigate decreased revenues from certain customer contracts and reflect changes in the corporate tax rate. The case is progressing as expected. MoGas anticipates the proposed revenue requirements would be approximately $20 million annually, and that the requested rates will go into effect on December 1, 2018, subject to a refund upon final ruling.

Outlook

CorEnergy regularly assesses its ability to pay and grow its dividend to common stockholders above the current level of $0.75 per quarter. The Company targets long-term revenue growth of 1-3% annually from existing contracts, through inflation-based and participating rent adjustments, and additional growth from acquisitions. There can be no assurance that any potential acquisition opportunities will result in consummated transactions.

Dividend Declaration

Common Stock: A second quarter 2018 dividend of $0.75 per share was declared for CorEnergy's common stock. The dividend is payable on August 31, 2018, to stockholders of record on August 17, 2018.

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, is payable on August 31, 2018, to stockholders of record on August 17, 2018.

Second Quarter Earnings Call

CorEnergy will host a conference call on Thursday, August 2, 2018, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 (for international, 1-201-689-8035) approximately five to ten 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 1:00 p.m. Central Time on November 2, 2018 by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 34308. A replay of the conference call will also be available on the Company’s website.

About CorEnergy Infrastructure Trust, Inc.

CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA), is a real estate investment trust (REIT) that owns essential energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from operators of our assets, primarily under triple-net participating leases. 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 those 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

1NAREIT FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and other adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. FFO as we have presented it here, is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and dividend income and net realized and unrealized gain or loss on other equity securities. CorEnergy defines AFFO as FFO Adjusted for Securities Investment plus (gain) loss on extinguishment of debt, provision for loan losses, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, income tax expense (benefit) unrelated to securities investments, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), amortization of debt premium, and other adjustments as deemed appropriate by Management. Reconciliations of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO to Net Income Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

  Consolidated Balance Sheets         June 30, 2018 December 31, 2017 Assets (Unaudited) Leased property, net of accumulated depreciation of $82,749,089 and $72,155,753 $ 455,363,130 $ 465,956,467 Property and equipment, net of accumulated depreciation of $14,312,665 and $12,643,636 111,514,726 113,158,872 Financing notes and related accrued interest receivable, net of reserve of $4,600,000 and $4,100,000 1,000,000 1,500,000 Other equity securities, at fair value 2,091,181 2,958,315 Cash and cash equivalents 14,175,860 15,787,069 Deferred rent receivable 25,769,989 22,060,787 Accounts and other receivables 3,373,602 3,786,036 Deferred costs, net of accumulated amortization of $956,999 and $623,764 3,171,680 3,504,916 Prepaid expenses and other assets 1,068,526 742,154 Deferred tax asset, net 4,115,834 2,244,629 Goodwill 1,718,868   1,718,868 Total Assets $ 623,363,396   $ 633,418,113 Liabilities and Equity Secured credit facilities, net of debt issuance costs of $237,302 and $254,646 $ 38,998,698 $ 40,745,354 Unsecured convertible senior notes, net of discount and debt issuance costs of $1,574,323 and $1,967,917 112,425,677 112,032,083 Asset retirement obligation 9,426,350 9,170,493 Accounts payable and other accrued liabilities 2,512,598 2,333,782 Management fees payable 1,814,105 1,748,426 Income tax liability 36,971 2,204,626 Unearned revenue 5,321,069   3,397,717 Total Liabilities $ 170,535,468   $ 171,632,481 Equity Series A Cumulative Redeemable Preferred Stock 7.375%, $130,000,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 52,000 issued and outstanding at June 30, 2018 and December 31, 2017 $ 130,000,000 $ 130,000,000 Capital stock, non-convertible, $0.001 par value; 11,933,774 and 11,915,830 shares issued and outstanding at June 30, 2018 and December 31, 2017 (100,000,000 shares authorized) 11,934 11,916 Additional paid-in capital 322,815,994   331,773,716 Total Equity 452,827,928   461,785,632 Total Liabilities and Equity $ 623,363,396   $ 633,418,113     Consolidated Statements of Income and Comprehensive Income (Unaudited)                 For the Three Months Ended For the Six Months Ended June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017 Revenue Lease revenue $ 18,275,859 $ 17,050,092 $ 35,867,718 $ 34,116,618 Transportation and distribution revenue 3,874,157   4,775,780   7,827,136   9,786,370   Total Revenue 22,150,016   21,825,872   43,694,854   43,902,988   Expenses Transportation and distribution expenses 1,534,524 1,362,980 3,107,420 2,698,550 General and administrative 3,107,776 2,558,339 5,834,833 5,619,579 Depreciation, amortization and ARO accretion expense 6,290,082 6,005,995 12,579,412 12,011,903 Provision for loan losses —   —   500,000   —   Total Expenses 10,932,382   9,927,314   22,021,665   20,330,032   Operating Income $ 11,217,634   $ 11,898,558   $ 21,673,189   $ 23,572,956   Other Income (Expense) Net distributions and dividend income $ 55,714 $ 221,440 $ 59,665 $ 264,902 Net realized and unrealized gain (loss) on other equity securities (881,100 ) 614,634 (867,134 ) 70,426 Interest expense (3,196,248 ) (3,202,837 ) (6,406,838 ) (6,657,234 ) Total Other Expense (4,021,634 ) (2,366,763 ) (7,214,307 ) (6,321,906 ) Income before income taxes 7,196,000   9,531,795   14,458,882   17,251,050   Taxes Current tax expense (benefit) (10,785 ) 57,651 (46,334 ) 23,891 Deferred tax expense (benefit) (604,064 ) 38,084   (1,013,341 ) (260,762 ) Income tax expense (benefit), net (614,849 ) 95,735   (1,059,675 ) (236,871 ) Net Income 7,810,849 9,436,060 15,518,557 17,487,921 Less: Net Income attributable to non-controlling interest —   435,888   —   818,271   Net Income attributable to CorEnergy Stockholders $ 7,810,849 $ 9,000,172 $ 15,518,557 $ 16,669,650 Preferred dividend requirements 2,396,875   2,123,129   4,793,750   3,160,238   Net Income attributable to Common Stockholders $ 5,413,974   $ 6,877,043   $ 10,724,807   $ 13,509,412     Net Income $ 7,810,849 $ 9,436,060 $ 15,518,557 $ 17,487,921 Other comprehensive income: Changes in fair value of qualifying hedges / AOCI attributable to CorEnergy stockholders — 3,006 — 5,978 Changes in fair value of qualifying hedges / AOCI attributable to non-controlling interest —   702   —   1,396   Net Change in Other Comprehensive Income $ —   $ 3,708   $ —   $ 7,374   Total Comprehensive Income 7,810,849 9,439,768 15,518,557 17,495,295 Less: Comprehensive income attributable to non-controlling interest —   436,590   —   819,667   Comprehensive Income attributable to CorEnergy Stockholders $ 7,810,849   $ 9,003,178   $ 15,518,557   $ 16,675,628   Earnings Per Common Share: Basic $ 0.45 $ 0.58 $ 0.90 $ 1.14 Diluted $ 0.45 $ 0.58 $ 0.90 $ 1.14 Weighted Average Shares of Common Stock Outstanding: Basic 11,928,297 11,896,616 11,923,627 11,892,670 Diluted 11,928,297 11,896,616 11,923,627 11,892,670 Dividends declared per share $ 0.750 $ 0.750 $ 1.500 $ 1.500     Consolidated Statements of Cash Flows (Unaudited)         For the Six Months Ended June 30, 2018 June 30, 2017 Operating Activities Net Income $ 15,518,557 $ 17,487,921 Adjustments to reconcile net income to net cash provided by operating activities: Deferred income tax, net (1,013,341 ) (260,762 ) Depreciation, amortization and ARO accretion 13,286,595 12,949,644 Provision for loan losses 500,000 — Non-cash settlement of accounts payable — (171,609 ) Gain on sale of equipment (3,724 ) — Net distributions and dividend income, including recharacterization of income — 148,649 Net realized and unrealized (gain) loss on other equity securities 867,134 (70,426 ) Unrealized gain on derivative contract — (16,453 ) Common stock issued under directors compensation plan 37,500 30,000 Changes in assets and liabilities: Increase in deferred rent receivable (3,709,202 ) (3,588,136 ) Decrease in accounts and other receivables 412,434 1,162,548 (Increase) decrease in prepaid expenses and other assets (326,372 ) 134,023 Increase in management fee payable 65,679 10,301 Increase (decrease) in accounts payable and other accrued liabilities 433,853 (53,621 ) Decrease in current income tax liability (2,167,655 ) — Increase (decrease) in unearned revenue (1,383,757 ) 29,695   Net cash provided by operating activities $ 22,517,701   $ 27,791,774   Investing Activities Purchases of property and equipment (47,883 ) (13,745 ) Proceeds from sale of property and equipment 11,499 — Return of capital on distributions received —   61,828   Net cash (used in) provided by investing activities $ (36,384 ) $ 48,083   Financing Activities Debt financing costs (264,010 ) (2,512 ) Net offering proceeds on Series A preferred stock — 71,170,611 Dividends paid on Series A preferred stock (4,793,750 ) (3,433,984 ) Dividends paid on common stock (17,270,766 ) (17,318,618 ) Distributions to non-controlling interest — (480,488 ) Payments on revolving line of credit — (44,000,000 ) Principal payments on secured credit facilities (1,764,000 ) (4,389,261 ) Net cash (used in) provided by financing activities $ (24,092,526 ) $ 1,545,748   Net Change in Cash and Cash Equivalents $ (1,611,209 ) $ 29,385,605 Cash and Cash Equivalents at beginning of period 15,787,069   7,895,084   Cash and Cash Equivalents at end of period $ 14,175,860   $ 37,280,689     Supplemental Disclosure of Cash Flow Information Interest paid $ 5,546,660 $ 5,777,328 Income taxes paid (net of refunds) 2,121,321 132,202   Non-Cash Financing Activities Change in accounts payable and accrued expenses related to debt financing costs $ (255,037 ) $ — Reinvestment of distributions by common stockholders in additional common shares 610,219 516,565     NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited)     For the Three Months Ended     For the Six Months Ended June 30, 2018     June 30, 2017   June 30, 2018     June 30, 2017 Net Income attributable to CorEnergy Stockholders $ 7,810,849 $ 9,000,172 $ 15,518,557 $ 16,669,650 Less: Preferred Dividend Requirements 2,396,875   2,123,129   4,793,750   3,160,238   Net Income attributable to Common Stockholders $ 5,413,974 $ 6,877,043 $ 10,724,807 $ 13,509,412 Add: Depreciation 6,139,171 5,822,383 12,277,590 11,644,679 Less: Non-Controlling Interest attributable to NAREIT FFO reconciling items (1) —   411,455   —   822,910   NAREIT funds from operations (NAREIT FFO) $ 11,553,145 $ 12,287,971 $ 23,002,397 $ 24,331,181 Add: Distributions received from investment securities 55,714 252,213 59,665 475,379 Less: Net distributions and dividend income 55,714 221,440 59,665 264,902 Net realized and unrealized gain (loss) on other equity securities (881,100 ) 614,634 (867,134 ) 70,426 Income tax (expense) benefit from investment securities 220,500   (310,622 ) 241,987   (114,862 ) Funds from operations adjusted for securities investments (FFO) $ 12,213,745 $ 12,014,732 $ 23,627,544 $ 24,586,094 Add: Provision for loan losses, net of tax — — 500,000 — Transaction costs 24,615 211,269 56,896 470,051 Amortization of debt issuance costs 353,637 468,871 707,181 937,742 Amortization of deferred lease costs 22,983 22,983 45,966 45,966 Accretion of asset retirement obligation 127,928 160,629 255,856 321,258 Less: Non-cash settlement of accounts payable — 171,609 — 171,609 Non-cash gain (loss) associated with derivative instruments — (10,619 ) — 16,453 Income tax benefit 394,349 214,887 817,688 351,733 Non-Controlling Interest attributable to AFFO reconciling items (1) —   3,358   —   6,709   Adjusted funds from operations (AFFO) $ 12,348,559   $ 12,499,249   $ 24,375,755   $ 25,814,607     Weighted Average Shares of Common Stock Outstanding: Basic 11,928,297 11,896,616 11,923,627 11,892,670 Diluted 15,382,843 15,351,161 15,378,172 15,347,215 NAREIT FFO attributable to Common Stockholders Basic $ 0.97 $ 1.03 $ 1.93 $ 2.05 Diluted (2) $ 0.89 $ 0.94 $ 1.78 $ 1.87 FFO attributable to Common Stockholders Basic $ 1.02 $ 1.01 $ 1.98 $ 2.07 Diluted (2) $ 0.94 $ 0.93 $ 1.82 $ 1.89 AFFO attributable to Common Stockholders Basic $ 1.04 $ 1.05 $ 2.04 $ 2.17 Diluted (3) $ 0.93 $ 0.94 $ 1.84 $ 1.94

(1)

 

There is no noncontrolling interest outstanding for the three and six months ended June 30, 2018.

(2)

Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.

(3)

Diluted per share calculations include a dilutive adjustment for convertible note interest expense.

 

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CorEnergy Infrastructure Trust, Inc.Investor RelationsLesley Schorgl, 877-699-CORR (2677)info@corenergy.reit