CorEnergy Infrastructure Trust, Inc. (“CorEnergy” or the
“Company”) today announced financial results for the fiscal year
ended December 31, 2018.
Fiscal Year 2018 Performance Summary
Fiscal Year 2018 financial highlights are as follows:
For the Year Ended December 31, 2018
Per Share Total Basic
Diluted Net Income (Attributable to Common
Stockholders)1 $ 34,163,499 $ 2.86 $ 2.79 NAREIT Funds from
Operations (NAREIT FFO)1 $ 46,796,201 $ 3.92 $ 3.61 Funds From
Operations (FFO)1 $ 47,959,311 $ 4.02 $ 3.69 Adjusted Funds From
Operations (AFFO)1 $ 49,024,120 $ 4.11 $ 3.70 Dividends Declared to
Common Stockholders $ 3.00 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
- Sale of Portland
Terminal to tenant, Zenith Energy: Sold the Portland
Terminal Facility and the Company’s remaining interest in the
Joliet Terminal to Zenith Energy for an aggregate consideration of
$61 million
- Exchange of
Convertible Debt: Exchanged $43.8 million face amount of the
Company’s 7% Convertible Senior Notes for an aggregate of 837,040
shares of common stock and $19.8 million in cash
- Repurchase of
Preferred Equity: Repurchased $4.5 million par value of the
Company’s 7.375% Series A Preferred Stock
- Maintained
dividend: Declared common stock dividend of $0.75 per share
($3.00 annualized) for the fourth quarter 2018, in line with the
previous 13 quarterly dividends
“CorEnergy entered 2019 a different company than it began 2018,
having sold the Portland Terminal to our tenant, an asset which
returned rates in the mid-teens since its purchase in January 2014.
Recently, we deleveraged our capital structure through the
repurchase of preferred equity and the exchange of convertible
debt,” said CorEnergy President, Chairman and CEO Dave Schulte. “We
engaged in several deep dives of evaluating asset acquisitions
which, while not ultimately resulting in a transaction, allowed our
team to stretch our understanding of which assets best fit our
risk-return profile. In 2019, we expect to continue our disciplined
approach in assessing real property assets to add to our
portfolio.”
Portfolio Update
Grand Isle Gathering System: On
October 18, 2018, the parent company of the tenant of the GIGS,
EGC, completed its previously announced acquisition by the
privately-held Gulf of Mexico operator, Cox Oil, for approximately
$332 million. The tenant continues to utilize the system and make
timely rent payments.
Pinedale Liquids Gathering System:
UPL made strides to strengthen its balance sheet in 2018 and
refocused its drilling plan on vertical wells, following mixed
results from horizontal well testing. Utilization of the Pinedale
LGS generated $4.3 million of variable rent revenue in 2018,
despite UPL’s financial results being adversely affected by lower
realized natural gas prices. CorEnergy intends to utilize excess
cash flows such as these to reduce its leverage profile and / or
invest in new assets.
MoGas Pipeline: On May 31, 2018,
MoGas filed a general rate case before the FERC with a proposed
revenue requirement of approximately $20.0 million, annually. The
proposed rates went into effect on December 1, 2018, subject to
refund upon final ruling. The FERC rate case remains ongoing.
Omega Pipeline: Omega and its
third-party consultants are reviewing potential projects, including
those for its utility energy services contract (UESC) at Fort
Leonard Wood in south-central Missouri. The UESC initiative is
expected to last four to five years and will produce incremental
earnings.
Portland Terminal: On December 21,
2018, CorEnergy sold the Portland Terminal Facility to its tenant,
Zenith Energy, as well as its remaining interest in the Joliet
Terminal, for an aggregate consideration of $61 million. The
Company had purchased the Portland Terminal in January 2014 for $42
million and invested an additional $10 million for improvements in
the asset.
Outlook
CorEnergy regularly assesses its ability to pay and grow its
dividend to common stockholders above the current $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. CorEnergy believes that a number of actions can be
taken to adequately offset the lost revenue from the sale of the
Portland Terminal, which could include a combination of i)
additional investments in revenue generating assets and / or ii)
deleveraging of the Company’s balance sheet through preferred
equity and convertible debt repurchases, at attractive prices.
There can be no assurance that any potential acquisition
opportunities will result in consummated transactions.
Dividend Declaration
Common Stock: A fourth quarter 2018
dividend of $0.75 per share (or $3.00 per share annualized) was
declared for CorEnergy’s common stock. The dividend is payable on
February 28, 2019, to stockholders of record on
February 14, 2019.
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
February 28, 2019, to stockholders of record on
February 14, 2019.
Fiscal Year 2018 Earnings Conference Call
CorEnergy will host a conference call on Thursday, February 28,
2019, 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 March 28, 2019 by dialing 877-481-4010 (for international,
1-919-882-2331). The Conference ID is 43972. 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 critical 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 after 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 (gain) loss, net of tax, transaction costs,
amortization of debt issuance costs, amortization of deferred lease
costs, accretion of asset retirement obligation, amortization of
above market leases, income tax expense (benefit) unrelated to
securities investments, non-cash costs associated with derivative
instruments, (gain) loss on the settlement of ARO, 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
December 31, 2018 December 31, 2017
Assets Leased property, net of accumulated depreciation of
$87,154,095 and $72,155,753 $ 398,214,355 $ 465,956,467 Property
and equipment, net of accumulated depreciation of $15,969,346 and
$12,643,636 109,881,552 113,158,872 Financing notes and related
accrued interest receivable, net of reserve of $600,000 and
$4,100,000 1,300,000 1,500,000 Note receivable 5,000,000 — Other
equity securities, at fair value — 2,958,315 Cash and cash
equivalents 69,287,177 15,787,069 Deferred rent receivable
25,942,755 22,060,787 Accounts and other receivables 5,083,243
3,786,036 Deferred costs, net of accumulated amortization of
$1,290,236 and $623,764 2,838,443 3,504,916 Prepaid expenses and
other assets 668,584 742,154 Deferred tax asset, net 4,948,203
2,244,629 Goodwill 1,718,868 1,718,868
Total Assets $
624,883,180 $ 633,418,113
Liabilities and Equity
Secured credit facilities, net of debt issuance costs of $210,891
and $254,646 37,261,109 40,745,354 Unsecured convertible senior
notes, net of discount and debt issuance costs of $1,180,729 and
$1,967,917 112,777,271 112,032,083 Asset retirement obligation
7,956,343 9,170,493 Accounts payable and other accrued liabilities
3,493,490 2,333,782 Management fees payable 1,831,613 1,748,426
Income tax liability — 2,204,626 Unearned revenue 6,552,049
3,397,717
Total Liabilities $ 169,871,875 $
171,632,481
Equity Series A Cumulative Redeemable Preferred
Stock 7.375%, $125,555,675 and $130,000,000 liquidation preference
($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,222
and 52,000 issued and outstanding at December 31, 2018 and December
31, 2017, respectively $ 125,555,675 $ 130,000,000 Capital stock,
non-convertible, $0.001 par value; 11,960,225 and $11,915,830
shares issued and outstanding at December 31, 2018 and December 31,
2017 (100,000,000 shares authorized) 11,960 11,916 Additional
paid-in capital 320,295,969 331,773,716 Retained earnings 9,147,701
—
Total Equity 455,011,305 461,785,632
Total Liabilities and Equity $ 624,883,180 $
633,418,113
Consolidated Statements of Income and
Comprehensive Income
For the Years Ended December 31, 2018 2017
2016 Revenue Lease revenue $ 72,747,362 $ 68,803,804
$ 67,994,130 Transportation and distribution revenue 16,484,236
19,945,573 21,094,112 Financing revenue — — 162,344
Total Revenue 89,231,598 88,749,377
89,250,586
Expenses Transportation and distribution
expenses 7,210,748 6,729,707 6,463,348 General and administrative
13,042,847 10,786,497 12,270,380 Depreciation, amortization and ARO
accretion expense 24,947,453 24,047,710 22,522,871 Provision for
loan (gain) loss (36,867 ) — 5,014,466
Total
Expenses 45,164,181 41,563,914 46,271,065
Operating Income $ 44,067,417 $ 47,185,463 $
42,979,521
Other Income (Expense) Net distributions
and dividend income $ 106,795 $ 680,091 $ 1,140,824 Net realized
and unrealized gain (loss) on other equity securities (1,845,309 )
1,531,827 824,482 Interest expense (12,759,010 ) (12,378,514 )
(14,417,839 ) Gain on the sale of leased property, net 11,723,257 —
— Loss on extinguishment of debt — (336,933 ) —
Total Other Expense (2,774,267 ) (10,503,529 ) (12,452,533 )
Income before income taxes 41,293,150 36,681,934
30,526,988
Taxes Current tax expense (benefit)
(585,386 ) 2,831,658 (313,107 ) Deferred tax benefit (1,833,340 )
(486,340 ) (151,313 )
Income tax expense (benefit), net
(2,418,726 ) 2,345,318 (464,420 )
Net Income
43,711,876 34,336,616 30,991,408 Less: Net Income attributable to
non-controlling interest — 1,733,826 1,328,208
Net Income attributable to CorEnergy Stockholders $
43,711,876 $ 32,602,790 $ 29,663,200 Preferred dividend
requirements 9,548,377 7,953,988 4,148,437
Net Income attributable to Common Stockholders $ 34,163,499
$ 24,648,802 $ 25,514,763 Net Income $
43,711,876 $ 34,336,616 $ 30,991,408 Other comprehensive income
(loss): Changes in fair value of qualifying hedges / AOCI
attributable to CorEnergy stockholders — 11,196 (201,993 ) Changes
in fair value of qualifying hedges / AOCI attributable to
non-controlling interest — 2,617 (47,226 )
Net
Change in Other Comprehensive Income (Loss) $ — $ 13,813
$ (249,219 )
Total Comprehensive Income 43,711,876
34,350,429 30,742,189 Less: Comprehensive income attributable to
non-controlling interest — 1,736,443 1,280,982
Comprehensive Income attributable to CorEnergy Stockholders
$ 43,711,876 $ 32,613,986 $ 29,461,207
Earnings Per Common Share: Basic $ 2.86 $ 2.07 $ 2.14 Diluted $
2.79 $ 2.07 $ 2.14 Weighted Average Shares of Common Stock
Outstanding: Basic 11,935,021 11,900,516 11,901,985 Diluted
15,389,180 11,900,516 11,901,985 Dividends declared per share $
3.000 $ 3.000 $ 3.000
Consolidated Statements of
Cash Flow For the Years Ended December 31,
2018 2017 2016
Operating Activities
Net Income
$ 43,711,876 $ 34,336,616 $ 30,991,408 Adjustments to reconcile net
income to net cash provided by operating activities: Deferred
income tax, net (1,845,710 ) (486,340 ) (151,313 ) Depreciation,
amortization and ARO accretion 26,361,907 25,708,891 24,548,350
Gain on sale of leased property (11,723,257 ) — — Provision for
loan (gain) loss (36,867 ) — 5,014,466 Loss on extinguishment of
debt — 336,933 — Non-cash settlement of accounts payable — (221,609
) — (Gain) loss on sale of equipment (8,416 ) 4,203 — Gain on
repurchase of convertible debt — — (71,702 ) Net distributions and
dividend income, including recharacterization of income — 148,649
(117,004 ) Net realized and unrealized (gain) loss on other equity
securities 1,845,309 (1,531,827 ) (781,153 ) Unrealized gain on
derivative contract — — (75,591 ) Settlement of derivative contract
— — (95,319 ) Loss on settlement of asset retirement obligation
310,941 — — Common stock issued under directors compensation plan
67,500 67,500 60,000 Changes in assets and liabilities: Increase in
deferred rent receivables (7,038,848 ) (7,184,005 ) (8,360,036 )
(Increase) decrease in accounts and other receivables (1,297,207 )
752,848 (174,390 ) Decrease in financing note accrued interest
receivable — — 95,114 (Increase) decrease in prepaid expenses and
other assets 73,505 (16,717 ) 329,735 Increase (decrease) in
management fee payable 83,187 13,402 (28,723 ) Increase (decrease)
in accounts payable and other accrued liabilities 476,223 (225,961
) (231,151 ) Increase (decrease) in income tax liability (2,204,626
) 2,204,626 — Increase (decrease) in unearned revenue (152,777 )
2,884,362 155,961 Net cash provided by operating
activities $ 48,622,740 $ 56,791,571 $ 51,108,652
Investing Activities Proceeds from the sale of leased
property 55,553,975 — — Proceeds from sale of other equity
securities 449,067 7,591,166 — Proceeds from assets and liabilities
held for sale — — 644,934 Purchases of property and equipment, net
(105,357 ) (116,595 ) (191,926 ) Proceeds from asset foreclosure
and sale 17,999 — 223,451 Principal payment on financing note
receivable 236,867 — — Increase in financing notes receivable — —
(202,000 ) Return of capital on distributions received 663,939
120,906 4,631 Net cash provided by investing
activities $ 56,816,490 $ 7,595,477 $ 479,090
Financing Activities
Debt financing costs
(264,010 ) (1,462,741 ) (193,000 ) Net offering proceeds on Series
A preferred stock — 71,161,531 — Repurchases of common stock — —
(2,041,851 ) Repurchases of convertible debt — — (899,960 )
Repurchases of Series A preferred stock (4,275,553 ) — — Dividends
paid on Series A preferred stock (9,587,500 ) (8,227,734 )
(4,148,437 ) Dividends paid on common stock (34,284,059 )
(34,731,892 ) (34,896,727 ) Distributions to non-controlling
interest — (1,833,650 ) — Advances on revolving line of credit —
10,000,000 44,000,000 Payments on revolving line of credit —
(54,000,000 ) — Proceeds from term debt — 41,000,000 — Principal
payments on secured credit facilities (3,528,000 ) (45,600,577 )
(60,131,423 ) Purchase of non-controlling interest —
(32,800,000 ) — Net cash used in financing activities $
(51,939,122 ) $ (56,495,063 ) $ (58,311,398 ) Net Change in Cash
and Cash Equivalents $ 53,500,108 $ 7,891,985 $ (6,723,656 ) Cash
and Cash Equivalents at beginning of period 15,787,069
7,895,084 14,618,740 Cash and Cash Equivalents at end
of period $ 69,287,177 $ 15,787,069 $ 7,895,084
Supplemental Disclosure of Cash Flow
Information Interest paid $ 11,200,835 $ 10,780,150 $
12,900,901 Income taxes paid (net of refunds) 2,136,563 199,772
37,736
Non-Cash Investing Activities Note receivable
in consideration of the sale of leased property $ 5,000,000 $ — $ —
Investment in other equity securities — (1,161,034 ) — Change in
accounts and other receivables — — (450,000 ) Net change in Assets
Held for Sale, Property and equipment, Prepaid expenses and other
assets, Accounts payable and other accrued liabilities and
Liabilities held for sale — — (1,776,549 )
Non-Cash
Financing Activities Change in accounts payable and accrued
expenses related to debt financing costs $ (255,037 ) $ 255,037 $ —
Reinvestment of distributions by common stockholders in additional
common shares 1,509,830 962,308 815,889 Common stock issued upon
conversion of convertible notes 42,654 — —
NAREIT
FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation
(Unaudited) For the Years Ended December
31, 2018 2017
2016 Net Income attributable to CorEnergy
Stockholders $ 43,711,876 $ 32,602,790 $ 29,663,200 Less:
Preferred Dividend Requirements 9,548,377 7,953,988
4,148,437
Net Income attributable to Common
Stockholders $ 34,163,499 $ 24,648,802 $ 25,514,763 Add:
Depreciation 24,355,959 23,292,713 21,704,275 Less: Gain on the
sale of leased property, net 11,723,257 — — Non-Controlling
Interest attributable to NAREIT FFO reconciling items —
1,632,546 1,645,819
NAREIT funds from operations
(NAREIT FFO) $ 46,796,201 $ 46,308,969 $ 45,573,219 Add:
Distributions received from investment securities 106,795 949,646
1,028,452 Income tax expense (benefit) from investment securities
(682,199 ) 1,000,084 760,036 Less: Net distributions and dividend
income 106,795 680,091 1,140,824 Net realized and unrealized gain
(loss) on other equity securities (1,845,309 ) 1,531,827
824,482
Funds from operations adjusted for securities
investments (FFO) $ 47,959,311 $ 46,046,781 $ 45,396,401 Add:
Loss of extinguishment of debt — 336,933 — Provision for loan
(gain) loss, net of tax (36,867 ) — 4,409,359 Transaction costs
521,311 592,068 520,487 Amortization of debt issuance costs
1,414,457 1,661,181 2,025,478 Amortization of deferred lease costs
91,932 91,932 91,932 Accretion of asset retirement obligation
499,562 663,065 726,664 Non-cash (gain) loss associated with
derivative instruments — 33,763 (75,591 ) Loss on settlement of ARO
310,941 — — Less: Non-cash settlement of accounts payable — 221,609
— Income tax (expense) benefit 1,736,527 (1,345,234 ) 619,349
Non-Controlling Interest attributable to AFFO reconciling items —
13,154 37,113
Adjusted funds from
operations (AFFO) $ 49,024,120 $ 50,536,194 $
52,438,268 Weighted Average Shares of Common Stock
Outstanding: Basic 11,935,021 11,900,516 11,901,985 Diluted
15,389,180 15,355,061 15,368,370
NAREIT FFO attributable to
Common Stockholders Basic $ 3.92 $ 3.89 $ 3.83 Diluted (1) $
3.61 $ 3.59 $ 3.54
FFO attributable to Common Stockholders
Basic $ 4.02 $ 3.87 $ 3.81 Diluted (1) $ 3.69 $ 3.57 $ 3.53
AFFO
attributable to Common Stockholders Basic $ 4.11 $ 4.25 $ 4.41
Diluted (2) $ 3.70 $ 3.81 $ 3.93
(1)
Diluted per share calculations include
dilutive adjustments for convertible note interest expense,
discount amortization and deferred debt issuance amortization.
(2)
Diluted per share calculations include a
dilutive adjustment for convertible note interest expense.
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version on businesswire.com: https://www.businesswire.com/news/home/20190227005977/en/
CorEnergy Infrastructure Trust, Inc.Investor RelationsLesley
Schorgl, 877-699-CORR (2677)info@corenergy.reit
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