Brookfield Infrastructure (NYSE: BIP; TSX: BIP.UN) today announced
its results for the third quarter ended September 30, 2020.
“Our businesses continued to demonstrate their
resilience during the third quarter, with each segment delivering
solid operating results. We have also benefited from the completion
of two highly cash-generative investments that align with our
current strategic focus,” said Sam Pollock, Chief Executive Officer
of Brookfield Infrastructure Partners. “Looking ahead, we
anticipate 2021 will be a year of meaningful growth for Brookfield
Infrastructure. Our very strong liquidity position, along with the
positive momentum being generated by our capital recycling program,
should enhance our ability to execute on compelling
opportunities.”
|
For the three months ended September 30 |
For the nine months ended September 30 |
US$ millions (except per unit amounts), unaudited1 |
|
2020 |
|
|
2019 |
|
2020 |
|
|
2019 |
Net income2 |
$ |
5 |
|
$ |
82 |
$ |
63 |
|
$ |
210 |
– per unit3,4 |
$ |
(0.12 |
) |
$ |
0.06 |
$ |
(0.22 |
) |
$ |
0.13 |
FFO5 |
$ |
365 |
|
$ |
338 |
$ |
1,056 |
|
$ |
1,026 |
– per unit (split-adjusted)6 |
$ |
0.79 |
|
$ |
0.73 |
$ |
2.27 |
|
$ |
2.29 |
Net income attributable to the partnership for
the three-month period ended September 30, 2020 was
$5 million, compared to $82 million for the same period in the
prior year. After adjusting for the impact of a weaker Brazilian
real, performance improved across all operating segments,
reflecting organic growth and contributions from recently completed
acquisitions. These positive impacts were more than offset by fair
value adjustments related to our corporate hedging program which
resulted in a loss of $60 million in the current period, compared
to a gain of $60 million recorded in the prior year.
Funds from operations for the quarter grew by 8%
on a year-over-year basis, primarily driven by strong performance
within our utility, energy, and data infrastructure segments. Our
business grew organically from inflation-indexation on 75% of our
total revenues and the commissioning of $650 million of new capital
projects in the last 12 months. Results for the period also include
the initial contribution of recently completed new investments.
Consistent with the prior quarter, the depreciation of the
Brazilian real had the single largest negative impact on results,
reducing FFO by $30 million relative to the same period in
2019.
Segment Performance
Our utilities segment generated FFO of $139
million, which represents a 6% increase over the prior year after
adjusting for the impact of weaker foreign currencies. In general,
our regulated and contracted utilities are performing well in the
current environment. Underlying results in the quarter benefited
from inflation-indexation, approximately $300 million of capital
added to rate base and the contribution from our North American
regulated transmission business acquired in late 2019.
FFO from our transport segment totaled $135
million, an increase of 5% compared to the prior year despite some
softness in our volumes related to the economic shutdowns.
Favorable results benefited from a rent settlement at our U.K. port
operation, higher agricultural volumes across our rail networks and
the contribution of our North American rail operation which was
acquired in late 2019.
FFO from our energy segment totaled $115
million, a meaningful increase compared to the prior year quarter
of $100 million. Performance across our midstream assets was ahead
of the prior year as our highly contracted cash flows have been
unimpacted in the current environment. Our distributed energy
businesses grew by approximately 20% relative to the prior year
after removing the contribution from our Australian district energy
business that was sold last November. This growth was driven by
strong performance at our North American residential infrastructure
business which added 58,000 of annuity-based rental contracts in
the last year.
Our fast-growing data infrastructure segment
delivered FFO of $50 million, which represents an increase of
nearly 40% compared to the prior year. We have continued to expand
our global data transmission and distribution portfolio and this
step-change increase in FFO reflects several new investments
completed in the last 12 months. Results for the quarter include
the partial period contribution from the acquisition of 135,000
telecom towers in India and capital deployed in our data
distribution businesses in the U.K. and New Zealand.
The following table presents FFO by segment:
|
For the three months ended September 30 |
For the nine months ended September 30 |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
FFO by segment |
|
|
|
|
|
|
|
|
Utilities |
$ |
139 |
|
$ |
145 |
|
$ |
415 |
|
$ |
425 |
|
Transport |
|
135 |
|
|
128 |
|
|
363 |
|
|
402 |
|
Energy |
|
115 |
|
|
100 |
|
|
336 |
|
|
303 |
|
Data Infrastructure |
|
50 |
|
|
36 |
|
|
135 |
|
|
94 |
|
Corporate |
|
(74 |
) |
|
(71 |
) |
|
(193 |
) |
|
(198 |
) |
FFO |
$ |
365 |
|
$ |
338 |
|
$ |
1,056 |
|
$ |
1,026 |
|
Update on Strategic
Initiatives
During the quarter, we closed two acquisitions
that will contribute significantly to results going forward:
- Indian Telecom
Towers – In August, we closed the acquisition of 135,000
operational telecom towers from Reliance Jio. We invested
approximately $3.4 billion of equity (BIP’s share – approximately
$600 million). Reliance Jio is the anchor tenant under a
30-year Master Services Agreement, which provides a contracted cash
flow profile with substantial downside protection. Our business
plan involves building out the portfolio to 175,000 towers in the
near term.
- U.S. LNG Export
Facility – In September, we acquired an interest in
Cheniere Energy Partners L.P. (Cheniere) at an equity value of $1.5
billion (BIP’s share – approximately $425 million). Cheniere
owns Sabine Pass Liquefaction, LLC, a world class LNG export
facility with 85% of revenue generated under long-term contracts.
These contracts are secured with globally diversified and highly
creditworthy counterparties. The recently constructed facility has
ample expansion capacity to meet rising demand for low-cost U.S.
LNG as global decarbonization efforts increase.
Distribution and Dividend
Declaration
The Board of Directors has declared a quarterly
distribution in the amount of $0.485 per unit, payable on December
31, 2020 to unitholders of record as at the close of business on
November 30, 2020. The regular quarterly dividends on the
Cumulative Class A Preferred Limited Partnership Units, Series 1,
Series 3, Series 5, Series 7, Series 9, Series 11 and Series
13 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 December 31, 2020 to
shareholders of record as at the close of business on
November 30, 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 approximately $575 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:Kate White Manager, Investor Relations
Tel: (416) 956-5183 Email: kate.white@brookfield.com |
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access Brookfield Infrastructure’s Third 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 November 9, 2020 at 9:00 a.m. Eastern Time at
https://edge.media-server.com/mmc/p/3627oqw7 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: 8748907).
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 11 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
nine-month period ended September 30, 2020 were 295.3 million and
294.5 million, respectively (2019 – 290.9 million and 282.9
million).
4. Results in a loss on a per unit basis for the
three and nine-month periods ended September 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
8 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
nine-month periods ended September 30, 2020 were 464.9 million and
464.9 million, respectively (2019 – 460.7 million and
448.9 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 nine-month periods ended
September 30, 2020 were 418.5 million and 418.4 million,
respectively (2019 – 414.6 million and 404.0 million).
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Financial Position
|
|
|
As of |
US$
millions, unaudited |
September30, 2020 |
|
|
Dec 31,2019 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash
equivalents |
$ |
1,012 |
|
$ |
827 |
Financial
assets |
|
404 |
|
|
149 |
Property, plant
and equipment and investment properties |
|
28,450 |
|
|
23,429 |
Intangible
assets |
|
13,084 |
|
|
14,386 |
Investments in
associates and joint ventures |
|
4,700 |
|
|
4,967 |
Goodwill |
|
6,269 |
|
|
6,553 |
Deferred income
taxes and other |
|
4,221 |
|
|
5,997 |
Total assets |
$ |
58,140 |
|
$ |
56,308 |
|
|
|
|
|
|
Liabilities and partnership capital |
|
|
|
|
|
Corporate borrowings |
$ |
2,882 |
|
$ |
2,475 |
Non-recourse
borrowings |
|
20,604 |
|
|
18,544 |
Financial
liabilities |
|
3,387 |
|
|
2,173 |
Deferred income
taxes and other |
|
10,625 |
|
|
10,939 |
|
|
|
|
|
|
Partnership capital |
|
|
|
|
|
Limited
partners |
|
3,695 |
|
|
5,048 |
General
partner |
|
17 |
|
|
24 |
Non-controlling
interest attributable to: |
|
|
|
|
|
Redeemable partnership units held by Brookfield |
|
1,466 |
|
|
2,039 |
Class A shares of BIPC and Exchange LP units |
|
566 |
|
|
18 |
Interest of others in operating subsidiaries |
|
13,768 |
|
|
14,113 |
Preferred unitholders |
|
1,130 |
|
|
935 |
Total
partnership capital |
|
20,642 |
|
|
22,177 |
Total
liabilities and partnership capital |
$ |
58,140 |
|
$ |
56,308 |
|
|
|
|
|
|
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Operating
Results
US$
millions, except per unit information, unaudited |
For the three months ended September 30 |
|
For the nine months ended September 30 |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
2,209 |
|
$ |
1,664 |
|
$ |
6,351 |
|
$ |
4,942 |
|
Direct operating costs |
|
(1,185 |
) |
|
(850 |
) |
|
(3,487 |
) |
|
(2,488 |
) |
General and administrative
expense |
|
(86 |
) |
|
(75 |
) |
|
(219 |
) |
|
(200 |
) |
Depreciation and amortization expense |
|
(411 |
) |
|
(317 |
) |
|
(1,186 |
) |
|
(932 |
) |
|
|
527 |
|
|
422 |
|
|
1,459 |
|
|
1,322 |
|
Interest expense |
|
(278 |
) |
|
(229 |
) |
|
(807 |
) |
|
(682 |
) |
Share of earnings from
associates and joint ventures |
|
17 |
|
|
36 |
|
|
76 |
|
|
88 |
|
Mark-to-market on hedging
items |
|
(66 |
) |
|
70 |
|
|
57 |
|
|
104 |
|
Other
income (expense) |
|
16 |
|
|
(36 |
) |
|
(218 |
) |
|
(14 |
) |
Income before income tax |
|
216 |
|
|
263 |
|
|
567 |
|
|
818 |
|
Income tax (expense)
recovery |
|
|
|
|
|
|
|
|
Current |
|
(70 |
) |
|
(55 |
) |
|
(183 |
) |
|
(180 |
) |
Deferred |
|
2 |
|
|
(3 |
) |
|
(54 |
) |
|
(14 |
) |
Net income |
|
148 |
|
|
205 |
|
|
330 |
|
|
624 |
|
Non-controlling interest of others in operating subsidiaries |
|
(143 |
) |
|
(123 |
) |
|
(267 |
) |
|
(414 |
) |
Net
income attributable to partnership |
$ |
5 |
|
$ |
82 |
|
$ |
63 |
|
$ |
210 |
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Limited partners |
|
(26 |
) |
|
29 |
|
|
(41 |
) |
|
65 |
|
General partner |
|
46 |
|
|
41 |
|
|
137 |
|
|
118 |
|
Non-controlling interest – redeemable partnership units
held by Brookfield |
|
(11 |
) |
|
12 |
|
|
(19 |
) |
|
27 |
|
Non-controlling interest – class A shares of Brookfield
Infrastructure Corporation |
|
(4 |
) |
|
– |
|
|
(14 |
) |
|
– |
|
Basic and diluted (loss) earnings
per unit attributable to: |
|
|
|
|
|
Limited partners1 |
$ |
(0.12 |
) |
$ |
0.06 |
|
$ |
(0.22 |
) |
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
- Average number of limited
partnership units outstanding on a time weighted average basis for
the three and nine-month period ended September 30, 2020 were 295.3
million and 294.5 million, respectively (2019 – 290.9 million and
282.9 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 September
30 |
|
For the nine months ended September 30 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
|
|
Net income |
$ |
148 |
|
$ |
205 |
|
$ |
330 |
|
$ |
624 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
|
Earnings from investments in associates and joint ventures,
net of distributions received |
|
3 |
|
|
46 |
|
|
75 |
|
|
78 |
|
Depreciation and amortization expense |
|
411 |
|
|
317 |
|
|
1,186 |
|
|
932 |
|
Mark-to-market on hedging items, provisions and other |
|
130 |
|
|
(4 |
) |
|
395 |
|
|
6 |
|
Deferred income tax (recovery) expense |
|
(2 |
) |
|
3 |
|
|
54 |
|
|
14 |
|
Change
in non-cash working capital, net |
|
86 |
|
|
22 |
|
|
73 |
|
|
76 |
|
Cash
from operating activities |
|
776 |
|
|
589 |
|
|
2,113 |
|
|
1,730 |
|
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
Net investments in: |
|
|
|
|
|
|
|
|
Operating assets |
|
(3,405 |
) |
|
(22 |
) |
|
(2,683 |
) |
|
(2,212 |
) |
Associates |
|
(309 |
) |
|
(424 |
) |
|
(309 |
) |
|
(289 |
) |
Long-lived assets |
|
(328 |
) |
|
(302 |
) |
|
(970 |
) |
|
(815 |
) |
Financial assets |
|
(52 |
) |
|
(90 |
) |
|
(308 |
) |
|
(129 |
) |
Net
settlements of foreign exchange contracts |
|
— |
|
|
23 |
|
|
83 |
|
|
59 |
|
Cash
used by investing activities |
|
(4,094 |
) |
|
(815 |
) |
|
(4,187 |
) |
|
(3,386 |
) |
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
Distributions to limited and
general partners |
|
(283 |
) |
|
(263 |
) |
|
(848 |
) |
|
(764 |
) |
Net (repayments)
borrowings: |
|
|
|
|
|
|
|
|
Corporate |
|
(221 |
) |
|
578 |
|
|
444 |
|
|
68 |
|
Subsidiary |
|
152 |
|
|
111 |
|
|
383 |
|
|
958 |
|
Deposit received from (repaid
to) parent |
|
545 |
|
|
(823 |
) |
|
545 |
|
|
— |
|
Net preferred units and
preferred shares issued |
|
195 |
|
|
— |
|
|
195 |
|
|
72 |
|
Net partnership units
issued |
|
2 |
|
|
803 |
|
|
7 |
|
|
779 |
|
Net
capital provided by non-controlling interest and other |
2,545 |
|
|
(164 |
) |
|
1,587 |
|
|
726 |
|
Cash
from financing activities |
|
2,935 |
|
|
242 |
|
|
2,313 |
|
|
1,839 |
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
|
Change during the period |
$ |
(383 |
) |
$ |
16 |
|
$ |
239 |
|
$ |
183 |
|
Cash reclassified as held for sale |
|
— |
|
|
(16 |
) |
|
— |
|
|
(16 |
) |
Impact of foreign exchange on cash |
|
15 |
|
|
(38 |
) |
|
(54 |
) |
|
(30 |
) |
Balance, beginning of period |
|
1,380 |
|
|
715 |
|
|
827 |
|
|
540 |
|
Balance, end of period |
$ |
1,012 |
|
$ |
677 |
|
$ |
1,012 |
|
$ |
677 |
|
Brookfield Infrastructure Partners
L.P.Statements of Funds from
Operations
|
|
For the three monthsended September 30 |
|
|
For the nine months ended September
30 |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
Utilities |
$ |
185 |
|
$ |
190 |
|
$ |
552 |
|
$ |
561 |
|
Transport |
|
171 |
|
|
174 |
|
|
482 |
|
|
547 |
|
Energy |
|
150 |
|
|
128 |
|
|
441 |
|
|
378 |
|
Data Infrastructure |
|
65 |
|
|
46 |
|
|
174 |
|
|
121 |
|
Corporate |
|
(86 |
) |
|
(75 |
) |
|
(219 |
) |
|
(200 |
) |
Total |
|
485 |
|
|
463 |
|
|
1,430 |
|
|
1,407 |
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
(136 |
) |
|
(145 |
) |
|
(435 |
) |
|
(439 |
) |
Other
income |
|
16 |
|
|
20 |
|
|
61 |
|
|
58 |
|
Funds
from operations (FFO) |
|
365 |
|
|
338 |
|
|
1,056 |
|
|
1,026 |
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
(239 |
) |
|
(219 |
) |
|
(708 |
) |
|
(673 |
) |
Deferred taxes and other items |
|
(121 |
) |
|
(37 |
) |
|
(285 |
) |
|
(143 |
) |
Net
income attributable to the partnership |
$ |
5 |
|
$ |
82 |
|
$ |
63 |
|
$ |
210 |
|
|
|
|
|
|
|
|
|
|
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 6 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 September
30 |
|
|
For the nine months ended September 30 |
|
US$, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
limited partnership unit1 |
$ |
(0.12 |
) |
$ |
0.06 |
|
$ |
(0.22 |
) |
$ |
0.13 |
|
Add back or deduct
the following: |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
0.51 |
|
|
0.48 |
|
|
1.52 |
|
|
1.50 |
|
Deferred taxes and other items |
|
0.40 |
|
|
0.19 |
|
|
0.97 |
|
|
0.66 |
|
FFO per unit2 |
$ |
0.79 |
|
$ |
0.73 |
|
$ |
2.27 |
|
$ |
2.29 |
|
|
|
1. |
Average number of limited partnership units outstanding on a time
weighted average basis for the three and nine-month periods ended
September 30, 2020 was 295.3 million and 294.5 million,
respectively (2019 – 290.9 million and 282.9 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 nine-month periods ended September 30, 2020 was 464.9
million and 464.9 million, respectively (2019 – 460.7 million and
448.9 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 nine-month period ended
September 30, 2020, were 418.5 million and 418.4 million,
respectively (2019 – 414.6 million and 404.0 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 6 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 |
September 30,2020 |
|
|
Dec 31, 2019 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Operating groups |
|
|
|
|
|
Utilities |
$ |
1,802 |
|
$ |
2,178 |
Transport |
|
3,578 |
|
|
3,991 |
Energy |
|
2,953 |
|
|
3,128 |
Data Infrastructure |
|
1,832 |
|
|
1,318 |
Cash
and cash equivalents |
|
435 |
|
|
273 |
|
$ |
10,600 |
|
$ |
10,888 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Corporate borrowings |
$ |
2,882 |
|
$ |
2,475 |
Other
liabilities |
|
1,974 |
|
|
1,284 |
|
|
4,856 |
|
|
3,759 |
Capitalization |
|
|
|
|
|
Partnership capital |
|
5,744 |
|
|
7,129 |
|
$ |
10,600 |
|
$ |
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 5 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 Third 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
$0.485 per class A exchangeable subordinate voting share of BIPC (a
“Share”), payable on December 31, 2020 to shareholders of record as
at the close of business on November 30, 2020. This dividend is
identical in amount per Share and has identical record and payment
dates to the quarterly distribution announced today by BIP on BIP’s
units.
The Shares of BIPC are structured with the
intention of being economically equivalent to the non-voting
limited partnership units of Brookfield Infrastructure Partnership
L.P. (“BIP” or the “Partnership”) (NYSE: BIP; TSX: BIP.UN). We
believe economic equivalence is achieved through identical
dividends and distributions on the Shares and BIP’s units and each
Share being exchangeable at the option of the holder for one BIP
unit at any time. Given the economic equivalence, we expect that
the market price of the Shares will be significantly impacted by
the market price of BIP’s units and the combined business
performance of our company and BIP as a whole. In addition to
carefully considering the disclosure made in this news release in
its entirety, shareholders are strongly encouraged to carefully
review BIP’s letter to unitholders, supplemental information and
its other continuous disclosure filings. BIP’s letter to
unitholders and supplemental information are available at
www.brookfield.com/infrastructure. Copies of the Partnership’s
continuous disclosure filings are available electronically on EDGAR
on the SEC’s website at www.sec.gov or on SEDAR at
www.sedar.com.
Results
The net income and Funds from Operations (FFO)
of BIPC is fully attributed to the Partnership and the earnings of
BIPC are fully captured in the Partnership’s financial statements
and results.
|
For the three months ended September 30 |
|
For the nine months ended September 30 |
US$ millions, unaudited1 |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Net (loss) income attributable to the Partnership |
$ |
(301 |
) |
$ |
50 |
|
$ |
(450 |
) |
$ |
146 |
FFO2 |
$ |
99 |
|
$ |
109 |
|
$ |
296 |
|
$ |
322 |
BIPC reported net losses for the quarter of $301
million compared to net income of $50 million in the same period
during the prior year. Results for the current quarter 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 by revaluation losses recognized on our company’s
exchangeable shares that are classified as liabilities under IFRS,
and the impact of foreign exchange.
Our business generated FFO of $99 million for
the quarter, representing a 4% increase over the same period during
the prior year after adjusting for a weaker Brazilian real.
FFO in the current quarter benefited from
inflationary-indexation and additions to rate base, however these
positive factors were more than offset by the impacts of foreign
exchange and lower connections activity at our U.K regulated
distribution business.
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 16 of this
release.
Brookfield Infrastructure
Corporation Consolidated Statements of Financial
Position
|
|
As of |
US$
millions, unaudited |
September 30, 2020 |
|
Dec 31, 2019 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash
equivalents |
$ |
250 |
$ |
204 |
Accounts
receivable and other |
|
339 |
|
390 |
Financial
assets |
|
44 |
|
29 |
Property, plant
and equipment |
|
4,558 |
|
4,497 |
Intangible
assets |
|
2,738 |
|
3,936 |
Goodwill |
|
488 |
|
667 |
Deferred tax asset
and other |
|
142 |
|
130 |
Total assets |
$ |
8,559 |
$ |
9,853 |
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
Accounts payable
and other |
$ |
478 |
$ |
487 |
Exchangeable and
class B shares |
2,142 |
|
– |
Non-recourse
borrowings |
|
3,215 |
|
3,526 |
Loans payable to
Brookfield Infrastructure |
|
1,130 |
|
– |
Financial
liabilities |
|
1,026 |
|
1,008 |
Deferred tax
liabilities and other |
|
1,378 |
|
1,555 |
|
|
|
|
|
Equity |
|
|
|
|
Equity in net assets attributable to the Partnership |
|
(1,879 |
) |
|
1,654 |
Non-controlling interest |
|
1,069 |
|
1,623 |
Total
equity |
|
(810 |
) |
|
3,277 |
Total liabilities and equity |
$ |
8,559 |
$ |
9,853 |
|
|
|
|
|
Brookfield Infrastructure
CorporationConsolidated Statements of Operating
Results
US$
millions, unaudited |
For the three months ended September 30 |
|
For the nine months ended September 30 |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
349 |
|
$ |
406 |
|
$ |
1,055 |
|
$ |
1,213 |
|
Direct operating costs |
|
(60 |
) |
|
(61 |
) |
|
(176 |
) |
|
(177 |
) |
General and administrative
expense |
|
(9 |
) |
|
(8 |
) |
|
(23 |
) |
|
(21 |
) |
Depreciation and amortization expense |
|
(69 |
) |
|
(75 |
) |
|
(212 |
) |
|
(231 |
) |
|
|
211 |
|
|
262 |
|
|
644 |
|
|
784 |
|
Interest expense |
|
(59 |
) |
|
(39 |
) |
|
(153 |
) |
|
(120 |
) |
Mark-to-market on hedging
items and foreign currency revaluation |
|
(14 |
) |
|
(3 |
) |
|
(36 |
) |
|
(4 |
) |
Remeasurement of exchangeable
and class B shares |
|
(292 |
) |
|
– |
|
|
(432 |
) |
|
– |
|
Other
expense |
|
(7 |
) |
|
(11 |
) |
|
(32 |
) |
|
(32 |
) |
(Loss) income before income
tax |
|
(161 |
) |
|
209 |
|
|
(9 |
) |
|
628 |
|
Income tax expense |
|
|
|
|
|
|
|
|
Current |
|
(44 |
) |
|
(44 |
) |
|
(123 |
) |
|
(131 |
) |
Deferred |
|
(17 |
) |
|
(24 |
) |
|
(83 |
) |
|
(72 |
) |
Net (loss)
income |
$ |
(222 |
) |
$ |
141 |
|
$ |
(215 |
) |
$ |
425 |
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Partnership |
|
(301 |
) |
|
50 |
|
|
(450 |
) |
|
146 |
|
Non-controlling interest |
|
79 |
|
|
91 |
|
|
235 |
|
|
279 |
|
|
Brookfield Infrastructure
CorporationConsolidated Statements of Cash
Flows
US$
millions, unaudited |
|
For the three months ended September 30 |
|
|
For the nine months ended September 30 |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(222 |
) |
$ |
141 |
|
$ |
(215 |
) |
$ |
425 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
|
Depreciation and amortization expense |
|
69 |
|
|
75 |
|
|
212 |
|
|
231 |
|
Mark-to-market on hedging items and other |
|
25 |
|
|
7 |
|
|
73 |
|
|
34 |
|
Remeasurement of exchangeable and class B shares |
|
292 |
|
|
– |
|
|
432 |
|
|
– |
|
Deferred income tax expense |
|
17 |
|
|
24 |
|
|
83 |
|
|
72 |
|
Change in non-cash working capital, net |
|
56 |
|
|
91 |
|
|
– |
|
|
95 |
|
Cash
from operating activities |
|
237 |
|
|
338 |
|
|
585 |
|
|
857 |
|
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
|
Purchase of long-lived assets, net of disposals |
|
(107 |
) |
|
(110 |
) |
|
(291 |
) |
|
(308 |
) |
Cash
used by investing activities |
|
(107 |
) |
|
(110 |
) |
|
(291 |
) |
|
(308 |
) |
|
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
|
Distributions to
non-controlling interest |
|
(75 |
) |
|
(131 |
) |
|
(263 |
) |
|
(335 |
) |
Distributions to, net of
contributions from, the Partnership |
|
– |
|
|
(64 |
) |
|
(33 |
) |
|
(136 |
) |
Proceeds from borrowings |
|
50 |
|
|
59 |
|
|
485 |
|
|
167 |
|
Repayments of borrowings |
|
(3 |
) |
|
– |
|
|
(383 |
) |
|
(41 |
) |
Cash used by financing activities |
|
(28 |
) |
|
(136 |
) |
|
(194 |
) |
|
(345 |
) |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
|
Change during the period |
$ |
102 |
|
$ |
92 |
|
$ |
100 |
|
$ |
204 |
|
Impact of foreign exchange on cash |
|
(13 |
) |
|
(19 |
) |
|
(54 |
) |
|
(18 |
) |
Balance, beginning of period |
|
161 |
|
|
212 |
|
|
204 |
|
|
99 |
|
Balance, end of period |
$ |
250 |
|
$ |
285 |
|
$ |
250 |
|
$ |
285 |
|
Brookfield Infrastructure
CorporationStatements of Funds from
Operations
|
|
For the three monthsended September 30, |
|
|
For the nine months ended September 30 |
US$ millions, unaudited |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
Utilities |
$ |
135 |
|
$ |
148 |
|
$ |
401 |
|
$ |
436 |
|
Corporate |
|
(9 |
) |
|
(8 |
) |
|
(23 |
) |
|
(21 |
) |
Total |
|
126 |
|
|
140 |
|
|
378 |
|
|
415 |
|
|
|
|
|
|
|
|
|
|
Financing costs |
|
(17 |
) |
|
(20 |
) |
|
(53 |
) |
|
(60 |
) |
Other
income |
|
(10 |
) |
|
(11 |
) |
|
(29 |
) |
|
(33 |
) |
Funds
from operations (FFO) |
|
99 |
|
|
109 |
|
|
296 |
|
|
322 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization |
|
(37 |
) |
|
(35 |
) |
|
(111 |
) |
|
(109 |
) |
Deferred taxes and other items |
|
(363 |
) |
|
(24 |
) |
|
(635 |
) |
|
(67 |
) |
Net
(loss) income attributable to the Partnership |
$ |
(301 |
) |
$ |
50 |
|
$ |
(450 |
) |
$ |
146 |
|
|
|
|
|
|
|
|
|
|
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 14 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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