Brookfield Infrastructure (NYSE: BIP; TSX: BIP.UN) today announced
its results for the first quarter ended March 31, 2021.
“After an incredibly resilient 2020, our
business continued into 2021 with a powerful start to the year, led
by strong organic growth and several advanced capital recycling
initiatives,” said Sam Pollock, Chief Executive Officer of
Brookfield Infrastructure. “We are well-positioned to benefit from
an extended period of economic expansion, given our
inflation-linked revenues and businesses with positive linkage to
GDP growth.”
|
For the three monthsended March 31 |
US$
millions (except per unit amounts), unaudited1 |
2021 |
|
2020 |
Net income2 |
$ |
190 |
|
|
$ |
119 |
|
– per unit3 |
$ |
0.27 |
|
|
$ |
0.13 |
|
FFO4 |
$ |
431 |
|
|
$ |
358 |
|
– per unit (split-adjusted)5 |
$ |
0.93 |
|
|
$ |
0.77 |
|
Brookfield reported net income for the
three-month period ended March 31, 2021 of $190 million ($0.27 per
unit) compared to $119 million ($0.13 per unit) in the prior year.
Net income per unit more than doubled, reflecting strong organic
growth and contributions from recently completed acquisitions.
Current year results also benefited from favorable commodity
markets and the recognition of a gain on the partial disposition of
our U.S. gas pipeline. These positive factors were partially offset
by lower unrealized gains recognized on our corporate hedging
program relative to the prior year.
Funds from Operations (or FFO) of $431 million
for the quarter increased by 20% over the same period last year as
a result of strong base business growth and the contribution from
new investments acquired in 2020. FFO grew organically by 8% due to
inflationary tariff increases, modestly higher volumes associated
with the early stages of the economic recovery, and the completion
of $800 million of new capital projects during the last 12 months.
Results for the quarter were further supplemented by favorable
market dynamics produced by weather events that led to exceptional
performance in our midstream segment. These positive factors were
partially offset by the impact of foreign exchange in a number of
our segments and a higher management fee relative to the prior
year.
Segment Performance
The utilities segment generated FFO of $166
million, an improvement of 7% over the prior year on a constant
currency basis. All businesses within the segment are performing
well, with results benefiting from inflation indexation and the
commissioning of $375 million of capital into rate base during the
last 12 months. These contributions were partially offset by the
sale of two mature businesses in 2020.
FFO for our transport segment was $162 million,
an increase of 17% compared to the prior year. The gradual
reopening of economies has contributed to volume growth at our rail
and ports businesses. Supported by robust demand for commodities in
Australia and Brazil, volumes on our rail networks increased almost
10%. Container volumes at our ports increased by almost 20%
compared to the prior year, driven primarily by consumer led
activity in the U.S. and Australia. Results also benefited from the
contribution of our U.S. LNG export terminal that was acquired in
September. These positive factors were partially offset by asset
sales as a result of capital recycling and foreign exchange.
FFO from our midstream segment totaled $146
million, a nearly twofold increase compared to the prior year.
Strong performance reflects robust customer demand and the
completion of an expansion project at our U.S. gas pipeline.
Results for the quarter also benefited from the operational
strength and preparedness of our gas storage business through the
extreme weather conditions experienced in the U.S. Going forward,
the continued development of the Montney Basin by producers with
LNG Canada commitments should provide a further uplift to the
segment as customers contract the unused capacity in our
infrastructure.
FFO from the data segment totaled $60 million,
an increase of over 40% compared to the prior year. This reflects
the contribution of the Indian telecom tower acquisition completed
in August, as well as organic growth of 7% across our existing
businesses. This organic growth includes inflationary price
increases built into our telecom tower and data center customer
contracts, as well as the rollout of additional points-of-presence
and fiber-to-the-home at our French telecom operation.
The following table presents FFO by segment:
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
FFO by segment |
|
|
|
Utilities |
$ |
166 |
|
|
$ |
165 |
|
Transport |
162 |
|
|
139 |
|
Midstream |
146 |
|
|
77 |
|
Data |
60 |
|
|
42 |
|
Corporate |
(103 |
) |
|
(65 |
) |
FFO |
$ |
431 |
|
|
$ |
358 |
|
Update on Strategic Initiatives
We completed or advanced several important
initiatives in the first quarter of 2021:
I. U.S. Gas
Pipeline – In early March, we completed the sale of a 25%
minority interest (BIP’s share – 12.5%). Net proceeds to BIP
totaled $412 million, which equates to an enterprise value of
approximately $5.2 billion on a 100% basis. The transaction valued
the company approximately $300 million above our IFRS carrying
value. Further, since the recapitalization of the business in 2015,
over 75% of invested capital has been returned to Brookfield
Infrastructure and we realized an IRR of 21% on the partial
sale.
II. North American
District Energy Business – As discussed in the prior
quarter, we are advancing two separate transactions to complete the
divestment of our U.S. and Canadian district energy platforms.
These sales achieve a multiple of capital of over six times and
underscore the meaningful value created over eight years of
ownership. We anticipate closing of the Canadian transaction to
occur in the next month, with the sale of the U.S. operation
following shortly thereafter. Total proceeds to Brookfield
Infrastructure from these sales are approximately
$950 million.
III. Portfolio of Smart
Meters in the U.K. – Subsequent to quarter end, we agreed
to sell our portfolio of smart meters in the U.K. at an attractive
valuation reflecting the highly contracted nature of the business
and high growth trajectory under the U.K.’s energy transition plan.
The portfolio will be carved out of our U.K. regulated distribution
business and sold on a stand-alone basis. During our ownership
period and including the proceeds from the sale, we earned an IRR
of 58%. Brookfield Infrastructure will receive net proceeds after
debt repayment of approximately $350 million.
IV. Inter Pipeline
Ltd. – In February, Brookfield Infrastructure and its
institutional partners formally launched a $5.0 billion takeover
offer to shareholders of IPL to privatize the company. If
successful, Brookfield Infrastructure will deploy approximately
$2 billion, comprised of cash and shares of BIPC, into a
high-quality portfolio of Canadian midstream assets. We believe
that IPL, as part of a larger, more diversified enterprise, will
benefit from our proven operating capabilities, our renewable
energy expertise as well as stewardship around ESG transition
investing.
V. Brazilian Regulated
Transmission Business – Subsequent to quarter-end,
Brookfield Infrastructure, alongside its institutional partners,
acquired from Petrobras the remaining 10% interest in our Brazilian
regulated gas transmission business not already owned. We are
funding the acquisition with additional asset-level debt and thus
do not require further capital. The investment is a great
opportunity to increase our exposure to a fully contracted,
inflation-linked cash flow producing asset that we have owned and
operated for four years, and therefore know very well.
Board of Directors Update
We welcome the re-appointment of John Mullen as
an independent Director of both BIP and BIPC effective from May 5,
2021. John formerly served as a director of the Partnership from
May 2017 to February 2020. John has a long and distinguished career
as an executive and a director, having held senior positions in
multinational transportation and logistics companies for more than
two decades. John was formerly the Chief Executive of DHL Global,
and Managing Director and Chief Executive of Asciano Limited. John
is currently the Chair of Telstra Corporation Limited, Australia’s
largest telecommunications company, and also the Chair of Brambles
Limited, a supply-chain logistics company operating in more than 60
countries.
Distribution and Dividend Declaration
The Board of Directors has declared a quarterly
distribution in the amount of $0.51 per unit, payable on June 30,
2021 to unitholders of record as at the close of business on May
31, 2021. This distribution represents a 5% increase compared to
the prior year. 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, Series 13 and Series 14
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 $0.51 per
share, also payable on June 30, 2021 to shareholders of record
as at the close of business on May 31, 2021.
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,
midstream and data 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 over $600 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: |
Investors: |
Claire Holland |
Kate White |
Senior Vice President,
Communications |
Manager, Investor
Relations |
Tel: (416) 369-8236 |
Tel: (416) 956-5183 |
Email:
claire.holland@brookfield.com |
Email:
kate.white@brookfield.com |
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access Brookfield Infrastructure’s First Quarter 2021 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 May 6, 2021 at 9:00 a.m. Eastern Time at
https://edge.media-server.com/mmc/p/9ux6ugkb 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: 7676738).
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 BIPC exchangeable shares.
References to the Partnership are to Brookfield
Infrastructure Partners L.P.
- Please
refer to page 12 for results of Brookfield Infrastructure
Corporation.
-
Includes net income attributable to limited partners, the general
partner, and non-controlling interests ‒ Redeemable Partnership
Units held by Brookfield, Exchange LP Units, and BIPC exchangeable
shares.
-
Average number of limited partnership units outstanding on a time
weighted average basis for the three-month period ended
March 31, 2021 was 295.4 million (2020 –
293.6 million). Earnings per limited partnership unit for the
three-month period ended March 31, 2020 have been adjusted to
reflect the dilutive impact of the special distribution.
-
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 9 of this release.
- Average
number of partnership units outstanding on a fully diluted time
weighted average basis for the three-month period ended
March 31, 2021 was 465.0 million (2020: 464.8 million,
adjusted for the BIPC special distribution).
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Financial
Position
|
As of |
US$
millions, unaudited |
March 31,2021 |
|
|
Dec 31,2020 |
|
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,140 |
|
|
$ |
867 |
|
Financial assets |
464 |
|
|
425 |
|
Property, plant and equipment
and investment properties |
29,735 |
|
|
32,102 |
|
Intangible assets and
goodwill |
18,377 |
|
|
18,401 |
|
Investments in associates and
joint ventures |
4,972 |
|
|
5,528 |
|
Deferred income taxes and other |
6,554 |
|
|
4,008 |
|
Total assets |
$ |
61,242 |
|
|
$ |
61,331 |
|
|
|
|
|
Liabilities and
partnership capital |
|
|
|
Corporate borrowings |
$ |
2,422 |
|
|
$ |
3,158 |
|
Non-recourse borrowings |
19,431 |
|
|
20,020 |
|
Financial liabilities |
3,128 |
|
|
3,374 |
|
Deferred income taxes and
other |
14,309 |
|
|
13,106 |
|
|
|
|
|
Partnership
capital |
|
|
|
Limited partners |
4,129 |
|
|
4,233 |
|
General partner |
19 |
|
|
19 |
|
Non-controlling interest
attributable to: |
|
|
|
Redeemable partnership units held by Brookfield |
1,643 |
|
|
1,687 |
|
BIPC exchangeable shares and Exchange LP units |
633 |
|
|
650 |
|
Interest of others in operating subsidiaries |
14,204 |
|
|
13,954 |
|
Preferred unitholders |
1,324 |
|
|
1,130 |
|
Total partnership capital |
21,952 |
|
|
21,673 |
|
Total liabilities and partnership capital |
$ |
61,242 |
|
|
$ |
61,331 |
|
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Operating
Results
|
For the three monthsended March 31 |
US$
millions, except per unit information, unaudited |
2021 |
|
2020 |
|
|
|
|
Revenues |
$ |
2,683 |
|
|
$ |
2,196 |
|
Direct operating costs |
(1,346 |
) |
|
(1,239 |
) |
General and administrative
expense |
(95 |
) |
|
(61 |
) |
Depreciation and amortization expense |
(469 |
) |
|
(400 |
) |
|
773 |
|
|
496 |
|
Interest expense |
(355 |
) |
|
(282 |
) |
Share of earnings from
associates and joint ventures |
67 |
|
|
48 |
|
Mark-to-market on hedging
items |
35 |
|
|
198 |
|
Other
income (expense) |
27 |
|
|
(206 |
) |
Income before income tax |
547 |
|
|
254 |
|
Income tax expense |
|
|
|
Current |
(94 |
) |
|
(58 |
) |
Deferred |
(40 |
) |
|
(48 |
) |
Net income |
413 |
|
|
148 |
|
Non-controlling interest of others in operating subsidiaries |
(223 |
) |
|
(29 |
) |
Net income attributable to partnership |
$ |
190 |
|
|
$ |
119 |
|
|
|
|
|
Attributable to: |
|
|
|
Limited partners |
$ |
89 |
|
|
$ |
52 |
|
General partner |
50 |
|
|
46 |
|
Non-controlling interest |
|
|
|
Redeemable partnership units held by Brookfield |
37 |
|
|
21 |
|
BIPC exchangeable shares and Exchange LP units |
14 |
|
|
— |
|
Basic and diluted earnings per unit attributable to: |
|
|
|
Limited partners1 |
$ |
0.27 |
|
|
$ |
0.13 |
|
- Average
number of limited partnership units outstanding on a time weighted
average basis for the three-month period ended March 31, 2021
was 295.4 million (2020 – 293.6 million). Earnings per
limited partnership unit for the three-month period ended March 31,
2020 have been adjusted to reflect the dilutive impact of the
special distribution.
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Cash
Flows
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
|
|
|
|
Operating
Activities |
|
|
|
Net income |
$ |
413 |
|
|
$ |
148 |
|
Adjusted for the following
items: |
|
|
|
Earnings from investments in associates and joint ventures, net of
distributions received |
(8 |
) |
|
45 |
|
Depreciation and amortization expense |
469 |
|
|
400 |
|
Mark-to-market on hedging items, provisions and other |
(94 |
) |
|
181 |
|
Deferred income tax expense |
40 |
|
|
48 |
|
Change
in non-cash working capital, net |
(94 |
) |
|
(100 |
) |
Cash from operating activities |
726 |
|
|
722 |
|
|
|
|
|
Investing
Activities |
|
|
|
Net (investments in) proceeds
from: |
|
|
|
Operating assets |
(96 |
) |
|
722 |
|
Sale of associates |
412 |
|
|
— |
|
Long-lived assets |
(321 |
) |
|
(376 |
) |
Financial assets |
125 |
|
|
(153 |
) |
Net
settlements of foreign exchange contracts |
1 |
|
|
82 |
|
Cash from investing activities |
121 |
|
|
275 |
|
|
|
|
|
Financing
Activities |
|
|
|
Distributions to limited and
general partners |
(303 |
) |
|
(282 |
) |
Net (repayments)
borrowings: |
|
|
|
Corporate |
(764 |
) |
|
393 |
|
Subsidiary |
173 |
|
|
159 |
|
Deposit received from
parent |
400 |
|
|
— |
|
Preferred units issued |
194 |
|
|
— |
|
Partnership units issued |
3 |
|
|
2 |
|
Net
capital provided to non-controlling interest and other |
(245 |
) |
|
(792 |
) |
Cash used by financing activities |
(542 |
) |
|
(520 |
) |
|
|
|
|
Cash and cash
equivalents |
|
|
|
Change during the period |
$ |
305 |
|
|
$ |
477 |
|
Cash reclassified as held for sale |
(6 |
) |
|
— |
|
Impact of foreign exchange on cash |
(26 |
) |
|
(78 |
) |
Balance, beginning of period |
867 |
|
|
827 |
|
Balance, end of period |
$ |
1,140 |
|
|
$ |
1,226 |
|
Brookfield Infrastructure Partners
L.P.Statements of Funds from
Operations
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
|
|
|
|
Adjusted EBITDA |
|
|
|
Utilities |
$ |
223 |
|
|
$ |
214 |
|
Transport |
233 |
|
|
195 |
|
Midstream |
185 |
|
|
100 |
|
Data |
82 |
|
|
56 |
|
Corporate |
(95 |
) |
|
(61 |
) |
Total |
628 |
|
|
504 |
|
|
|
|
|
Financing costs |
(186 |
) |
|
(151 |
) |
Other
(expense) income |
(11 |
) |
|
5 |
|
Funds from operations (FFO) |
431 |
|
|
358 |
|
|
|
|
|
Depreciation and
amortization |
(280 |
) |
|
(247 |
) |
Deferred taxes and other items |
39 |
|
|
8 |
|
Net income attributable to the partnership |
$ |
190 |
|
|
$ |
119 |
|
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 BIPC exchangeable shares.
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 7 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 March 31 |
US$,
unaudited |
2021 |
|
2020 |
|
|
|
|
Earnings per limited partnership unit1 |
$ |
0.27 |
|
|
$ |
0.13 |
|
Add back or deduct the
following: |
|
|
|
Depreciation and amortization |
0.60 |
|
|
0.53 |
|
Deferred taxes and other items |
0.06 |
|
|
0.11 |
|
FFO per unit2 |
$ |
0.93 |
|
|
$ |
0.77 |
|
- Average
number of limited partnership units outstanding on a time weighted
average basis for the three-month period ended March 31, 2021
was 295.4 million (2020 – 293.6 million). Earnings per
limited partnership unit for the three-month period ended March 31,
2020 have been adjusted to reflect the dilutive impact of the
special distribution.
- Average
number of partnership units outstanding on a fully diluted time
weighted average basis for the three-month period ended
March 31, 2021 was 465.0 million (2020: 464.8 million,
adjusted for the BIPC special distribution).
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 7 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 |
March 31,2021 |
|
|
Dec 31, 2020 |
|
|
|
|
|
Assets |
|
|
|
Operating groups |
|
|
|
Utilities |
$ |
2,902 |
|
|
$ |
2,896 |
|
Transport |
4,081 |
|
|
4,209 |
|
Midstream |
1,989 |
|
|
2,245 |
|
Data |
1,924 |
|
|
1,995 |
|
Cash
and cash equivalents |
500 |
|
|
464 |
|
|
$ |
11,396 |
|
|
$ |
11,809 |
|
|
|
|
|
Liabilities |
|
|
|
Corporate borrowings |
$ |
2,422 |
|
|
$ |
3,158 |
|
Other
liabilities |
2,550 |
|
|
2,062 |
|
|
4,972 |
|
|
5,220 |
|
Capitalization |
|
|
|
Partnership capital |
6,424 |
|
|
6,589 |
|
|
$ |
11,396 |
|
|
$ |
11,809 |
|
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 BIPC exchangeable shares.
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 6 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
ReportsFirst Quarter 2021 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
$0.51 per class A exchangeable subordinate voting share of BIPC (a
“Share”), payable on June 30, 2021 to shareholders of record as at
the close of business on May 31, 2021. 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 Operations1 (FFO)
of BIPC are captured in the Partnership’s financial statements and
results.
BIPC reported a net loss for the quarter of
$178 million compared to net income of $117 million in
the same period of the prior year2. Earnings 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
the Shares that are classified as liabilities under IFRS, and the
impact of foreign exchange. Excluding the revaluation of our Shares
and the associated dividends paid, net income attributable to the
Partnership was $18 million for the first quarter.
Our business generated FFO of $104 million for
the quarter, representing a 6% increase on a constant currency
basis. FFO in the current quarter benefited from
inflationary-indexation and additions to rate base, however these
positive factors were more than offset by an increase in management
fees attributable to our company and the impact of foreign
exchange.
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 documents
filed by BIPC with the securities regulators in Canada and the
United States including “Risk Factors” in BIPC’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
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.
-
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 to the holders of the Shares which 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 17 of this release.
-
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.
Brookfield Infrastructure
CorporationConsolidated Statements of Financial
Position
|
As of |
US$
millions, unaudited |
March 31,2021 |
|
|
Dec 31, 2020 |
|
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
124 |
|
|
$ |
192 |
|
Accounts receivable and
other |
415 |
|
|
394 |
|
Property, plant and
equipment |
5,208 |
|
|
5,111 |
|
Intangible assets |
2,661 |
|
|
2,948 |
|
Goodwill |
485 |
|
|
528 |
|
Deferred tax asset and other |
169 |
|
|
171 |
|
Total assets |
$ |
9,062 |
|
|
$ |
9,344 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Accounts payable and
other |
$ |
433 |
|
|
$ |
505 |
|
Exchangeable and class B
shares |
2,394 |
|
|
2,221 |
|
Non-recourse borrowings |
3,435 |
|
|
3,477 |
|
Loans payable to Brookfield
Infrastructure |
1,153 |
|
|
1,143 |
|
Financial liabilities |
1,041 |
|
|
1,031 |
|
Deferred tax liabilities and
other |
1,518 |
|
|
1,539 |
|
|
|
|
|
Equity |
|
|
|
Equity in net assets
attributable to the Partnership |
(1,932 |
) |
|
(1,722 |
) |
Non-controlling interest |
1,020 |
|
|
1,150 |
|
Total equity |
(912 |
) |
|
(572 |
) |
Total liabilities and equity |
$ |
9,062 |
|
|
$ |
9,344 |
|
Brookfield Infrastructure
CorporationConsolidated Statements of Operating
Results
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
|
|
|
|
Revenues |
$ |
399 |
|
|
$ |
384 |
|
Direct operating costs |
(69 |
) |
|
(62 |
) |
Depreciation and amortization expense |
(75 |
) |
|
(76 |
) |
|
255 |
|
|
246 |
|
|
|
|
|
Interest expense |
(63 |
) |
|
(32 |
) |
Remeasurement of exchangeable
and class B shares |
(173 |
) |
|
98 |
|
Mark-to-market and other expenses |
(34 |
) |
|
(18 |
) |
(Loss) income before income tax |
(15 |
) |
|
294 |
|
Income tax expense |
|
|
|
Current |
(53 |
) |
|
(44 |
) |
Deferred |
(18 |
) |
|
(49 |
) |
Net (loss) income |
$ |
(86 |
) |
|
$ |
201 |
|
|
|
|
|
Attributable to: |
|
|
|
Partnership |
$ |
(178 |
) |
|
$ |
117 |
|
Non-controlling interest |
92 |
|
|
84 |
|
Brookfield Infrastructure
CorporationConsolidated Statements of Cash
Flows
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
|
|
|
|
Operating
Activities |
|
|
|
Net (loss) income |
$ |
(86 |
) |
|
$ |
201 |
|
Adjusted for the following
items: |
|
|
|
Depreciation and amortization expense |
75 |
|
|
76 |
|
Mark-to-market on hedging items and other |
21 |
|
|
13 |
|
Remeasurement of exchangeable and class B shares |
173 |
|
|
(98 |
) |
Deferred income tax expense |
18 |
|
|
49 |
|
Change
in non-cash working capital, net |
(77 |
) |
|
(61 |
) |
Cash from operating activities |
124 |
|
|
180 |
|
|
|
|
|
Investing
Activities |
|
|
|
Purchase of long-lived assets, net of disposals |
(95 |
) |
|
(121 |
) |
Cash used by investing activities |
(95 |
) |
|
(121 |
) |
|
|
|
|
Financing
Activities |
|
|
|
Distributions to
non-controlling interest |
(106 |
) |
|
(101 |
) |
Distributions to, net of
contributions from, the Partnership |
— |
|
|
(33 |
) |
Proceeds from borrowings |
46 |
|
|
435 |
|
Repayments of borrowings |
(18 |
) |
|
(380 |
) |
Cash used by financing activities |
(78 |
) |
|
(79 |
) |
|
|
|
|
Cash and cash
equivalents |
|
|
|
Change during the period |
$ |
(49 |
) |
|
$ |
(20 |
) |
Impact of foreign exchange on cash |
(19 |
) |
|
(41 |
) |
Balance, beginning of period |
192 |
|
|
204 |
|
Balance, end of period |
$ |
124 |
|
|
$ |
143 |
|
Brookfield Infrastructure
CorporationStatements of Funds from
Operations
|
For the three monthsended March 31 |
US$
millions, unaudited |
2021 |
|
2020 |
|
|
|
|
Adjusted EBITDA |
|
|
|
Utilities |
$ |
146 |
|
|
$ |
142 |
|
Corporate |
(10 |
) |
|
(6 |
) |
Total |
136 |
|
|
136 |
|
|
|
|
|
Financing costs |
(18 |
) |
|
(19 |
) |
Other
expenses |
(14 |
) |
|
(10 |
) |
Funds from operations (FFO) |
104 |
|
|
107 |
|
|
|
|
|
Depreciation and
amortization |
(41 |
) |
|
(38 |
) |
Remeasurement of exchangeable
and class B shares |
(173 |
) |
|
98 |
|
Deferred taxes and other items |
(68 |
) |
|
(50 |
) |
Net (loss) income attributable to the Partnership |
$ |
(178 |
) |
|
$ |
117 |
|
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 15 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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