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Brookfield Infrastructure Reports Third Quarter 2019 Results

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BROOKFIELD, News, Nov. 07, 2019 (GLOBE NEWSWIRE) -- Brookfield Infrastructure (NYSE:BIP, TSX:BIP) today announced its results for the third quarter ended September 30, 2019.

  For the three months
ended September 30
  For the nine months
ended September 30

US$ millions (except per unit amounts), unaudited   2019   2018       2019   2018
Net income1 $ 82 $ 5     $ 210 $  339
– per unit2,3 $ 0.07 $  (0.10 )   $   0.14 $ 0.53
FFO $ 338 $ 278     $ 1,026 $ 905
– per unit5 $ 0.82 $ 0.71     $ 2.55 $ 2.31

Brookfield Infrastructure reported net income for the quarter of $82 million ($0.07 per unit) compared to $5 million (net loss of $0.10 per unit) in the prior year. Results for the period benefited from an increase in FFO in each of our operating segments and incremental contributions from new investments closed in the past twelve months. The prior year results included a one-time item recorded in our transport segment which impacted earnings in the comparative period.

Our business generated FFO of $338 million for the quarter, or $0.82 on a per unit basis which represents a 15% increase over the third quarter in 2018. FFO in the period benefited from organic growth of 9%, which was at the high end our long-term target range, and capital recently deployed in new investments. 

"Our operations performed well and results in the quarter reflect strong underlying growth in our core business," said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure. "The outlook for our business is also positive. We currently have $1.1 billion of additional new investments that have either been secured or are in advanced stages, that will contribute meaningfully to our results once completed. We are pursuing several capital recycling initiatives, which we expect to generate between $1.5 to $2.0 billion of proceeds in the next twelve months, and these proceeds will fund future investments."

Pollock added, "We have received a positive response thus far from the investment community regarding the creation of Brookfield Infrastructure Corporation (‘BIPC'), which we are targeting to launch in the first quarter of 2020. BIPC shares are intended to be economically equivalent to BIP units and will provide investors with an alternate way to access our global infrastructure business."

Segment Performance

FFO from our utilities segment totaled $145 million for the quarter, compared to $130 million in the prior year. This segment delivered 9% organic growth arising from $300 million of projects that were commissioned into rate base in the last year, inflation-indexation across our portfolio and continued strength in connections activity at our U.K. regulated distribution business.

Our transport segment contributed FFO of $128 million, compared to $119 million during the same period of 2018. Results in the current quarter benefited from volume growth across our ports and toll roads, as well as higher tariffs and rates that contractually escalate with local inflation. These positive contributions were partially offset by the impact of the sales of a 33% interest in our Chilean toll road and our European port operation, both completed earlier this year.

FFO from our energy segment totaled $100 million, reflecting a 70% increase relative to the third quarter of 2018. The step-change increase was primarily driven by contributions from the acquisitions of a North American residential distributed energy business, a Canadian midstream operation and a fully contracted natural gas pipeline in India. Together, these new investments generated approximately $40 million of FFO in the current period. Results also benefited from strength at our U.S. gas transmission business as a result of new customer contracts and the commissioning of capital expansion projects.

FFO from our data infrastructure segment was $36 million for the period, almost double the amount earned in the prior year, and primarily reflects the contribution from recent investments that substantially expanded our global presence. These investments include a global data center business and a data distribution business in New Zealand. Additionally, our French telecommunication business reported organic growth of 5% primarily the result of its build-to-suit tower expansion program.

The following table presents FFO by segment:

 

 
For the three months
ended September 30

  For the nine months
ended September 30
US$ millions, unaudited   2019    2018        2019      2018   
FFO by segment                
Utilities $   145  $ 130     $ 425   $ 438  
Transport   128    119         402     389  
Energy   100    59       303     179  
Data Infrastructure   36    19       94     57  
Corporate     (71)     (49 )     (198 )   (158 )
FFO $   338  $ 278     $  1,026   $ 905  

Update on Strategic Initiatives

Over the past several months we have been active, advancing previously announced initiatives. Recently, we achieved financial close on our North American gas pipeline business with an investment of approximately $140 million (BIP's share), as well as on our New Zealand data distribution business, investing approximately $200 million (BIP's share). In the coming months we expect to invest a further $1.1 billion across various businesses. Here is an update on two major investment initiatives:

  1. North American Rail Business – In July, we announced the $8.4 billion total value take-private acquisition of Genesee & Wyoming, Inc. (‘G&W'), which we will be acquiring alongside institutional investors (BIP's share of equity – approximately $500 million). G&W shareholder and Surface Transportation Board (STB) approvals were received in October 2019. The transaction is on track to close in the fourth quarter, following receipt of the remaining customary regulatory approvals.

  2. Indian Telecom Towers – We are finalizing an agreement with Reliance Jio to acquire a large-scale portfolio of 130,000 telecom towers in India. This transaction is being negotiated on a bilateral basis and leverages our existing relationship with Reliance Industries, the counterparty to the Indian pipeline business we acquired earlier this year. We have substantially completed our due diligence and are currently finalizing transaction documentation. We expect to sign the transaction in the coming weeks and anticipate investing up to $400 million (BIP's share of equity) upon closing of the transaction in the months that follow.

Our latest phase of capital recycling has also been successful. In the coming months, we expect our liquidity position will grow by approximately $550 million, upon closing of three initiatives that were recently signed:

  1. Colombian regulated distribution operation – We have agreed to sell this business for $100 million of after-tax proceeds to BIP. Upon closing, which is expected in the fourth quarter, we will have earned an after-tax IRR of 18% and generated a multiple of capital of almost three times our initial investment.

  2. Australian district energy and distribution business – We have agreed to divest this business for approximately $280 million. Our exit price translates to an 18x EV/EBITDA multiple, a strong valuation that reflects the stability and positive growth outlook for the business. The sale is expected to close in the fourth quarter of 2019.

  3. Chilean toll road businessWe have entered into an agreement to sell a further 33% interest in this business, at a purchase price consistent with the sale of the initial 33% interest that closed earlier this year. The sale will result in an after-tax IRR of 16% and a multiple of capital of 2.4 times. The sale is expected to close in the fourth quarter and will result in $170 million in proceeds to BIP.

Board of Directors Update

John Mullen will be stepping down from the Board of Brookfield Infrastructure in early 2020, for personal reasons. Derek Pannell, Chairman of the Board, stated, "I would like to thank John for his advice and guidance since joining the Board in 2017. His expertise and contributions have been greatly appreciated."

Distribution

The Board of Directors has declared a quarterly distribution in the amount of $0.5025 per unit, payable on December 31, 2019 to unitholders of record as at the close of business on November 29, 2019. Regular quarterly dividends on the Cumulative Class A Preferred Limited Partnership Units, Series 1, Series 3, Series 5, Series 7, Series 9 and Series 11 have also been declared, as well as the dividend for BIP Investment Corporation Senior Preferred Shares, Series 1.

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 Partners 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.

Brookfield Infrastructure is the flagship listed infrastructure company of Brookfield Asset Management, a leading global altern

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