Brookfield Infrastructure Reports 2014 First Quarter Results
HAMILTON, BERMUDA--(Marketwired - May 5, 2014) -
Investors, analysts and other interested parties can access
Brookfield Infrastructure's 2014 first quarter results as well as
the Letter to Unitholders and Supplemental Information on the
website under the Investor Relations section at
www.brookfieldinfrastructure.com.
The 2014 first quarter results conference call can be accessed
via webcast on May 5, 2014 at 9:00 a.m. ET at
www.brookfieldinfrastructure.com or via teleconference at
1-800-319-4610 toll free in North America, or for overseas calls
please dial +1-631-982-4565 at approximately 8:50 a.m. The
teleconference taped rebroadcast will also be available until
midnight on June 5, 2014. To access this rebroadcast, please call
1-800-319-6413 or outside Canada & U.S. please call
+1-604-638-9010 (password: 9245#).
Brookfield Infrastructure (NYSE:BIP) (TSX:BIP.UN) today
announced our results for the first quarter ended March 31,
2014.
|
|
Three months ended Mar 31 |
|
US$ millions (except per unit amounts),
unaudited |
|
2014 |
|
|
2013 |
|
FFO1 |
$ |
186 |
|
$ |
160 |
|
|
- per
unit2 |
$ |
0.89 |
|
$ |
0.80 |
|
Net income (loss) |
$ |
32 |
|
$ |
(28 |
) |
|
- per unit3 |
$ |
0.10 |
|
$ |
(0.17 |
) |
Brookfield Infrastructure posted strong results for the quarter
ended March 31, 2014 with funds from operations ("FFO") totalling
$186 million ($0.89 per unit) compared to FFO of $160 million
($0.80 per unit) in the first quarter of 2013. This 16% increase in
year-over-year FFO (11% per unit) reflects steady improvements in
each of our operating segments and the deployment of capital in
both organic growth initiatives and new acquisitions. The payout
ratio4 was 60%, which is at the low end of the target range of
60-70%, and we generated a solid AFFO yield5 of 14% during the
quarter.
Brookfield Infrastructure reported net income of $32 million
($0.10 per unit3) for the quarter ended March 31, 2014, compared to
a net loss of $28 million (net loss of $0.17 per unit3) in the
prior year, which was impacted by debt breakage costs.
"We are off to a strong start in 2014 with all of our segments
performing well, as reflected in our strong financial results,"
said Sam Pollock, CEO of Brookfield Infrastructure. "As we position
the company for future growth, our goal is to invest approximately
$500 million to $1 billion of capital into our operations this
year. To date, we have committed to invest in five new investments,
deploying approximately $600 million into our transport and energy
operations. These new investments, combined with our planned
organic expansion initiatives, will provide considerable growth for
our business for the remainder of the year and beyond."
Segment Performance
Brookfield Infrastructure's utilities business generated FFO of
$89 million in the period, compared to $92 million in the first
quarter of 2013. Results in this segment were impacted by the sale
of our Australasian distribution operations in the fourth quarter
of 2013. On a 'same store' basis, underlying performance was
strong, as FFO increased by $6 million or 7% as our businesses
benefited from inflation indexation and the commissioning of
certain capital projects into our rate base.
The transport operation generated FFO of $95 million in the
first quarter of 2014, compared to $67 million in the prior year
period. The significant increase in FFO was driven by the full
contribution from our Australian railroad expansion program where
the final portion was commissioned in March 2013. In addition,
higher volumes associated with a bumper grain harvest and a higher
contribution from our toll road business, where we doubled our
ownership interest in the Brazilian roads in September 2013, also
contributed to results.
Brookfield Infrastructure's energy operation generated FFO of
$26 million in the first quarter of 2014, compared to $22 million
in the prior year period. Results in this segment were aided by
improved performance at our North American natural gas transmission
business. During the quarter, this business experienced increased
natural gas volumes into the Chicago market and higher revenues
from profit sharing agreements with customers that were tied to
improvements in basis spreads. Higher spreads were primarily driven
by natural gas price volatility caused by an unusually long and
cold winter. Brookfield Infrastructure's UK energy distribution
operations also recorded higher FFO compared to the prior year as a
result of higher tariffs as well as lower costs associated with a
margin improvement program that we have been implementing over the
past year.
The following table presents net income and FFO by segment:
US$ millions, unaudited |
Three months ended Mar 31 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
Net income (loss) by segment |
|
|
|
|
|
|
|
Utilities |
$ |
37 |
|
$ |
(5 |
) |
|
Transport |
|
33 |
|
|
(1 |
) |
|
Energy |
|
9 |
|
|
9 |
|
|
Corporate and other |
|
(47 |
) |
|
(31 |
) |
Net income (loss) |
$ |
32 |
|
$ |
(28 |
) |
|
|
|
|
|
|
|
FFO by segment |
|
|
|
|
|
|
|
Utilities |
$ |
89 |
|
$ |
92 |
|
|
Transport |
|
95 |
|
|
67 |
|
|
Energy |
|
26 |
|
|
22 |
|
|
Corporate and other |
|
(24 |
) |
|
(21 |
) |
FFO |
$ |
186 |
|
$ |
160 |
|
Growth Initiatives
We committed to make five new investments in the transport and
energy sectors totaling approximately $600 million. We will invest
alongside institutional partners, drawing on our $1.8 billion of
corporate liquidity to acquire a 40% interest in each of these
investments.
In February, agreements were signed to acquire an approximate
50% equity stake in APM Terminals' (APMT) Elizabeth container
terminal located in the port of New York / New Jersey. This
transaction represents a compelling opportunity for us to enter the
second busiest port market in North America by investing in a high
quality, long life asset that is expected to benefit from economic
growth in the U.S. This is a gateway terminal that handled
approximately 700,000 TEUs in 2013 and has surplus capacity to
facilitate volume growth in the future. This transaction is
expected to close in the second quarter of 2014, subject to
obtaining all required consents and regulatory approvals.
At the end of March, the previously announced acquisition of a
50% interest in Mitsui OSK Lines' (MOL) container terminals in Los
Angeles and Oakland was completed. These are also gateway container
terminals that also have surplus capacity to facilitate future
volume growth. There is a significant modernization project
underway in Los Angeles that will increase capacity and efficiency
of the facility, and once complete will make this one of the most
automated terminals in North America.
In April, definitive agreements were signed to acquire 100% of
Macquarie District Energy ("MDE") and Seattle Steam LP ("SSC"). MDE
owns district cooling systems in Chicago and Las Vegas, with the
system in Chicago considered one of the highest quality facilities
in the U.S. SSC provides heat to over 160 buildings in the central
business district of Seattle through 18 miles of distribution
pipelines and operates two independent steam plants with a total
generating capacity of 750,000 lbs/hour of steam. These
acquisitions are expected to close by the third quarter of 2014,
subject to obtaining all required consents and regulatory
approvals.
We also continue to work toward the completion of the previously
discussed acquisition of 27% of Vale's Brazilian rail and port
business, VLI. This business consists of approximately 4,000 km of
rail integrated with five inland terminals and three ports. VLI
expects to deploy over R$6.0 billion to upgrade and expand
operations over the next seven years, allowing it to capture volume
growth from increased activity in the agriculture, steel and other
industrial sectors in Brazil. We are working through a number of
customary closing conditions and expect to close this investment
early in the third quarter.
Distributions
The Board of Directors declared a quarterly distribution in the
amount of $0.48 per unit, payable on June 30, 2014 to unitholders
of record as at the close of business on May 30, 2014.
During the quarter, the Partnership was unfortunately advised
that the Depository Trust & Clearing Corporation (DTCC) will no
longer offer participation in Brookfield Infrastructure's
Distribution Reinvestment Plan for beneficial holders. As a result,
distribution reinvestment will no longer be available to
unitholders who hold units through their brokers and will only
available for registered unitholders, effective from the next
distribution on June 30, 2014. Information on this plan and on
declared distributions can be found on Brookfield Infrastructure's
website under Investor Relations/Distributions.
Additional Information
Brookfield Infrastructure's Letter to Unitholders and the
Supplemental Information are available at
www.brookfieldinfrastructure.com.
Brookfield Infrastructure operates high quality,
long-life assets that generate stable cash flows, require
relatively minimal maintenance capital expenditures and, by virtue
of barriers to entry and other characteristics, tend to appreciate
in value over time. Its current business consists of the ownership
and operation of premier utilities, transport and energy assets in
North and South America, Australasia, and Europe. It also seeks
acquisition opportunities in other infrastructure sectors with
similar attributes. Brookfield Infrastructure's payout policy
targets 5% to 9% annual growth in distributions. Units trade on the
New York and Toronto stock exchanges under the symbols BIP and
BIP.UN, respectively. For more information, please visit Brookfield
Infrastructure's website at
www.brookfieldinfrastructure.com.
Note: This news release contains 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", "tend to", "target" "future",
"growth", "expect", "believe", "goal", "plan", 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 expansion of Brookfield Infrastructure's
business, the likelihood and timing of successfully completing the
acquisitions 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,
and the level of distribution growth over the next several years.
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, 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, 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 new
acquisitions in the competitive infrastructure space (including the
ability to complete announced acquisitions that may be subject to
conditions precedent) and to integrate acquisitions into existing
operations, the future performance of these acquisitions, including
traffic volumes on our toll roads, 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 and
general partnership units.
References to the Partnership are to Brookfield
Infrastructure Partners L.P.
- FFO is defined as net income excluding the impact of
depreciation and amortization, deferred income taxes, breakage and
transaction costs, non-cash valuation gains and losses, and other
items. A reconciliation of net income to FFO is available on page 5
of this release.
- Average number of partnership units outstanding on a fully
diluted time weighted average basis, assuming the exchange of
redeemable partnership units held by Brookfield for limited
partnership units, for the three months ended March 31, 2014 were
210.1 million (2013 - 200.8 million).
- Represents net income per limited partnership
unit.
- Payout ratio is defined as distributions paid (inclusive of
GP incentive distributions) divided by FFO.
- AFFO yield is defined as AFFO (FFO less maintenance capital
expenditures) over time weighted average invested
capital.
Brookfield Infrastructure Partners L.P. |
|
|
Statements of Funds from Operations |
|
|
|
For the three-month period ended March 31, |
|
(US$ MILLIONS, UNAUDITED) |
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
Utilities |
$ |
126 |
|
$ |
133 |
|
|
Transport |
|
144 |
|
|
107 |
|
|
Energy |
|
44 |
|
|
38 |
|
|
Corporate and other |
|
(27 |
) |
|
(10 |
) |
Total |
|
287 |
|
|
268 |
|
|
|
|
|
|
|
|
Financing costs |
|
(102 |
) |
|
(107 |
) |
Other income (expenses) |
|
1 |
|
|
(1 |
) |
Funds from operations (FFO) |
|
186 |
|
|
160 |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
(117 |
) |
|
(110 |
) |
Mark-to-market on hedge contracts |
|
(16 |
) |
|
(45 |
) |
Deferred taxes and other items |
|
(21 |
) |
|
(33 |
) |
Net income (loss) attributable to the partnership |
$ |
32 |
|
$ |
(28 |
) |
|
|
|
|
|
|
|
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 (loss) attributable to the partnership
includes net income (loss) attributable to non-controlling
interests - redeemable partnership units held by Brookfield,
limited partners and the general partner.
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 (loss) as presented in
Brookfield Infrastructure's Consolidated Statements of Operating
Results on page 8 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 Partnership Capital |
|
|
|
|
As of |
|
(US$ MILLIONS, UNAUDITED) |
Mar 31, 2014 |
|
Dec 31, 2013 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Operating Platforms |
|
|
|
|
|
|
|
Utilities |
$ |
1,931 |
|
$ |
1,928 |
|
|
Transport |
|
2,527 |
|
|
2,456 |
|
|
Energy |
|
711 |
|
|
702 |
|
Cash and cash equivalents |
|
416 |
|
|
523 |
|
|
$ |
5,585 |
|
$ |
5,609 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Corporate borrowings |
$ |
363 |
|
$ |
377 |
|
Other liabilities |
|
117 |
|
|
46 |
|
|
|
480 |
|
|
423 |
|
Capitalization |
|
|
|
|
|
|
Partnership capital |
|
5,105 |
|
|
5,186 |
|
|
$ |
5,585 |
|
$ |
5,609 |
|
|
|
|
|
|
|
|
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
non-controlling interests - redeemable partnership units held by
Brookfield, limited partners and the general partner.
Accordingly, the statements above differ from Brookfield
Infrastructure's Consolidated Statements of Financial Position
contained in its financial statements, which are prepared in
accordance with IFRS. Readers are encouraged to consider both bases
of presentation in assessing Brookfield Infrastructure's financial
position on page 7 of this release.
Brookfield Infrastructure Partners L.P. |
|
|
Consolidated Statements of Financial Position |
|
|
|
As of |
|
(US$ MILLIONS, UNAUDITED) |
Mar 31, 2014 |
|
Dec 31, 2013 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
363 |
|
$ |
538 |
|
Financial assets |
|
319 |
|
|
259 |
|
Property, plant and equipment |
|
7,866 |
|
|
7,763 |
|
Intangible assets |
|
4,034 |
|
|
4,006 |
|
Investments in associates |
|
2,167 |
|
|
2,039 |
|
Investment properties |
|
166 |
|
|
164 |
|
Deferred income taxes and other |
|
840 |
|
|
913 |
|
Total assets |
$ |
15,755 |
|
$ |
15,682 |
|
|
|
|
|
|
|
|
Liabilities and partnership capital |
|
|
|
|
|
|
Corporate borrowings |
$ |
363 |
|
$ |
377 |
|
Non-recourse borrowings |
|
5,834 |
|
|
5,790 |
|
Financial liabilities |
|
672 |
|
|
547 |
|
Deferred income taxes and other |
|
2,400 |
|
|
2,363 |
|
Total liabilities |
|
9,269 |
|
|
9,077 |
|
|
|
|
|
|
|
|
Partnership capital |
|
|
|
|
|
|
Limited partners |
|
3,693 |
|
|
3,751 |
|
Non-controlling interest attributable to: |
|
|
|
|
|
|
|
Redeemable partnership units held by Brookfield |
|
1,385 |
|
|
1,408 |
|
|
Interest of others in operating subsidiaries |
|
1,381 |
|
|
1,419 |
|
General partner |
|
27 |
|
|
27 |
|
Total partnership capital |
|
6,486 |
|
|
6,605 |
|
Total liabilities and partnership capital |
$ |
15,755 |
|
$ |
15,682 |
|
|
|
|
|
|
|
|
Brookfield Infrastructure Partners L.P. |
|
|
|
Consolidated Statements of Operating Results |
|
|
|
|
For the three-month period ended March 31, |
|
(US$ MILLIONS, EXCEPT PER UNIT INFORMATION,
UNAUDITED) |
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Revenues |
$ |
480 |
|
$ |
463 |
|
Direct operating costs |
|
(212 |
) |
|
(222 |
) |
General and administrative expenses |
|
(27 |
) |
|
(28 |
) |
Depreciation and amortization expense |
|
(91 |
) |
|
(86 |
) |
|
|
150 |
|
|
127 |
|
Interest expense |
|
(87 |
) |
|
(87 |
) |
Share of earnings from associates |
|
12 |
|
|
17 |
|
Mark-to-market on hedging items |
|
(16 |
) |
|
(62 |
) |
Valuation losses and other |
|
(3 |
) |
|
(37 |
) |
Income (loss) before income tax |
|
56 |
|
|
(42 |
) |
Income tax (expense) recovery |
|
|
|
|
|
|
|
Current |
|
(6 |
) |
|
(6 |
) |
|
Deferred |
|
(6 |
) |
|
26 |
|
Net income (loss) from continuing operations |
|
44 |
|
|
(22 |
) |
Income for discontinued operations, net of income
tax |
|
- |
|
|
21 |
|
Non-controlling interest of others in operating
subsidiaries |
|
(12 |
) |
|
(27 |
) |
Net income (loss) attributable to partnership |
$ |
32 |
|
$ |
(28 |
) |
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Limited partners |
|
15 |
|
|
(25 |
) |
|
Non-controlling interest - redeemable partnership units held by
Brookfield. |
|
6 |
|
|
(10 |
) |
|
General partner |
|
11 |
|
|
7 |
|
Basic and diluted earnings (loss) per unit attributable
to: |
|
|
|
|
|
|
|
Limited partners1 |
$ |
0.10 |
|
$ |
(0.17 |
) |
|
|
|
|
|
|
|
1 |
Average number of limited partnership units outstanding on a
time weighted average basis for the three months ended March 31,
2014 were 150.3 million (2013 - 143.6 million). |
|
|
|
Brookfield Infrastructure Partners L.P. |
|
|
Consolidated Statements of Cash Flows |
|
|
|
For the three-month period ended March 31, |
|
(US$ MILLIONS, UNAUDITED) |
|
2014 |
|
|
2013 |
|
|
|
|
|
|
|
|
Operating Activities |
|
|
|
|
|
|
Net income (loss) from continuing operations |
$ |
44 |
|
$ |
(22 |
) |
Adjusted for the following items: |
|
|
|
|
|
|
|
Income from discontinued operations, net of income tax |
|
- |
|
|
21 |
|
|
Share
of earnings from associates, net of distributions |
|
(11 |
) |
|
(11 |
) |
|
Depreciation and amortization expense |
|
91 |
|
|
86 |
|
|
Mark-to-market on hedging items |
|
16 |
|
|
62 |
|
|
Valuation losses and other |
|
12 |
|
|
60 |
|
|
Deferred tax recovery |
|
6 |
|
|
(26 |
) |
Change in non-cash working capital, net |
|
(18 |
) |
|
(23 |
) |
Cash from operating activities |
|
140 |
|
|
147 |
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
Net investments in: |
|
|
|
|
|
|
|
Operating assets |
|
- |
|
|
(13 |
) |
|
Associates |
|
(39 |
) |
|
(4 |
) |
|
Long-lived assets |
|
(109 |
) |
|
(103 |
) |
|
Financial assets |
|
(50 |
) |
|
- |
|
Net settlement of foreign exchange contracts |
|
(8 |
) |
|
7 |
|
Cash used by investing activities |
|
(206 |
) |
|
(113 |
) |
|
|
|
|
|
|
|
Financing Activities |
|
|
|
|
|
|
Distribution to limited and general partners |
|
(112 |
) |
|
(94 |
) |
Net borrowings (repayments): |
|
|
|
|
|
|
|
Corporate |
|
- |
|
|
(222 |
) |
|
Subsidiary |
|
20 |
|
|
323 |
|
Issuance of partnership units (inclusive of dividend
reinvestment plan) |
|
2 |
|
|
2 |
|
Subsidiary distributions to non-controlling
interest |
|
(27 |
) |
|
(21 |
) |
Cash used by financing activities |
|
(117 |
) |
|
(12 |
) |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
|
|
Change during the period |
$ |
(183 |
) |
$ |
22 |
|
|
Impact of foreign exchange on cash |
|
8 |
|
|
1 |
|
|
Balance, beginning of period |
|
538 |
|
|
263 |
|
Balance, end of period |
$ |
363 |
|
$ |
286 |
|
|
|
|
|
|
|
|
Investors:Tracey WiseSenior Vice President, Investor
Relations416-956-5154tracey.wise@brookfield.comMedia:Andrew
WillisSenior Vice President, Communications and
Media416-369-8236andrew.willis@brookfield.comwww.brookfieldinfrastructure.com
Brookfield Infrastructur... (TSX:BIP.UN)
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