Brookfield Infrastructure Partners L.P. (Brookfield Infrastructure,
BIP, or the Partnership) (NYSE: BIP; TSX: BIP.UN) today announced
its results for the second quarter ended June 30, 2023.
“Our business showcased its resilience during
the second quarter, providing strong financial and operational
results," said Sam Pollock, Chief Executive Officer of Brookfield
Infrastructure. “We have also already accomplished most of our
current year strategic initiatives, exceeding our annual deployment
target and successfully executing our capital recycling program,
with $1.9 billion in asset sales this year.”
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions (except per unit amounts), unaudited1 |
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Net income2 |
$ |
378 |
|
$ |
176 |
|
$ |
401 |
|
$ |
246 |
|
– per unit3,4 |
$ |
0.38 |
|
$ |
0.13 |
|
$ |
0.31 |
|
$ |
0.12 |
|
FFO5 |
$ |
552 |
|
$ |
513 |
|
$ |
1,106 |
|
$ |
1,006 |
|
– per unit4,6 |
$ |
0.72 |
|
$ |
0.67 |
|
$ |
1.44 |
|
$ |
1.31 |
|
Brookfield Infrastructure reported net income of
$378 million for the three month period ended June 30, 2023
compared to net income of $176 million in the prior year. Current
year results benefited from the contribution associated with
recently completed acquisitions, organic growth across our base
business and realized gains on each of the six asset sales that
closed in the second quarter. These positive impacts were partially
offset by higher borrowing costs associated with the financing of
our growth initiatives.
Funds from operations (FFO) for the second
quarter was $552 million, increasing 8% relative to the comparable
period. Results were supported by the contribution of approximately
$2.1 billion of capital deployed in new acquisitions over the past
year, partially offset by the impact of asset sales and borrowing
costs associated with financing our new investments. Organic growth
was near the high-end of our 6-9% target range, reflecting the
benefit of elevated levels of inflation on tariff increases and the
commissioning of approximately $1 billion in new capital projects
over the last 12 months. Partially offsetting the strong underlying
performance of our business was the normalization of market
sensitive revenues, as the prior year benefited from elevated
commodity prices.
Segment Performance
The following table presents FFO by segment:
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited1 |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
FFO by segment |
|
|
|
|
|
|
|
Utilities |
$ |
224 |
|
|
$ |
188 |
|
|
$ |
432 |
|
|
$ |
355 |
|
Transport |
|
199 |
|
|
|
199 |
|
|
|
391 |
|
|
|
384 |
|
Midstream |
|
161 |
|
|
|
170 |
|
|
|
359 |
|
|
|
366 |
|
Data |
|
72 |
|
|
|
60 |
|
|
|
142 |
|
|
|
118 |
|
Corporate |
|
(104 |
) |
|
|
(104 |
) |
|
|
(218 |
) |
|
|
(217 |
) |
FFO5 |
$ |
552 |
|
|
$ |
513 |
|
|
$ |
1,106 |
|
|
$ |
1,006 |
|
The utilities segment generated FFO of $224
million, an increase of 19% from the same period last year. Organic
growth for the segment was 10%, reflecting the continued benefit of
elevated inflation indexation and the commissioning of
approximately $500 million of capital into our rate base during the
last 12 months. Current quarter results benefited from the
expansion of our residential decarbonization infrastructure
platform in North America and Europe, following the acquisition of
HomeServe in January 2023.
FFO for the transport segment was $199 million
for the quarter, an increase of 5% from the prior year excluding
our U.S. container terminal that was divested in the second quarter
of 2022. Results continue to benefit from inflation-linked rate
increases. Compared to the prior period last year, rates at our
global toll road portfolio increased by 10% and our rail networks
passed through increases of 8%. Volumes have remained resilient,
with traffic levels increasing 2% across our toll roads and rail
volumes were consistent with the prior year. Partially offsetting
the strong operational results of our road and rail assets, was a
1% reduction in port volumes and the normalization of commodity
prices that provided an outsized contribution at our U.S. LNG
export terminal in the prior period.
The midstream segment generated $161 million of
FFO, a modest decrease compared with the prior year. Strong
performance across our base businesses from increased utilization
and higher contracted cash flows was offset by softer results at
our Canadian diversified midstream business due to the
normalization of market sensitive revenues and the delay in a
meaningful contribution from the Heartland Petrochemical Complex
(HPC), which was offline for much of the quarter. Looking ahead,
HPC is anticipated to partially contribute to results in the third
quarter, while the fourth quarter is expected to provide full
run-rate contribution.
The data segment generated FFO of $72 million,
an increase of 20% from the same period last year. Current quarter
results benefited from the acquisition of a European telecom tower
operation in February and the contribution from an Australian fiber
business acquired in August 2022.
Update on Strategic Initiatives
We continue to find good opportunities to invest
capital above our targeted return threshold. During the second
quarter, we accelerated our global data center growth strategy
through the acquisition of two marquee development platforms in
Europe and North America, respectively. These investments fill gaps
in our existing portfolio, which was regionally focused in South
America, Australia and India. We now have an asset footprint in all
our core markets and have become one of the largest developers in
the world.
Most recently, we entered into an agreement to
acquire a co-controlling stake in Compass Datacenters for $1.35
billion, including Brookfield Infrastructure’s equity of
approximately $375 million. Compass is a leading North American
hyperscale data center platform that has approximately 170
megawatts of operating capacity, with a significantly de-risked
contracted and reserved capacity backlog to be developed on
power-ready and owned land across several major campuses. Total
operating, contracted and reserved capacity is 735 megawatts, which
is 85% underpinned by investment grade hyperscalers. Contracted
capacity of 675 megawatts is included in this total and has a
13-year weighted average contract duration, with approximately 60%
contracted on a triple net basis providing for recovery of
maintenance and operating costs from our customers. The transaction
is expected to close in Q4 2023, subject to the satisfaction of
customary closing conditions.
The acquisition of Data4, our European
hyperscale data center platform, closed on August 1, 2023. Since
announcing the transaction, the business converted a 130 megawatt
memorandum of understanding with a leading hyperscale client into
firm contracted capacity, resulting in over 50% of our business
plan growth profile of 400 megawatts being successfully contracted
or reserved.
The Triton privatization is advancing well, with
the majority of the required regulatory approvals received and a
shareholder vote that has been set for August 24, 2023. We
currently expect to close the transaction shortly after receiving
confirmation of shareholder support. Across these three
transactions, we expect Brookfield Infrastructure’s equity share of
the deployment to be nearly $2 billion.
Brookfield Infrastructure continues to be
successful in converting its advanced pipeline of capital recycling
opportunities into completed sales. To date in this calendar year,
we have secured $1.9 billion of asset sale proceeds, of which $1.4
billion has already closed. Generally, transactions are taking
longer to complete and potential buyers have less access to
capital. However, demand for highly contracted and essential
infrastructure remains strong and we are focused on preparing for
the next round of capital recycling initiatives in 2024.
Distribution and Dividend
Declaration
The Board of Directors of BIP has declared a
quarterly distribution in the amount of $0.3825 per unit, payable
on September 29, 2023 to unitholders of record as at the close of
business on August 31, 2023. This distribution represents a 6%
increase compared to the prior year. The regular quarterly
dividends on the Cumulative Class A Preferred Limited Partnership
Units, Series 1, Series 3, Series 9, Series 11, Series 13 and
Series 14 have also been declared, as well as the capital gains
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 $0.3825 per share, also payable on
September 29, 2023 to shareholders of record as at the close
of business on August 31, 2023.
Conference Call and Quarterly Earnings
Details
Investors, analysts and other interested parties
can access Brookfield Infrastructure’s Second Quarter 2023 Results,
as well as Letter to Unitholders and Supplemental Information, at
https://bip.brookfield.com.
To participate in the Conference Call today at
9:00am ET, please pre-register at
https://register.vevent.com/register/BI4c3ebb6543884ebbbe6f0cd3253ee96f.
Upon registering, you will be emailed a dial-in number, direct
passcode and unique PIN. The Conference Call will also be Webcast
live at https://edge.media-server.com/mmc/p/7sxvpkbi.
Additional Information
The Board has reviewed and approved this news
release, including the summarized unaudited financial information
contained herein.
About Brookfield
InfrastructureBrookfield 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
https://bip.brookfield.com.
Brookfield Infrastructure is the flagship listed
infrastructure company of Brookfield Asset Management, a global
alternative asset manager with approximately $850 billion of assets
under management. For more information, go to
https://brookfield.com.
Contact Information
MediaSimon MaineManaging Director, Corporate
Communications Tel: +44 739 890-9278Email:
simon.maine@brookfield.com |
Investor RelationsStephen FukudaVice President,
Corporate Development & Investor RelationsTel: +1 416 956
5129Email: stephen.fukuda@brookfield.com |
Cautionary Statement Regarding
Forward-looking StatementsThis news release may contain
forward-looking information within the meaning of Canadian
provincial securities laws and “forward-looking statements” within
the meaning of applicable securities laws. 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 include statements regarding the three-for-two
split of BIP and BIPC’s respective units and shares, and 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 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 impact of health pandemics 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, BIPC exchangeable LP units
and BIPC exchangeable shares.
Any statements contained herein with respect to
tax consequences are of a general nature only and are not intended
to be, nor should they be construed to be, legal or tax advice to
any person, and no representation with respect to tax consequences
is made. Unitholders and shareholders are urged to consult their
tax advisors with respect to their particular circumstances.
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,
BIPC exchangeable LP units and BIPC exchangeable shares.
References to the Partnership are to Brookfield
Infrastructure Partners L.P.
- Please refer to page 11 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, BIPC exchangeable LP units and BIPC exchangeable
shares.
- Average number of limited
partnership units outstanding on a time weighted average basis for
the three and six-month periods ended June 30, 2023
were 458.7 million and 458.5 million (2022:
458.0 million and 458.0 million).
- On June 10, 2022, Brookfield
Infrastructure completed a three-for-two split of our units, BIPC
exchangeable shares, Exchange LP Units, and BIPC exchangeable LP
units, by way of a subdivision whereby unitholders/shareholders
received an additional one-half of a unit/share for each unit/share
held. The Managing General Partner Units, Special General Partner
Units and Redeemable Partnership Units of the Holding LP were
concurrently split. Brookfield Infrastructure’s preferred units
were not affected by the split.
- We define FFO as net income
excluding the impact of depreciation and amortization, deferred
income taxes, mark-to-market gains (losses) and other income
(expenses) that are not related to the revenue earning activities
and are not normal, recurring cash operating expenses necessary for
business operations. FFO includes balances attributable to the
Partnership generated by investments in associates and joint
ventures accounted for using the equity method and excludes amounts
attributable to non-controlling interests based on the economic
interests held by non-controlling interests in consolidated
subsidiaries. We believe that FFO, when viewed in conjunction with
our IFRS results, provides a more complete understanding of factors
and trends affecting our underlying operations. FFO is a measure of
operating performance that is not calculated in accordance with,
and does not have any standardized meaning prescribed by IFRS as
issued by the International Accounting Standards Board. FFO is
therefore unlikely to be comparable to similar measures presented
by other issuers. A reconciliation of net income to FFO is
available on page 9 of this release. Readers are encouraged to
consider both measures in assessing our company’s results.
- Average number of partnership units
outstanding on a fully diluted time weighted average basis for the
three and six-month periods ended June 30, 2023 were
771.6 million and 771.5 million (2022: 771.1 million
and 771.1 million).
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Financial
Position
|
As of |
US$
millions, unaudited |
June 30,2023 |
|
|
Dec. 31,2022 |
|
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
1,380 |
|
|
$ |
1,279 |
|
Financial assets |
|
672 |
|
|
|
785 |
|
Property, plant and equipment
and investment properties |
|
38,834 |
|
|
|
37,991 |
|
Intangible assets and
goodwill |
|
27,869 |
|
|
|
20,611 |
|
Investments in associates and
joint ventures |
|
5,416 |
|
|
|
5,325 |
|
Deferred income taxes and other |
|
7,500 |
|
|
|
6,978 |
|
Total assets |
$ |
81,671 |
|
|
$ |
72,969 |
|
|
|
|
|
Liabilities and
partnership capital |
|
|
|
Corporate borrowings |
$ |
4,691 |
|
|
$ |
3,666 |
|
Non-recourse borrowings |
|
30,892 |
|
|
|
26,567 |
|
Financial liabilities |
|
2,132 |
|
|
|
2,067 |
|
Deferred income taxes and
other |
|
15,333 |
|
|
|
15,115 |
|
|
|
|
|
Partnership
capital |
|
|
|
Limited partners |
|
5,229 |
|
|
|
5,372 |
|
General partner |
|
26 |
|
|
|
27 |
|
Non-controlling interest
attributable to: |
|
|
|
Redeemable partnership units held by Brookfield |
|
2,195 |
|
|
|
2,263 |
|
Exchangeable units/shares1 |
|
1,322 |
|
|
|
1,361 |
|
Perpetual subordinated notes |
|
293 |
|
|
|
293 |
|
Interest of others in operating subsidiaries |
|
18,640 |
|
|
|
15,320 |
|
Preferred unitholders |
|
918 |
|
|
|
918 |
|
Total partnership capital |
|
28,623 |
|
|
|
25,554 |
|
Total liabilities and partnership capital |
$ |
81,671 |
|
|
$ |
72,969 |
|
- Includes
non-controlling interest attributable to BIPC exchangeable shares,
BIPC exchangeable LP units and Exchange LP units.
Brookfield Infrastructure Partners
L.P.Consolidated Statements of Operating
Results
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, except per unit information, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
4,256 |
|
|
$ |
3,681 |
|
|
$ |
8,474 |
|
|
$ |
7,092 |
|
Direct operating costs |
|
(3,280 |
) |
|
|
(2,712 |
) |
|
|
(6,509 |
) |
|
|
(5,218 |
) |
General
and administrative expense |
|
(109 |
) |
|
|
(108 |
) |
|
|
(212 |
) |
|
|
(229 |
) |
|
|
867 |
|
|
|
861 |
|
|
|
1,753 |
|
|
|
1,645 |
|
Interest expense |
|
(567 |
) |
|
|
(469 |
) |
|
|
(1,135 |
) |
|
|
(878 |
) |
Share of earnings (losses)
from associates and joint ventures |
|
273 |
|
|
|
(34 |
) |
|
|
376 |
|
|
|
20 |
|
Mark-to-market gains
(losses) |
|
87 |
|
|
|
165 |
|
|
|
(7 |
) |
|
|
133 |
|
Other
income |
|
295 |
|
|
|
56 |
|
|
|
200 |
|
|
|
91 |
|
Income before income tax |
|
955 |
|
|
|
579 |
|
|
|
1,187 |
|
|
|
1,011 |
|
Income tax (expense)
recovery |
|
|
|
|
|
|
|
Current |
|
(144 |
) |
|
|
(180 |
) |
|
|
(276 |
) |
|
|
(300 |
) |
Deferred |
|
(38 |
) |
|
|
26 |
|
|
|
5 |
|
|
|
8 |
|
Net income |
|
773 |
|
|
|
425 |
|
|
|
916 |
|
|
|
719 |
|
Non-controlling interest of others in operating subsidiaries |
|
(395 |
) |
|
|
(249 |
) |
|
|
(515 |
) |
|
|
(473 |
) |
Net income attributable to partnership |
$ |
378 |
|
|
$ |
176 |
|
|
$ |
401 |
|
|
$ |
246 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Limited partners |
$ |
186 |
|
|
$ |
70 |
|
|
$ |
161 |
|
|
$ |
76 |
|
General partner |
|
67 |
|
|
|
60 |
|
|
|
132 |
|
|
|
120 |
|
Non-controlling interest |
|
|
|
|
|
|
|
Redeemable partnership units held by Brookfield |
|
77 |
|
|
|
29 |
|
|
|
66 |
|
|
|
32 |
|
Exchangeable units/shares1 |
|
48 |
|
|
|
17 |
|
|
|
42 |
|
|
|
18 |
|
Basic and diluted losses per unit attributable to: |
|
|
|
|
|
|
|
Limited partners2 |
$ |
0.38 |
|
|
$ |
0.13 |
|
|
$ |
0.31 |
|
|
$ |
0.12 |
|
- Includes non-controlling interest
attributable to BIPC exchangeable shares, BIPC exchangeable LP
units and Exchange LP units.
- Average number of limited
partnership units outstanding on a time weighted average basis for
the three and six-month periods ended June 30, 2023
were 458.7 million and 458.5 million (2022: 458.0 million
and 458.0 million).
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Cash Flows
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
Net income |
$ |
773 |
|
|
$ |
425 |
|
|
$ |
916 |
|
|
$ |
719 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
Earnings from investments in associates and joint ventures, net of
distributions received |
|
109 |
|
|
|
76 |
|
|
|
161 |
|
|
|
146 |
|
Depreciation and amortization expense |
|
632 |
|
|
|
552 |
|
|
|
1,277 |
|
|
|
1,096 |
|
Mark-to-market, provisions and other |
|
(309 |
) |
|
|
(200 |
) |
|
|
(108 |
) |
|
|
(179 |
) |
Deferred income tax expense (recovery) |
|
38 |
|
|
|
(26 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
Change
in non-cash working capital, net |
|
(273 |
) |
|
|
(93 |
) |
|
|
(754 |
) |
|
|
(305 |
) |
Cash from operating activities |
|
970 |
|
|
|
734 |
|
|
|
1,487 |
|
|
|
1,469 |
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
Net proceeds from (investments
in): |
|
|
|
|
|
|
|
Operating assets |
|
524 |
|
|
|
— |
|
|
|
(4,175 |
) |
|
|
(42 |
) |
Associates |
|
672 |
|
|
|
59 |
|
|
|
(30 |
) |
|
|
(396 |
) |
Long-lived assets |
|
(507 |
) |
|
|
(723 |
) |
|
|
(996 |
) |
|
|
(1,313 |
) |
Financial assets |
|
55 |
|
|
|
55 |
|
|
|
176 |
|
|
|
19 |
|
Net settlements of foreign exchange contracts |
|
1 |
|
|
|
25 |
|
|
|
— |
|
|
|
24 |
|
Other
investing activities |
|
15 |
|
|
|
— |
|
|
|
(668 |
) |
|
|
— |
|
Cash from (used by) investing activities |
|
760 |
|
|
|
(584 |
) |
|
|
(5,693 |
) |
|
|
(1,708 |
) |
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
Distributions to limited and
general partners |
|
(377 |
) |
|
|
(354 |
) |
|
|
(753 |
) |
|
|
(711 |
) |
Net borrowings: |
|
|
|
|
|
|
|
Corporate |
|
60 |
|
|
|
379 |
|
|
|
958 |
|
|
|
818 |
|
Subsidiary |
|
12 |
|
|
|
751 |
|
|
|
2,546 |
|
|
|
1,393 |
|
Deposit repaid to parent |
|
— |
|
|
|
(200 |
) |
|
|
— |
|
|
|
— |
|
Net preferred units
redeemed |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(243 |
) |
Partnership units issued |
|
2 |
|
|
|
4 |
|
|
|
8 |
|
|
|
8 |
|
Settlement of deferred
consideration |
|
— |
|
|
|
(1,037 |
) |
|
|
— |
|
|
|
(1,037 |
) |
Net capital provided (to) by
non-controlling interest |
|
(761 |
) |
|
|
(161 |
) |
|
|
2,244 |
|
|
|
(31 |
) |
Other
financing activities |
|
(851 |
) |
|
|
(72 |
) |
|
|
(781 |
) |
|
|
(90 |
) |
Cash (used by) from financing activities |
|
(1,915 |
) |
|
|
(690 |
) |
|
|
4,222 |
|
|
|
107 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
Change during the period |
$ |
(185 |
) |
|
$ |
(540 |
) |
|
$ |
16 |
|
|
$ |
(132 |
) |
Cash reclassified as held for sale |
|
— |
|
|
|
(30 |
) |
|
|
(6 |
) |
|
|
(30 |
) |
Impact of foreign exchange on cash |
|
50 |
|
|
|
(98 |
) |
|
|
91 |
|
|
|
57 |
|
Balance, beginning of period |
|
1,515 |
|
|
|
1,969 |
|
|
|
1,279 |
|
|
|
1,406 |
|
Balance, end of period |
$ |
1,380 |
|
|
$ |
1,301 |
|
|
$ |
1,380 |
|
|
$ |
1,301 |
|
Brookfield Infrastructure Partners
L.P. Reconciliation of Net Income to Funds from
Operations
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net income |
$ |
773 |
|
|
$ |
425 |
|
|
$ |
916 |
|
|
$ |
719 |
|
Add back or deduct the following: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
632 |
|
|
|
552 |
|
|
|
1,277 |
|
|
|
1,096 |
|
Share of (earnings) losses from investments in associates and joint
ventures |
|
(273 |
) |
|
|
34 |
|
|
|
(376 |
) |
|
|
(20 |
) |
FFO contribution from investments in associates and joint
ventures1 |
|
245 |
|
|
|
215 |
|
|
|
484 |
|
|
|
421 |
|
Deferred tax expense (recovery) |
|
38 |
|
|
|
(26 |
) |
|
|
(5 |
) |
|
|
(8 |
) |
Mark-to-market (gains) losses |
|
(87 |
) |
|
|
(165 |
) |
|
|
7 |
|
|
|
(133 |
) |
Gain on disposition of subsidiaries, associates and joint
ventures2 |
|
(478 |
) |
|
|
(75 |
) |
|
|
(478 |
) |
|
|
(75 |
) |
Other expense3 |
|
263 |
|
|
|
71 |
|
|
|
426 |
|
|
|
90 |
|
Consolidated Funds from Operations |
$ |
1,113 |
|
|
$ |
1,031 |
|
|
$ |
2,251 |
|
|
$ |
2,090 |
|
FFO Attributable to non-controlling interests4 |
|
(561 |
) |
|
|
(518 |
) |
|
|
(1,145 |
) |
|
|
(1,084 |
) |
FFO |
$ |
552 |
|
|
$ |
513 |
|
|
$ |
1,106 |
|
|
$ |
1,006 |
|
- FFO contribution from investments
in associates and joint ventures correspond to the FFO attributable
to the partnership that are generated by its investments in
associates and joint ventures accounted for using the equity
method.
- Gains on disposition of
subsidiaries, associates, and joint ventures are presented net of
gains/losses relating to foreign currency translation reclassified
from accumulated comprehensive income to other income on the
Consolidated Statement of Operating Results.
- Other expense corresponds to
amounts that are not related to the revenue earning activities and
are not normal, recurring cash operating expenses necessary for
business operations. Other expenses excluded from FFO primarily
includes acquisition costs, gains/losses on remeasurement of
borrowings, amortization of deferred financing costs, fair value
remeasurement gains/losses, accretion expenses on deferred
consideration or asset retirement obligations, and gains or losses
on debt extinguishment.
- Amounts attributable to
non-controlling interests are calculated based on the economic
ownership interests held by non-controlling interests in
consolidated subsidiaries. By adjusting FFO attributable to
non-controlling interests, our partnership is able to remove the
portion of FFO earned at non-wholly owned subsidiaries that are not
attributable to our partnership.
Brookfield Infrastructure Partners
L.P.Statements of Funds from Operations per
Unit
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$, unaudited |
|
2023 |
|
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
Earnings per limited
partnership unit1 |
$ |
0.38 |
|
|
$ |
0.13 |
|
$ |
0.31 |
|
$ |
0.12 |
|
Add back or deduct the
following: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
0.45 |
|
|
|
0.43 |
|
|
0.90 |
|
|
0.85 |
|
Deferred taxes and other items |
|
(0.11 |
) |
|
|
0.11 |
|
|
0.23 |
|
|
0.34 |
|
FFO per unit2 |
$ |
0.72 |
|
|
$ |
0.67 |
|
$ |
1.44 |
|
$ |
1.31 |
|
- Average number of limited
partnership units outstanding on a time weighted average basis for
the three and six-month periods ended June 30, 2023
were 458.7 million and 458.5 million (2022: 458.0 million
and 458.0 million).
- Average number
of partnership units outstanding on a fully diluted time weighted
average basis for the three and six-month periods ended
June 30, 2023 were 771.6 million and 771.5 million (2022:
771.1 million and 771.1 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 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 Corporation
Reports Second Quarter 2023 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
$0.3825 per class A exchangeable subordinate voting share of BIPC
(a “Share”), payable on September 29, 2023 to shareholders of
record as at the close of business on August 31, 2023. This
dividend is identical in amount per Share and has identical record
and payment dates to the quarterly distribution announced today by
Brookfield Infrastructure Partners L.P. (“BIP” or the
“Partnership”) on its 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
https://bip.brookfield.com. Copies of the Partnership’s continuous
disclosure filings are available electronically on EDGAR on the
SEC’s website at https://sec.gov or on SEDAR at
https://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 of $154 million
for the three month period ended June 30, 2023, compared
to net income of $842 million in the prior year. After
removing the impact of the revaluation on our own Shares that are
classified as liabilities under IFRS, underlying earnings were
consistent with the prior year. Current period results benefited
from inflation indexation across our business and capital
commissioned into rate base at our U.K. regulated distribution
business. These benefits were offset by an increase in income taxes
as a one-time deferred tax recovery was recorded in the comparative
period.
FFO increased to $124 million this quarter,
representing a 7% increase compared to the same period in the prior
year. FFO benefited from inflation indexation across our
businesses, as well as higher connections activity at our U.K.
regulated distribution business. These benefits were partially
offset by an increase in financing costs at our Brazilian regulated
gas transmission business.
Cautionary Statement Regarding
Forward-looking Statements
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 three-for-two split of
BIP’s and BIPC’s respective units and Shares, 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 impact of health pandemics 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 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.
-
We define FFO as net income excluding the impact of depreciation
and amortization, deferred income taxes, mark-to-market gains
(losses) and other income (expenses) that are not related to the
revenue earning activities and are not normal, recurring cash
operating expenses necessary for business operations. We exclude
from FFO dividends paid on the exchangeable shares of our company
that are presented as interest expense, as well as the interest
expense on loans payable to the partnership which represent the
partnership’s investment in our company. We also exclude from FFO
amounts attributable to non-controlling interests based on the
economic interests held by non-controlling interests in
consolidated subsidiaries. FFO excludes amounts attributable to
non-controlling interests based on the economic interests held by
non-controlling interests in consolidated subsidiaries. We believe
that FFO, when viewed in conjunction with our IFRS results,
provides a more complete understanding of factors and trends
affecting our underlying operations. FFO is a measure of operating
performance that is not calculated in accordance with, and does not
have any standardized meaning prescribed by IFRS as issued by the
International Accounting Standards Board. FFO is therefore unlikely
to be comparable to similar measures presented by other issuers. A
reconciliation of net income to FFO is available on page 16 of this
release. Readers are encouraged to consider both measures in
assessing our company’s results.
Brookfield Infrastructure
CorporationConsolidated Statements of Financial
Position
|
As of |
US$
millions, unaudited |
June 30,2023 |
|
|
Dec. 31,2022 |
|
|
|
|
|
Assets |
|
|
|
Cash and cash equivalents |
$ |
356 |
|
|
$ |
445 |
|
Due from Brookfield
Infrastructure |
|
820 |
|
|
|
566 |
|
Property, plant and
equipment |
|
5,149 |
|
|
|
4,718 |
|
Intangible assets |
|
3,043 |
|
|
|
2,847 |
|
Investments in associates |
|
417 |
|
|
|
428 |
|
Goodwill |
|
566 |
|
|
|
518 |
|
Deferred tax asset and other |
|
622 |
|
|
|
656 |
|
Total assets |
$ |
10,973 |
|
|
$ |
10,178 |
|
|
|
|
|
Liabilities and
Equity |
|
|
|
Accounts payable and
other |
$ |
756 |
|
|
$ |
781 |
|
Loans payable to Brookfield
Infrastructure |
|
26 |
|
|
|
26 |
|
Exchangeable and class B
shares |
|
4,040 |
|
|
|
3,426 |
|
Non-recourse borrowings |
|
5,057 |
|
|
|
4,577 |
|
Financial liabilities |
|
107 |
|
|
|
72 |
|
Deferred tax liabilities and
other |
|
1,751 |
|
|
|
1,657 |
|
|
|
|
|
Equity |
|
|
|
Equity in net assets
attributable to the Partnership |
|
(1,630 |
) |
|
|
(1,119 |
) |
Non-controlling interest |
|
866 |
|
|
|
758 |
|
Total equity |
|
(764 |
) |
|
|
(361 |
) |
Total liabilities and equity |
$ |
10,973 |
|
|
$ |
10,178 |
|
Brookfield Infrastructure
CorporationConsolidated Statements of Operating
Results
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Revenues |
$ |
538 |
|
|
$ |
479 |
|
|
$ |
1,035 |
|
|
$ |
940 |
|
Direct operating costs |
|
(149 |
) |
|
|
(131 |
) |
|
|
(296 |
) |
|
|
(265 |
) |
General
and administrative expenses |
|
(17 |
) |
|
|
(17 |
) |
|
|
(33 |
) |
|
|
(37 |
) |
|
|
372 |
|
|
|
331 |
|
|
|
706 |
|
|
|
638 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
(161 |
) |
|
|
(143 |
) |
|
|
(314 |
) |
|
|
(245 |
) |
Share of earnings (losses)
from investments in associates |
|
3 |
|
|
|
2 |
|
|
|
4 |
|
|
|
(4 |
) |
Remeasurement of exchangeable
and class B shares |
|
(301 |
) |
|
|
656 |
|
|
|
(608 |
) |
|
|
259 |
|
Mark-to-market and other |
|
28 |
|
|
|
(5 |
) |
|
|
38 |
|
|
|
96 |
|
(Loss) income before income tax |
|
(59 |
) |
|
|
841 |
|
|
|
(174 |
) |
|
|
744 |
|
Income tax (expense)
recovery |
|
|
|
|
|
|
|
Current |
|
(89 |
) |
|
|
(110 |
) |
|
|
(169 |
) |
|
|
(200 |
) |
Deferred |
|
(6 |
) |
|
|
111 |
|
|
|
(6 |
) |
|
|
82 |
|
Net (loss) income |
$ |
(154 |
) |
|
$ |
842 |
|
|
$ |
(349 |
) |
|
$ |
626 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
Partnership |
$ |
(274 |
) |
|
$ |
673 |
|
|
$ |
(575 |
) |
|
$ |
300 |
|
Non-controlling interest |
|
120 |
|
|
|
169 |
|
|
|
226 |
|
|
|
326 |
|
Brookfield Infrastructure
CorporationConsolidated Statements of Cash
Flows
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Operating
Activities |
|
|
|
|
|
|
|
Net (loss) income |
$ |
(154 |
) |
|
$ |
842 |
|
|
$ |
(349 |
) |
|
$ |
626 |
|
Adjusted for the following
items: |
|
|
|
|
|
|
|
Earnings from investments in associates, net of distributions
received |
|
— |
|
|
|
15 |
|
|
|
(1 |
) |
|
|
21 |
|
Depreciation and amortization expense |
|
57 |
|
|
|
54 |
|
|
|
112 |
|
|
|
108 |
|
Mark-to-market and other |
|
(10 |
) |
|
|
28 |
|
|
|
(5 |
) |
|
|
(54 |
) |
Remeasurement of exchangeable and class B shares |
|
301 |
|
|
|
(656 |
) |
|
|
608 |
|
|
|
(259 |
) |
Deferred income tax expense (recovery) |
|
6 |
|
|
|
(111 |
) |
|
|
6 |
|
|
|
(82 |
) |
Change
in non-cash working capital, net |
|
65 |
|
|
|
60 |
|
|
|
(116 |
) |
|
|
(5 |
) |
Cash from operating activities |
|
265 |
|
|
|
232 |
|
|
|
255 |
|
|
|
355 |
|
|
|
|
|
|
|
|
|
Investing
Activities |
|
|
|
|
|
|
|
Investments in associates |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(455 |
) |
Purchase of long-lived assets,
net of disposals |
|
(134 |
) |
|
|
(140 |
) |
|
|
(259 |
) |
|
|
(253 |
) |
Purchase of financial assets and other |
|
— |
|
|
|
— |
|
|
|
(4 |
) |
|
|
(71 |
) |
Cash used by investing activities |
|
(134 |
) |
|
|
(140 |
) |
|
|
(263 |
) |
|
|
(779 |
) |
|
|
|
|
|
|
|
|
Financing
Activities |
|
|
|
|
|
|
|
Distributions to
non-controlling interest |
|
(48 |
) |
|
|
(117 |
) |
|
|
(163 |
) |
|
|
(136 |
) |
Proceeds from borrowings, net
of repayments |
|
(53 |
) |
|
|
426 |
|
|
|
58 |
|
|
|
1,570 |
|
Settlement of deferred consideration |
|
— |
|
|
|
(1,037 |
) |
|
|
— |
|
|
|
(1,037 |
) |
Cash (used by) from financing activities |
|
(101 |
) |
|
|
(728 |
) |
|
|
(105 |
) |
|
|
397 |
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
|
|
|
|
|
Change during the period |
$ |
30 |
|
|
$ |
(636 |
) |
|
$ |
(113 |
) |
|
$ |
(27 |
) |
Impact of foreign exchange on cash |
|
17 |
|
|
|
(71 |
) |
|
|
24 |
|
|
|
70 |
|
Balance, beginning of period |
|
309 |
|
|
|
1,219 |
|
|
|
445 |
|
|
|
469 |
|
Balance, end of period |
$ |
356 |
|
|
$ |
512 |
|
|
$ |
356 |
|
|
$ |
512 |
|
Brookfield Infrastructure
CorporationStatements of Funds from
Operations
|
For the three monthsended June 30 |
|
For the six monthsended June 30 |
US$ millions, unaudited |
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(154 |
) |
|
$ |
842 |
|
|
$ |
(349 |
) |
|
$ |
626 |
|
Add back or deduct the following: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
57 |
|
|
|
54 |
|
|
|
112 |
|
|
|
108 |
|
Share of (earnings) losses from investments in associates |
|
(3 |
) |
|
|
(2 |
) |
|
|
(4 |
) |
|
|
4 |
|
FFO contribution from investments in associates1 |
|
16 |
|
|
|
15 |
|
|
|
31 |
|
|
|
20 |
|
Deferred income tax expense (recovery) |
|
6 |
|
|
|
(111 |
) |
|
|
6 |
|
|
|
(82 |
) |
Mark-to-market and foreign currency revaluation |
|
(12 |
) |
|
|
19 |
|
|
|
(12 |
) |
|
|
(82 |
) |
Other expenses2 |
|
2 |
|
|
|
18 |
|
|
|
6 |
|
|
|
31 |
|
Remeasurement of exchangeable and class B shares |
|
301 |
|
|
|
(656 |
) |
|
|
608 |
|
|
|
(259 |
) |
Dividends classified as interest expense and interest expense on
intercompany loans |
|
43 |
|
|
|
40 |
|
|
|
85 |
|
|
|
80 |
|
Consolidated Funds from Operations |
|
256 |
|
|
|
219 |
|
|
|
483 |
|
|
|
446 |
|
FFO attributable to non-controlling interests3 |
|
(132 |
) |
|
|
(103 |
) |
|
|
(248 |
) |
|
|
(228 |
) |
FFO |
$ |
124 |
|
|
$ |
116 |
|
|
$ |
235 |
|
|
$ |
218 |
|
1. FFO contribution from investments in
associates correspond to the FFO attributable to our company that
are generated by its investments in associates accounted for using
the equity method.2. Other expenses correspond to amounts that are
not related to the revenue earning activities and are not normal,
recurring cash operating expenses necessary for business
operations. Other expenses excluded from FFO primarily include fair
value remeasurement gains/losses and accretion expense on deferred
consideration.3. Amounts attributable to non-controlling interests
are calculated based on the economic ownership interests held by
non-controlling interests in consolidated subsidiaries. By
adjusting FFO attributable to non-controlling interests, our
company is able to remove the portion of FFO earned at non-wholly
owned subsidiaries that are not attributable to our company.
Brookfield Infrastructure (NYSE:BIPC)
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