Brookfield Infrastructure (NYSE:BIP)(TSX:BIP.UN) -
Investors, analysts and other interested parties can access
Brookfield Infrastructure's 2012 third quarter results as well as
the Letter to Unitholders and Supplemental Information on the web
site under the Investor Relations section at
www.brookfieldinfrastructure.com.
The 2012 third quarter results conference call can be accessed
via webcast on November 7, 2012 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. ET. The
teleconference taped rebroadcast can be accessed at 1-800-319-6413
(password: 9245#) until midnight on December 7, 2012.
Brookfield Infrastructure today announced its results for the
third quarter ended September 30, 2012.
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Three months ended Nine months ended
Sept. 30 Sept. 30
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US$ millions (except per unit amounts) 2012 2011 2012 2011
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FFO(1) $ 113 $ 97 $ 332 $ 297
- per unit(2) $ 0.58 $ 0.62 $ 1.76 $ 1.89
Net income $ 68 $ 62 $ 56 $ 133
- per unit(2) $ 0.35 $ 0.39 $ 0.30 $ 0.84
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Brookfield Infrastructure posted solid results for the quarter
ended September 30, 2012 with funds from operations ("FFO")(1)
totalling $113 million ($0.58 per unit) compared to FFO of $97
million ($0.62 per unit) in the third quarter of 2011. Results
reflect an increase in FFO from Brookfield Infrastructure's
transport and energy and utilities platforms, partially offset by a
decline in performance from its timber business. Per unit FFO was
6% lower than the prior year due to the impact of an approximate
$500 million equity issuance in August 2012. The proceeds from this
offering will be used to fund acquisitions that are scheduled to
close in the fourth quarter. Brookfield Infrastructure's payout
ratio(3) for the quarter was 65% of FFO, within its targeted range
of 60% to 70%.
"Despite the slowdown of the global economy, our diversified
portfolio of businesses continued to perform well," said Sam
Pollock, Chief Executive Officer of Brookfield Infrastructure
Group. "During the quarter, we completed the expansion of our
Australian railroad ahead of schedule and under budget, which was a
significant milestone in our growth. We are also making significant
progress closing a number of strategic initiatives that will
substantially increase the scale of our electricity transmission,
regulated distribution and toll road operations and will lay the
foundation for the next phase of growth for our business."
Segment Performance
Brookfield Infrastructure's utilities platform generated FFO of
$80 million in the third quarter of 2012, compared to $77 million
in the prior year period. The increase in FFO was driven by
increased connections revenue and additions to rate base, due to an
acquisition that closed during the year, in its regulated
distribution business.
Brookfield Infrastructure's transport and energy platform
generated FFO of $54 million in the third quarter of 2012, compared
to $39 million in the prior year period. This platform's strong
performance was driven by a 140% increase in FFO from its
Australian railroad, as a result of revenue from four expansion
projects that have been commissioned, as well as an increase in
grain volume following a record harvest in Western Australia.
Brookfield Infrastructure's timber platform reported FFO of $3
million in the third quarter of 2012, compared to $5 million in the
prior year period. The decline in performance primarily reflected
weaker pricing in both the domestic and export log markets and
reduced harvest levels, particularly in the coastal region of
British Columbia, due to cautionary measures to prevent forest
fires caused by an unusually extended period of warm dry
weather.
The following table presents net income and FFO by segment:
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Three months ended Nine months ended
Sept. 30 Sept. 30
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US$ millions, unaudited 2012 2011 2012 2011
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Net income by segment
Utilities $ 38 $ 56 $ 98 $ 107
Transport and energy 37 9 31 51
Timber 3 32 (5) 45
Corporate and other (10) (35) (68) (70)
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Net income $ 68 $ 62 $ 56 $ 133
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FFO by segment
Utilities $ 80 $ 77 $ 223 $ 204
Transport and energy 54 39 169 123
Timber 3 5 15 28
Corporate and other (24) (24) (75) (58)
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FFO $ 113 $ 97 $ 332 $ 297
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Brookfield Infrastructure reported net income of $68 million
($0.35 per unit) for the quarter ended September 30, 2012, compared
to net income of $62 million ($0.39 per unit) in the third quarter
of 2011. The increase was the result of higher FFO and the benefit
of a deferred tax recovery, partially offset by certain valuation
gains that were recognized in the prior year.
Strategic Initiatives Update
In October, Brookfield Infrastructure closed the acquisition of
an additional interest in its Chilean toll road, increasing its
ownership to approximately 50%. Furthermore, Brookfield
Infrastructure continues to advance the acquisition of a 60%
interest in the largest toll road operator in Brazil, in
conjunction with Abertis Infraestructuras and institutional
investors. Upon closing, which is expected in December, the
Partnership will own interests in 11 toll roads in Brazil and
Chile. Its 3,200 km network will be diversified, with a balance of
light and heavy vehicles and urban and interurban traffic. All
concessions will benefit from projected increases in traffic and
tolls that escalate with inflation. As one of the largest
owner/operators of toll roads in the region, Brookfield
Infrastructure will be well positioned to invest in additional
expansions and upgrades of the system as well as add-on
acquisitions and development opportunities in two of the highest
growth countries in the region. Brookfield Infrastructure will
invest approximately $475 million into its South American toll road
platform in the fourth quarter.
Also in October, Brookfield Infrastructure acquired a district
energy system that serves commercial customers in downtown Toronto
in partnership with institutional investors. This business
generates very stable cash flow, with 93% of its revenue under
long-term contracts with high quality counter-parties. The growth
opportunities of this business are particularly exciting in light
of the large pipeline of prospective new customers that can be
connected to its deep lake cooling system. Brookfield
Infrastructure invested approximately $75 million for a 25%
interest in this business.
During the quarter, Brookfield Infrastructure closed the
acquisition of a UK regulated distribution business and made
significant progress towards completing the recapitalization of the
company. In September, Challenger Infrastructure Fund's unitholders
approved the sale of its 85% interest. Subsequently, the minority
shareholders exercised their right to sell on the same terms
enabling Brookfield Infrastructure to acquire 100% of the business.
In October, the UK Office of Fair Trading approved this
transaction, and Brookfield Infrastructure is in the process of
finalizing the documentation for financing arrangements with its
bank group. Completion of the recapitalization is expected to take
place before the end of November. Upon close of the transaction and
the subsequent merger with its existing business, Brookfield
Infrastructure will invest $510 million and more than double its
installed base of gas and electricity connections to over 1
million. Furthermore, it will extend its multi-utility capability
into high margin fibre-to-home and district heating offerings.
During the quarter Brookfield Infrastructure initiated a process
to acquire Brookfield Asset Management's interest in its Chilean
transmission system. The independent members of the Partnership's
Board of Directors recently approved the acquisition of this 10%
interest for $235 million. With this transaction, Brookfield
Infrastructure will increase its stake in one of its premier assets
to 28%. This system is the backbone electricity transmission system
in Chile, serving 98% of the population of the country. With the
economic growth in Chile, this business is well positioned to
invest in upgrades and expansions to satisfy increased electricity
demand. This transaction is expected to close during the first
quarter of 2013, subject to obtaining required third party
consents.
Recent Financings
On August 10, Brookfield Infrastructure closed an equity
issuance of approximately 15.7 million L.P. units at an offering
price of $33.25 per unit, under its shelf registrations in the U.S.
and Canada, raising net proceeds of approximately $500 million.
Subsequent to quarter end, Brookfield Infrastructure issued C$400
million of five-year bonds in the Canadian market with a 3.5%
interest rate, which was swapped into U.S. dollars at an effective
interest rate of 2.7%. Proceeds from these transactions are being
used to fund Brookfield Infrastructure's recent acquisitions and to
refinance holding company debt, which matures in November.
Distribution Declaration
The Board of Directors has declared a quarterly distribution in
the amount of US$0.375 per unit, payable on December 31, 2012 to
unitholders of record as at the close of business on November 30,
2012. Distributions are eligible for reinvestment under the
Partnership's Distribution Reinvestment Plan. Information on this
Plan and on declared distributions can be found on Brookfield
Infrastructure's website under Investor
Relations/Distributions.
Additional Information
The Letter to Unitholders and the Supplemental Information for
the three months ended September 30, 2012 contain further
information on Brookfield Infrastructure's strategy, operations and
financial results. Unitholders are encouraged to read these
documents, which 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, and timber assets in
North and South America, Australasia, and Europe. It also seeks
acquisition opportunities in other infrastructure sectors with
similar attributes. The payout policy targets 3% to 7% 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", "could", "estimate", "tend to", "continue",
"believe", "expect", "target" 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 and funds from
operations through the completion of certain acquisitions, the
funding, timing and likelihood of successfully completing these
acquisitions and the future performance of those acquisitions and
other growth opportunities 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 competitive business environment
for our timber operations, 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 (including those referred to in this news
release) in the competitive infrastructure space and to integrate
acquisitions into existing operations, the future performance of
these acquisitions, including traffic volumes on our toll roads 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.
References to the Partnership are to Brookfield Infrastructure
Partners L.P.
(1) FFO is equal to net income plus depreciation and amortization, deferred
taxes and certain other items. A reconciliation of net income to FFO is
available in the Partnership's Supplemental Information for the three
and nine months ended September 30, 2012 at
www.brookfieldinfrastructure.com.
(2) Average number of units outstanding on a fully diluted time weighted
average basis for the three and nine months ended September 30, 2012
were 194.8 million and 188.4 million, respectively (2011 - 157.4
million).
(3) Payout ratio is defined as distributions to unitholders divided by FFO.
Brookfield Infrastructure Partners L.P.
Statements of Funds from Operations
For the three-month For the nine-month
period ended period ended
Sept. 30 Sept. 30
----------------------------------------
(US$ millions, except per unit
information, unaudited) 2012 2011 2012 2011
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Operating platforms - revenues less
direct costs
Utilities $ 119 $ 113 $ 338 $ 312
Transport and energy 93 79 291 241
Timber 10 12 35 49
Corporate and other (25) (15) (67) (43)
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Total operating platforms - revenues
less direct costs 197 189 597 559
Financing costs (92) (91) (279) (268)
Other income (expense) 8 (1) 14 6
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Total funds from operations (FFO) 113 97 332 297
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Depreciation and amortization (69) (53) (209) (154)
Deferred income taxes and other
items 24 18 (67) (10)
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Net income attributable to
partnership $ 68 $ 62 $ 56 $ 133
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Funds from operations (FFO) per unit $ 0.58 $ 0.62 $ 1.76 $ 1.89
Net income per unit $ 0.35 $ 0.39 $ 0.30 $ 0.84
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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. Readers are encouraged to refer to Brookfield
Infrastructure's Supplemental Information which is available at
www.brookfieldinfrastructure.com.
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 performance and to determine the underlying
value of its businesses. Readers are encouraged to consider both
measures in assessing Brookfield Infrastructure's results.
Brookfield Infrastructure Partners L.P.
Statements of Partnership Capital
Net Invested Capital
------------------------------
(US$ millions, except per unit information, September 30, December 31,
unaudited) 2012 2011
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Assets
Operating Platforms
Utilities $ 1,465 $ 1,324
Transport and energy 2,505 2,214
Timber 625 648
Cash and cash equivalents 172 79
Other assets 49 55
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$ 4,816 $ 4,320
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Liabilities
Corporate borrowings $ 92 $ -
Non-recourse borrowings 118 114
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210 114
Capitalization
Partnership capital 4,606 4,206
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$ 4,816 $ 4,320
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Net book value per unit $ 22.94 $ 22.72
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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.
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 and to refer to Brookfield Infrastructure's Supplemental
Information, available at www.brookfieldinfrastructure.com.
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Financial Position
As of
------------------------------
September 30, December 31,
(US$ millions, unaudited) 2012 2011
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Assets
Cash and cash equivalents $ 384 $ 153
Accounts receivable and other 302 215
Other current assets 155 110
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Total current assets 841 478
Property, plant and equipment 5,268 4,073
Intangible assets 2,972 2,924
Standing timber 2,879 2,890
Investments in associates 1,666 1,400
Goodwill 607 591
Investment properties 200 194
Deferred income taxes and other 402 719
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Total assets $ 14,835 $ 13,269
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Liabilities and partnership capital
Accounts payable and other $ 605 $ 381
Non-recourse borrowings 977 145
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Total current liabilities 1,582 526
Corporate borrowings 92 -
Non-recourse borrowings 4,550 4,740
Deferred income taxes and other 1,976 2,094
Preferred shares 20 20
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Total liabilities 8,220 7,380
Partnership capital
Non-controlling interest 2,009 1,683
Limited partners' capital 4,038 3,539
General partner capital 19 19
Retained earnings 91 260
Reserves 458 388
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Total partnership capital 6,615 5,889
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Total liabilities and partnership capital $ 14,835 $ 13,269
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Brookfield Infrastructure Partners L.P.
Consolidated Statements of Operating Results
For the three-month For the nine-month
period ended period ended
Sept. 30 Sept. 30
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(US$ millions, unaudited) 2012 2011 2012 2011
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Revenues $ 482 $ 414 $ 1,426 $ 1,232
Direct operating costs (268) (232) (779) (669)
General and administrative expenses (25) (15) (67) (43)
Depreciation and amortization
expense (56) (34) (159) (90)
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133 133 421 430
Interest expense (96) (85) (287) (250)
Share of earnings from investments
in associates 40 14 9 38
Fair value adjustments (1) 165 (19) 142
Other income (expenses) 14 (4) (35) 17
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Income before income tax 90 223 89 377
Income tax recovery (expense) 5 (67) 22 (92)
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Net income $ 95 $ 156 $ 111 $ 285
Net income attributable to non-
controlling interest (27) (94) (55) (152)
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Net income attributable to
partnership $ 68 $ 62 $ 56 $ 133
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Net income per partnership unit $ 0.35 0.39 $ 0.30 $ 0.84
Calculation of Limited partners'
interest in net income attributable
to partnership:
Net income attributable to
partnership $ 68 62 $ 56 $ 133
Less: General partner interest (4) (2) (12) (2)
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Limited partners' interest in net
income $ 64 60 $ 44 $ 131
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Earnings per unit:
Basic and diluted earnings per unit
attributable to:
Limited partners $ 0.33 $ 0.38 $ 0.23 $ 0.84
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Brookfield Infrastructure Partners L.P.
Consolidated Statements of Cash Flows
For the three-month For the nine-month
period ended period ended
Sept. 30 Sept. 30
----------------------------------------
(US$ millions, unaudited) 2012 2011 2012 2011
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Operating Activities
Net income $ 95 $ 156 $ 111 $ 285
Adjusted for the following items:
(Earnings) losses from investments
in associates, net of
distributions received (35) (7) 19 (15)
Depreciation and amortization
expense 56 34 159 90
Fair value adjustments 1 (165) 19 (142)
Provisions and other items 14 (4) 62 (21)
Deferred tax recovery (10) 68 (36) 91
Change in non-cash working capital,
net 31 (16) 62 22
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Cash from operating activities 152 66 396 310
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Investing Activities
Acquisition of subsidiary, net of
cash acquired - (7) (25) (7)
Investments in associates (24) - (235) (13)
Additions to long lived assets (168) (128) (510) (343)
Sale (purchase) of financial assets 31 - (49) -
Settlements of foreign exchange
contracts 4 (29) 15 (65)
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Cash used by investing activities (157) (164) (804) (428)
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Financing Activities
Distributions to unitholders (79) (57) (225) (155)
Corporate borrowings (285) 95 92 294
Subsidiary borrowings 115 51 337 108
Partnership units issued 497 - 497 -
Subsidiary distributions to non-
controlling interest (17) (58) (61) (130)
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Cash from financing activities 231 31 640 117
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Cash and cash equivalents
Change during the period 226 (67) 232 (1)
Impact of foreign exchange on cash (1) (10) (1) 4
Balance, beginning of period 159 234 153 154
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Balance, end of period $ 384 $ 157 $ 384 $ 157
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Contacts: Investors: Brookfield Infrastructure Tracey Wise Vice
President, Investor Relations
416-956-5154tracey.wise@brookfield.com Media: Brookfield
Infrastructure Andrew Willis Senior Vice President, Communications
and Media 416-369-8236andrew.willis@brookfield.com
www.brookfieldinfrastructure.com
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