| For the three months ended September 30 | For the nine months ended September 30 | |||||||||
| US$ millions (except per unit amounts), unaudited | 2019 | 2018 | 2019 | 2018 | ||||||
| Net income1 | $ | 82 | $ | 5 | $ | 210 | $ | 339 | ||
| – per unit2,3 | $ | 0.07 | $ | (0.10 | ) | $ | 0.14 | $ | 0.53 | |
| FFO4 | $ | 338 | $ | 278 | $ | 1,026 | $ | 905 | ||
| – per unit5 | $ | 0.82 | $ | 0.71 | $ | 2.55 | $ | 2.31 | ||
Brookfield Infrastructure reported net income for the quarter of
Our business generated FFO of
“Our operations performed well and results in the quarter reflect strong underlying growth in our core business,” said Sam Pollock, Chief Executive Officer of Brookfield Infrastructure. “The outlook for our business is also positive. We currently have
Pollock added, “We have received a positive response thus far from the investment community regarding the creation of Brookfield Infrastructure Corporation (‘BIPC’), which we are targeting to launch in the first quarter of 2020. BIPC shares are intended to be economically equivalent to BIP units and will provide investors with an alternate way to access our global infrastructure business.”
Segment Performance
FFO from our utilities segment totaled
Our transport segment contributed FFO of
FFO from our energy segment totaled
FFO from our data infrastructure segment was
The following table presents FFO by segment:
| | For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
| US$ millions, unaudited | 2019 | 2018 | 2019 | 2018 | ||||||||||
| FFO by segment | ||||||||||||||
| Utilities | $ | 145 | $ | 130 | $ | 425 | $ | 438 | ||||||
| Transport | 128 | 119 | 402 | 389 | ||||||||||
| Energy | 100 | 59 | 303 | 179 | ||||||||||
| Data Infrastructure | 36 | 19 | 94 | 57 | ||||||||||
| Corporate | (71) | (49 | ) | (198 | ) | (158 | ) | |||||||
| FFO | $ | 338 | $ | 278 | $ | 1,026 | $ | 905 | ||||||
Update on Strategic Initiatives
Over the past several months we have been active, advancing previously announced initiatives. Recently, we achieved financial close on our North American gas pipeline business with an investment of approximately
- North American Rail Business – In July, we announced the
$8.4 billion total value take-private acquisition of Genesee &Wyoming , Inc. (‘G&W’), which we will be acquiring alongside institutional investors (BIP’s share of equity – approximately$500 million ). G&W shareholder and Surface Transportation Board (STB) approvals were received in October 2019. The transaction is on track to close in the fourth quarter, following receipt of the remaining customary regulatory approvals. - Indian Telecom Towers – We are finalizing an agreement with Reliance Jio to acquire a large-scale portfolio of 130,000 telecom towers in
India . This transaction is being negotiated on a bilateral basis and leverages our existing relationship with Reliance Industries, the counterparty to the Indian pipeline business we acquired earlier this year. We have substantially completed our due diligence and are currently finalizing transaction documentation. We expect to sign the transaction in the coming weeks and anticipate investing up to $400 million (BIP’s share of equity) upon closing of the transaction in the months that follow.
Our latest phase of capital recycling has also been successful. In the coming months, we expect our liquidity position will grow by approximately
- Colombian regulated distribution operation – We have agreed to sell this business for $100 million of after-tax proceeds to BIP. Upon closing, which is expected in the fourth quarter, we will have earned an after-tax IRR of 18% and generated a multiple of capital of almost three times our initial investment.
- Australian district energy and distribution business – We have agreed to divest this business for approximately
$280 million . Our exit price translates to an 18x EV/EBITDA multiple, a strong valuation that reflects the stability and positive growth outlook for the business. The sale is expected to close in the fourth quarter of 2019. - Chilean toll road business – We have entered into an agreement to sell a further 33% interest in this business, at a purchase price consistent with the sale of the initial 33% interest that closed earlier this year. The sale will result in an after-tax IRR of 16% and a multiple of capital of 2.4 times. The sale is expected to close in the fourth quarter and will result in $170 million in proceeds to BIP.
Board of Directors Update
John Mullen will be stepping down from the Board of Brookfield Infrastructure in early 2020, for personal reasons. Derek Pannell, Chairman of the Board, stated, “I would like to thank John for his advice and guidance since joining the Board in 2017. His expertise and contributions have been greatly appreciated.”
Distribution
The Board of Directors has declared a quarterly distribution in the amount of
Additional Information
The Board has reviewed and approved this news release, including the summarized unaudited financial information contained herein.
Brookfield Infrastructure’s Letter to Unitholders and Supplemental Information are available at www.brookfield.com/infrastructure.
Brookfield Infrastructure Partners is a leading global infrastructure company that owns and operates high quality, long-life assets in the utilities, transport, energy and data infrastructure sectors across
Brookfield Infrastructure is the flagship listed infrastructure company of Brookfield Asset Management, a leading global alternative asset manager with over
Brookfield Infrastructure Partners is listed on the
Please note that Brookfield Infrastructure Partner’s previous audited annual and unaudited quarterly reports have been filed on SEDAR and Edgar, and can also be found in the shareholders section of its website at https://bip.brookfield.com. Hard copies of the annual and quarterly reports can be obtained free of charge upon request.
For more information, please contact:
| Media: Claire Holland Vice President, Communications Tel: (416) 369-8236 Email: [email protected] | Investors: Melissa Low Vice President, Investor Relations Tel: (416) 956-5239 Email: [email protected] |
Conference Call and Quarterly Earnings Details
Investors, analysts and other interested parties can access Brookfield Infrastructure’s Third Quarter 2019 Results as well as the Letter to Unitholders and Supplemental Information on Brookfield Infrastructure’s website under the Investor Relations section at www.brookfield.com/infrastructure.
The conference call can be accessed via webcast on November 7, 2019 at 9:00 a.m. Eastern Time at https://edge.media-server.com/mmc/p/os4uqaax or via teleconference at 1-866-688-9459 toll free in
Note: This news release may contain forward-looking information within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning of Section 27A of the
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 and exchange LP units.
References to the Partnership are to Brookfield Infrastructure Partners L.P.
1. Includes net income attributable to non-controlling interests ‒ Redeemable Partnership Units held by
2. Average number of limited partnership units outstanding on a time weighted average basis for the three and nine-month periods ended September 30, 2019 were 290.9 million and 282.9 million, respectively (2018 – 276.8 million and 276.7 million).
3. Results in a loss on a per unit basis for the three-month period ended September 30, 2018 as allocation of net income is reduced by preferred unit and incentive distributions.
4. FFO is defined as net income excluding the impact of depreciation and amortization, deferred income taxes, breakage and transaction costs, and non-cash valuation gains or losses. A reconciliation of net income to FFO is available on page 9 of this release.
5. Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redeemable partnership units held by
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Financial Position
| As of | |||||
US$ millions, unaudited | Sep 30, 2019 | Dec 31, 2018 | |||
| Assets | |||||
| Cash and cash equivalents | $ | 677 | $ | 540 | |
| Financial assets | 277 | 224 | |||
| Property, plant and equipment | 15,108 | 12,814 | |||
| Intangible assets | 11,676 | 11,635 | |||
| Investments in associates and joint ventures | 4,593 | 4,591 | |||
| Investment properties | 392 | 190 | |||
| Deferred income taxes and other | 7,969 | 6,586 | |||
| Total assets | $ | 40,692 | $ | 36,580 | |
| Liabilities and partnership capital | |||||
| Corporate borrowings | $ | 2,107 | $ | 1,993 | |
| Non-recourse borrowings | 13,848 | 13,113 | |||
| Financial liabilities | 1,378 | 1,280 | |||
| Deferred income taxes and other | 7,151 | 5,526 | |||
| Partnership capital | |||||
| Limited partners | 4,738 | 4,513 | |||
| General partner | 22 | 22 | |||
| Non-controlling interest attributable to: | |||||
| Redeemable partnership units held by | 1,912 | 1,823 | |||
| Exchange LP units | 18 | 71 | |||
| Interest of others in operating subsidiaries | 8,583 | 7,303 | |||
| Preferred unitholders | 935 | 936 | |||
| Total partnership capital | 16,208 | 14,668 | |||
| Total liabilities and partnership capital | $ | 40,692 | $ | 36,580 | |
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Operating Results
| US$ millions, except per unit information, unaudited | For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Revenues | $ | 1,664 | $ | 1,167 | $ | 4,942 | $ | 3,224 | ||||||
| Direct operating costs | (850 | ) | (603 | ) | (2,488 | ) | (1,479 | ) | ||||||
| General and administrative expense | (75 | ) | (57 | ) | (200 | ) | (169 | ) | ||||||
| Depreciation and amortization expense | (317 | ) | (188 | ) | (932 | ) | (569 | ) | ||||||
| 422 | 319 | 1,322 | 1,007 | |||||||||||
| Interest expense | (229 | ) | (140 | ) | (682 | ) | (379 | ) | ||||||
| Share of earnings (losses) from associates and joint ventures | 36 | (32 | ) | 88 | (36 | ) | ||||||||
| Mark-to-market on hedging items | 70 | 31 | 104 | 58 | ||||||||||
| Gain on sale of associate | — | — | — | 338 | ||||||||||
| Other expense | (36 | ) | (26 | ) | (14 | ) | (33 | ) | ||||||
| Income before income tax | 263 | 152 | 818 | 955 | ||||||||||
| Income tax expense | ||||||||||||||
| Current | (55 | ) | (53 | ) | (180 | ) | (269 | ) | ||||||
| Deferred | (3 | ) | (12 | ) | (14 | ) | (53 | ) | ||||||
| Net income | 205 | 87 | 624 | 633 | ||||||||||
| Non-controlling interest of others in operating subsidiaries | (123 | ) | (82 | ) | (414 | ) | (294 | ) | ||||||
| Net income attributable to partnership | $ | 82 | $ | 5 | $ | 210 | $ | 339 | ||||||
| Attributable to: | ||||||||||||||
| Limited partners | 29 | (20 | ) | 65 | 166 | |||||||||
| General partner | 41 | 34 | 118 | 103 | ||||||||||
| Non-controlling interest – redeemable partnership units held by | 12 | (9 | ) | 27 | 70 | |||||||||
| Basic and diluted earnings per unit attributable to: | ||||||||||||||
| Limited partners1 | $ | 0.07 | $ | (0.10 | ) | $ | 0.14 | $ | 0.53 | |||||
1. Average number of limited partnership units outstanding on a time weighted average basis for the three and nine-month periods ended September 30, 2019 were 290.9 million and 282.9 million, respectively (2018 – 276.8 million and 276.7 million).
Brookfield Infrastructure Partners L.P.
Consolidated Statements of Cash Flows
| US$ millions, unaudited | For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||
| Operating Activities | ||||||||||||||
| Net income | $ | 205 | $ | 87 | $ | 624 | $ | 633 | ||||||
| Adjusted for the following items: | ||||||||||||||
| Earnings from investments in associates and joint ventures, net of distributions received | 46 | 40 | 78 | 64 | ||||||||||
| Depreciation and amortization expense | 317 | 188 | 932 | 569 | ||||||||||
| Revaluation (gains) losses on hedging items, provisions and other | (4 | ) | 28 | 6 | 57 | |||||||||
| Gain on sale of associate | — | — | — | (338) | ||||||||||
| Deferred income tax expense | 3 | 12 | 14 | 53 | ||||||||||
| Change in non-cash working capital, net | 22 | (18 | ) | 76 | (52) | |||||||||
| Cash from operating activities | 589 | 337 | 1,730 | 986 | ||||||||||
| Investing Activities | ||||||||||||||
| Net (investments in) proceeds from: | ||||||||||||||
| Operating assets | (22 | ) | (181 | ) | (2,212 | ) | (579) | |||||||
| Associates | (424 | ) | (8 | ) | (289 | ) | 1,226 | |||||||
| Long-lived assets | (302 | ) | (196 | ) | (815 | ) | (549) | |||||||
| Financial assets | (90 | ) | 25 | (129 | ) | (63) | ||||||||
| Net settlements of foreign exchange contracts | 23 | (5 | ) | 59 | (77) | |||||||||
| Cash used by investing activities | (815 | ) | (365 | ) | (3,386 | ) | (42) | |||||||
| Financing Activities | ||||||||||||||
| Distributions to limited and general partners | (263 | ) | (229 | ) | (764 | ) | (686) | |||||||
| Net borrowings (repayments): | ||||||||||||||
| Corporate | 578 | 377 | 68 | (412) | ||||||||||
| Subsidiary | 111 | 15 | 958 | 1,629 | ||||||||||
| Net preferred units and preferred shares issued | — | 185 | 72 | 342 | ||||||||||
| Deposits returned to parent | (823 | ) | — | — | — | |||||||||
| Issuance of partnership units, net of repurchases | 803 | 4 | 779 | 12 | ||||||||||
| Capital provided by non-controlling interest, net of distributions, and other | (164 | ) | 50 | 726 | (1,014) | |||||||||
| Cash from (used by) financing activities | 242 | 402 | 1,839 | (129) | ||||||||||
| Cash and cash equivalents | ||||||||||||||
| Change during the period | $ | 16 | $ | 374 | $ | 183 | $ | 815 | ||||||
| Cash reclassified as held for sale | (16 | ) | — | (16 | ) | — | ||||||||
| Impact of foreign exchange on cash | (38 | ) | (12 | ) | (30 | ) | (45) | |||||||
| Balance, beginning of period | 715 | 782 | 540 | 374 | ||||||||||
| Balance, end of period | $ | 677 | $ | 1,144 | $ | 677 | $ | 1,144 | ||||||
Brookfield Infrastructure Partners L.P.
Statements of Funds from Operations
| For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
| US$ millions, unaudited | 2019 | 2018 | 2019 | 2018 | |||||||||
| Adjusted EBITDA | |||||||||||||
| Utilities | $ | 190 | $ | 172 | $ | 561 | $ | 552 | |||||
| Transport | 174 | 158 | 547 | 509 | |||||||||
| Energy | 128 | 73 | 378 | 221 | |||||||||
| Data Infrastructure | 46 | 23 | 121 | 69 | |||||||||
| Corporate | (75 | ) | (57 | ) | (200 | ) | (169 | ) | |||||
| Total | 463 | 369 | 1,407 | 1,182 | |||||||||
| Financing costs | (145 | ) | (107 | ) | (439 | ) | (323 | ) | |||||
| Other income | 20 | 16 | 58 | 46 | |||||||||
| Funds from operations (FFO) | 338 | 278 | 1,026 | 905 | |||||||||
| Depreciation and amortization | (219 | ) | (180 | ) | (673 | ) | (573 | ) | |||||
| Deferred taxes and other items | (37 | ) | (93 | ) | (143 | ) | 7 | ||||||
| Net income attributable to the partnership | $ | 82 | $ | 5 | $ | 210 | $ | 339 | |||||
Notes:
Funds from operations in this statement is on a segmented basis and represents the operations of Brookfield Infrastructure net of charges associated with related liabilities and non-controlling interests. Adjusted EBITDA is defined as FFO excluding the impact of interest expense and other income or expenses. Net income attributable to the partnership includes net income attributable to non-controlling interests – redeemable partnership units held by
The Statements of Funds from Operations above are prepared on a basis that is consistent with the Partnership’s Supplemental Information and differs from net income as presented in Brookfield Infrastructure’s Consolidated Statements of Operating Results on page 7 of this release, which is prepared in accordance with IFRS. Management uses funds from operations (FFO) as a key measure to evaluate operating performance. Readers are encouraged to consider both measures in assessing Brookfield Infrastructure’s results.
Brookfield Infrastructure Partners L.P.
Statements of Funds from Operations per Unit
| For the three months ended September 30 | For the nine months ended September 30 | ||||||||||
| US$, unaudited | 2019 | 2018 | 2019 | 2018 | |||||||
| Earnings per limited partnership unit1 | $ | 0.07 | $ | (0.10 | ) | $ | 0.14 | $ | 0.53 | ||
| Add back or deduct the following: | |||||||||||
| Depreciation and amortization | 0.53 | 0.46 | 1.67 | 1.45 | |||||||
| Deferred taxes and other items | 0.22 | 0.35 | 0.74 | 0.33 | |||||||
| FFO per unit2 | $ | 0.82 | $ | 0.71 | $ | 2.55 | $ | 2.31 | |||
- Average number of limited partnership units outstanding on a time weighted average basis for the three and nine-month periods ended September 30, 2019 were 290.9 million and 282.9 million, respectively (2018 – 276.8 million and 276.7 million).
- Average number of partnership units outstanding on a fully diluted time weighted average basis, assuming the exchange of redeemable partnership units held by
Brookfield and Exchange LP Units for limited partnership units, for the three and nine-month periods ended September 30, 2019 were 414.6 million and 404.0 million (2018 – 394.2 million and 394.1 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 Partners L.P.
Statements of Partnership Capital
| As of | ||||
US$ millions, unaudited | Sep 30, 2019 | Dec 31, 2018 | ||
| Assets | ||||
| Operating groups | ||||
| Utilities | $ | 1,746 | $ | 1,787 |
| Transport | 3,273 | 3,627 | ||
| Energy | 3,038 | 2,817 | ||
| Data Infrastructure | 1,252 | 882 | ||
| Cash and cash equivalents | 299 | 238 | ||
| $ | 9,608 | $ | 9,351 | |
| Liabilities | ||||
| Corporate borrowings | $ | 2,107 | $ | 1,993 |
| Other liabilities | 811 | 929 | ||
| 2,918 | 2,922 | |||
| Capitalization | ||||
| Partnership capital | 6,690 | 6,429 | ||
| $ | 9,608 | $ | 9,351 | |
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
The Statements of Partnership Capital above are prepared on a basis that is consistent with the Partnership’s Supplemental Information and differs from the Brookfield Infrastructure’s Consolidated Statements of Financial Position on page 6 of this release, which is prepared in accordance with IFRS. Readers are encouraged to consider both bases of presentation in assessing Brookfield Infrastructure's financial position.
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