Brookfield Infrastructure Partners LP Q1 FY2023 earnings call

Management Statement and Operational Highlights

• Financial and Operational: Strong FFO results with organic growth at 9%, benefit from inflation on tariffs, volumes, $1B in new capital projects, and $2.4B in acquisitions over the past year.
• Balance Sheet: Excellent shape with S&P and Fitch reaffirming BBB+ ratings, raised over $5B in capital, ended Q1 with $2.4B liquidity.
• Investment Outlook: Discussed transport business and supply chain investments, announced acquisition of Triton International (world's largest intermodal container lessor) and intention to acquire Data4 data center platform.
• Strategic Initiatives: Secured new investment targets, capital recycling with $2B proceeds, completed 7 asset sales in 12 months, and announced acquisitions of Triton and Data4.

Segment Performance

• Utilities: Generated FFO of $208 million, a 25% increase from the prior year. Benefited from acquisition of HomeServe, organic growth over 10%, and full quarter contribution from an Australian regulated utility acquired in Feb 2022.
• Transport: FFO of $192 million, up 11% same-store. Traffic in global toll roads increased 3%, rail networks saw 11% more volumes, and global ports moved 5% more cargo.
• Midstream: FFO $198 million, consistent with prior year. Volumes in conventional systems up 6%, Western Canadian natural gas gathering/utilization at record highs, U.S. gas pipeline fully contracted with 11% more throughput.
• Data: FFO $70 million, up 21% y/y. Organic growth 9% due to additional points of presence and inflationary tariff escalators. Benefited from recovery in roaming revenue, acquisition of European telecom tower business, and contribution from Australian fiber operation.

Guidance

• Announced acquisition of Triton International (closing in Q4) and Data4 data center platform (closing in Q3).
• Capital recycling objective of approximately $2B.
• Expectations for strong cash flow generation from new acquisitions and continued capital recycling.

Risks

• Market sensitive revenue normalization due to prior year's elevated commodity prices and asset sales.
• Geopolitical tensions and COVID-19 pandemic impacts on global supply chains affecting transport and logistics segments.
• Regulatory and approval risks related to ongoing acquisitions (e.g., Triton and Data4).

Question and Answer

Q: On investment pipeline and capacity, what does the pipeline look like and is there focus on 2024 closing dates?

A: Pipeline is robust, selective in opportunities, with flexibility to pursue high value opportunities; no specific focus on 2024 closing dates yet.

Q: On Indian telecom tower business and consolidation, how is the business performing and any plans for consolidation?

A: India tower portfolio growing to ~175,000 towers, 5G-ready, co-location rate increasing; opportunistic on consolidating if attractive opportunities arise.

Q: On capital recycling and buyer interest, have you seen less interest from certain buyers and impact on assets sold?

A: Buyer universe narrower but still active; interest in sectors like data and supply chains remains, with focus on high-quality infrastructure assets.

Q: On Triton capital intensity and interplay with assets, how does Triton's capital intensity compare and interplay with existing assets?

A: Triton has high margins and low maintenance CapEx; fits into transportation franchise, providing integrated services and global supply chain insights.

Q: On gas storage sale and future acquisitions, what's the cash-on-cash return and funding mechanisms?

A: Targeted IRR 13-15% for gas storage portfolio; BIPC stock preferred for funding acquisitions, with utilization of various capital markets tools.