Brookfield Infrastructure Partners L.P. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Results: Generated FFO of $599 million in Q3, a 7% increase. Benefited from new investments, accretive tuck-in acquisitions, organic growth, but offset by higher borrowing costs and foreign exchange.
• Capital Markets Activity: Completed $3 billion of non-recourse financings, including $370 million ABS issuance for North American hyperscale data center platform, $900 million ABS for U.S. retail colocation data center business, and repricing of $800 million term loan for Western Canadian natural gas operation.
• Strategic Initiatives: Closed acquisition of 76,000 Indian telecom tower sites, rebranded to Altius. Secured $600 million of capital recycling proceeds for year, with plans to sell Mexican regulated natural gas transmission business and recapitalize North American gas storage platform.

Segment Performance

• Utilities segment: Generated FFO of $188 million, a 9% increase on a comparable basis. Organic growth driven by inflation indexation and commissioning of approximately $450 million of capital into rate base over 12 months.
• Transport segment: FFO was $308 million, a 50% increase over the same period prior year. Primarily attributable to acquisition of global intermodal logistics operation and incremental stake in Brazilian integrated rail and port operation. Strong volumes across networks with average rate increases of 7% across rail networks and 5% across toll road portfolio.
• Midstream segment: FFO of $147 million compared to $163 million in same period last year. Decline due to capital recycling activities and higher interest costs, but underlying businesses performing well.
• Data segment: FFO was $85 million, a 29% increase over same period last year. Attributable to strong underlying performance and new investments, with data center platform commissioning additional capacity and strong leasing activity.

Guidance

• Expect to generate $5 to $6 billion of proceeds from capital recycling initiatives over next 2 years. Growth profile focused on decarbonization and digitalization. Unparalleled access to scale capital to deploy into organic and inorganic growth opportunities. Economic backdrop favorable with short-term rates moving lower, inflation easing, and liquidity returning to institutional investors.

Risks

• Forward-looking statements subject to known and unknown risks, future results may differ materially. For further information on risk factors, review latest annual report on Form 20-F.

Q: On data and AI broadly, with BAM call discussing nuclear capability for AI, are SMRs contemplated in current backlog and discussed with hyper scalers?

A: Sure, everyone recognizes nuclear's role long term, but short term focus on renewable options and natural gas potential in U.S. and Canada.

Q: On residential decarbonization business in UK and Europe, are there synergies and separate geographies?

A: Philosophy is decentralization, each region operates autonomously but share best practices, technology, and export ideas.

Q: On elections and policy changes across countries, thoughts on tailwinds/headwinds for assets?

A: Trends of decarbonization and digitalization are big focus across parties, most decisions at corporate/state level, no meaningful change in macro trends.

Q: On India Telecom Tower business, complexities with leased/owned sites and exit strategies?

A: No inherent complexity, tuck-in gives development capability, work to extend leases on favorable terms, focus on value creation.

Q: On nuclear investment interest, is it through transition fund and BEP, not BIP?

A: More likely done through transition fund and BEP, unlikely a BIP investment.

Q: On macro picture, corporate liquidity and distribution growth, perspective?

A: Liquidity strong at $1.6 billion, expect proceeds from asset sales to replenish, dividend growth sacrosanct, not taking cash from dividends for new investments.

Q: On stronger U.S. dollar and investment opportunities outside continental U.S., thoughts?

A: Make investments without currency view, hedge investments, go to countries where can achieve outsized returns if capital scarce.

Q: On growth profile and inflation rolling through numbers in 2025, perspective?

A: Many businesses price with limited lag, captured 3%-4% in last 12 months, UK regulated utility has regulated lag on inflation pass-through, inflation still tailwind.