Mr. Sam Pollock reports

BROOKFIELD INFRASTRUCTURE REPORTS SECOND QUARTER 2023 RESULTS

Brookfield Infrastructure Partners LP has released 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."

Brookfield Infrastructure reported net income of $378-million for the three-month period ended June 30, 2023, compared with net income of $176-million in the prior year. Current-year results benefited from the contribution associated with recently completed acquisitions, organic growth across the partnership's 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 the partnership's growth initiatives.

Funds from operations (FFO) for the second quarter were $552-million, increasing 8 per cent 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 the partnership's new investments. Organic growth was near the high end of the partnership's 6-per-cent-to-9-per-cent 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 the partnership's business was the normalization of market-sensitive revenues as the prior-year benefited from elevated commodity prices.

Segment performance

An attached table presents FFO by segment.

The utilities segment generated FFO of $224-million, an increase of 19 per cent from the same period last year. Organic growth for the segment was 10 per cent, reflecting the continued benefit of elevated inflation indexation and the commissioning of approximately $500-million of capital into the partnership's rate base during the last 12 months. Current-quarter results benefited from the expansion of the partnership's 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 per cent from the prior year, excluding the partnership's U.S. container terminal that was divested in the second quarter of 2022. Results continue to benefit from inflation-linked rate increases. Compared with the prior period last year, rates at the partnership's global toll road portfolio increased by 10 per cent and the partnership's rail networks passed through increases of 8 per cent. Volumes have remained resilient, with traffic levels increasing 2 per cent across the partnership's toll roads, and rail volumes were consistent with the prior year. Partially offsetting the strong operational results of the partnership's road and rail assets was a 1-per-cent reduction in port volumes and the normalization of commodity prices that provided an outsized contribution at the partnership's U.S. LNG (liquefied natural gas) export terminal in the prior period.

The mid-stream segment generated $161-million of FFO, a modest decrease compared with the prior year. Strong performance across the partnership's base businesses from increased utilization and higher contracted cash flows was offset by softer results at the partnership's Canadian diversified mid-stream business due to the normalization of market-sensitive revenues and the delay in a meaningful contribution from the Heartland Petrochemical Complex (HPC), which was off-line 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 per cent 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 fibre business acquired in August, 2022.

Update on strategic initiatives

Brookfield Infrastructure Partners continues to find good opportunities to invest capital above its targeted return threshold. During the second quarter, Brookfield Infrastructure Partners accelerated its global data centre growth strategy through the acquisition of two marquee development platforms in Europe and North America, respectively. These investments fill gaps in the partnership's existing portfolio, which was regionally focused in South America, Australia and India. the partnership's now has an asset footprint in all its core markets and has become one of the largest developers in the world.

Most recently, Brookfield Infrastructure Partners 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 centre platform that has approximately 170 megawatts of operating capacity, with a significantly derisked 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 per cent 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 per cent contracted on a triple net basis, providing for recovery of maintenance and operating costs from Brookfield Infrastructure Partners' customers. The transaction is expected to close in Q4 2023, subject to the satisfaction of customary closing conditions.

The acquisition of Data4, Brookfield Infrastructure Partners' European hyperscale data centre platform, closed on Aug. 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 per cent of Brookfield Infrastructure Partners' 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 Aug. 24, 2023. Brookfield Infrastructure Partners currently expects to close the transaction shortly after receiving confirmation of shareholder support. Across these three transactions, the partnership expects 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, Brookfield Infrastructure Partners has 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 Brookfield Infrastructure Partners is focused on preparing for the next round of capital recycling initiatives in 2024.

Distribution and dividend declaration

The board of directors of Brookfield Infrastructure Partners has declared a quarterly distribution in the amount of 38.25 cents per unit, payable on Sept. 29, 2023, to unitholders of record as at the close of business on Aug. 31, 2023. This distribution represents a 6-per-cent increase compared with 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 Brookfield Infrastructure Partners investment corporation senior preferred shares, Series 1. In conjunction with the partnership's distribution declaration, the board of directors of Brookfield Infrastructure Corp. has declared an equivalent quarterly dividend of 38.25 cents per share, also payable on Sept. 29, 2023, to shareholders of record as at the close of business on Aug. 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, on Brookfield Infrastructure's website.

To participate in the conference call today at 9 a.m. ET, please preregister on-line. Upon registering, you will be e-mailed a dial-in number, direct passcode and unique PIN (personal identification number). The conference call will also be webcast live.

Additional information

The board has reviewed and approved this news release, including the summarized unaudited financial information contained herein.

About Brookfield Infrastructure

Brookfield Infrastructure is a leading global infrastructure company that owns and operates high-quality, long-life assets in the utilities, transport, mid-stream and data sectors across North America, South America, Asia Pacific and Europe. The company is focused on assets that generate stable cash flows and require minimal maintenance capital expenditures. Investors can access its portfolio either through Brookfield Infrastructure Partners, a Bermuda-based limited partnership, or Brookfield Infrastructure Corp., a Canadian corporation.

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