Brookfield Infrastructure Corporation (BIPC) Earnings Call Transcript & Summary

Thank you, [ Rene ]. The resolution has been moved and the motion is now before the meeting for discussion.

Madam Chair, we have not received any questions or comments submitted in connection with the appointment of auditors.

Management has received proxies representing a majority of the corporation's Class A shares and 100% of the Class B shares. These proxies direct management to vote a majority of the Class A shares and all of the Class B shares in favor of the resolution. Voting is now closed on all resolutions. I'm advised that we have the results of voting on the resolutions based on the tabulation of votes cast in advance of the meeting.

Thank you, Madam Chair. I'm pleased to report as there are 8 directors to be elected and the same number of nominees, I now declare that those nominated have been duly elected as Directors of the Corporation. On the appointment of the corporation's external auditor and authorization of directors to set their remuneration, I declare the motion carried. The final voting results will be available after the meeting and posted to SEDAR at www.sedar.com.

Ladies and gentlemen, that completes the formal business of today's meeting. Since there is no other business, this concludes our meeting. Now that the meeting has concluded, Sam Pollock and David Krant will make a presentation on behalf of the management team. At the end of the presentation, they will both be available to respond to any questions or comments you may have submitted. Please note that in responding to questions and in talking about our new initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review the Risk Factors section of our annual report on Form 20-F for the year ended December 31, 2021. Finally, we would like to ensure that all shareholders who are interested in asking a question have the opportunity to do so. We will make every effort to address questions during the allotted question-and-answer period. David Krant will now proceed with a presentation on behalf of the management team.

Thank you, Madam Chair, and good morning, everyone. As introduced, my name is David Krant. I'm the Chief Financial Officer of Brookfield Infrastructure Corporation, or BIPC. On behalf of the management team, we would like to thank all of our shareholders for their ongoing support. Before we begin, I wanted to remind shareholders that BIPC was created to provide investors with access to Brookfield Infrastructure's globally diversified portfolio through a traditional corporate structure. The content of today's shareholder presentation will focus on the group's recent accomplishments as well as provide an outlook for the infrastructure sector and specifically, our business. We intend on providing a more comprehensive business and strategic update at our upcoming Investor Day held on September 29. I encourage all shareholders to listen in. I'll begin the presentation with a brief overview and a reminder why BIPC was created. Brookfield Infrastructure Partners LLP, or BIP, was spun off from Brookfield Asset Management in 2008 and is dual listed on the New York and Toronto securities exchanges. Since its inception, we have established a track record of distribution growth and long-term value creation, increasing our distribution by a compound annual growth rate of 10% and providing our investors with an annualized total return of 19%. Although BIP have performed well, we believe that there is a large pool of capital that would not invest because of its limited partnership structure or its Bermuda domicile. As a result, we formed BIPC to offer investors with an economically equivalent security for [ in ] the form of a Canadian corporation. Through the exchange rate into BIP units, BIPC provides investors with access to Brookfield Infrastructure's global diversified portfolio of high-quality infrastructure assets and is structured to pay identical dividends per share as those declared by the partnership. Furthermore, we believe that the eligible or qualified dividends paid by BIPC in Canada and the U.S., respectively, provide more favorable tax outcomes for certain shareholders. Ultimately, by having 2 listed Brookfield Infrastructure securities, we are able to appeal to a larger and more diversified group of investors. Now looking back on the last year, we have achieved several milestones. Starting with results. We reported strong performance during 2021, with funds from operations increasing 19% year-over-year. These results led to a quarterly dividend increase of 6% to $0.54 per share prior to the share split affected earlier this week or $0.36 per share on a post-split basis. Additionally, we were successful in increasing the free float of the corporation through the issuance of 32 million shares as part of a privatization of a large diversified Canadian midstream business. And lastly, we continue to build upon our track record of creating long-term value for our shareholders through our strong price performance on both the New York and Toronto Stock Exchanges. To that extent, the value created for our shareholders can be seen in BIPC's performance since it was launched. BIPC continues to be well received by the market and has created significant value generating a total return of 57% since its inception in April of 2020. Now looking ahead, 2022 is shaping up to be an excellent year for Brookfield Infrastructure. As of today, we have invested or committed to invest over $2 billion of equity across 4 accretive new investments. I'll briefly touch on each. In February of this year, we closed our investment in AusNet Services, an electricity and gas transmission and distribution business in Australia. This is a highly coveted perpetual regulated utility franchise that is well positioned to participate in the decarbonization of Victoria's economy to meet its legislative 2050 net 0 target. Next, on April 1, we acquired a 50% interest in Intellihub, the leading provider of an electricity smart meters business in Australia and New Zealand. We believe that deployment consumption metering will continue to be an essential component of the electricity network with high growth potential to support demand-driven decarbonization efforts. Also in April, we announced an agreement to acquire Uniti and a take-private transaction through a 50-50 joint venture with another infrastructure owner. Strategically, this investment provides exposure to the country's largest pure-play greenfield fiber-to-the-home wholesale operator with stable and predictable recurring revenue streams and a significant backlog. And finally, last month, we announced our intention to acquire HomeServe, a leading global provider of home services through a take-private transaction. HomeServe operates in the U.S., the U.K., France and Spain, and its primary business is providing subscription-based recurring home repair policies for homeowners. These 2 transactions are subject to customary closing conditions and shareholder vote, which we expect to be completed in the coming months. Taking a step back, today's economic environment is particularly attractive for infrastructure investment. Historically, the infrastructure sector generally outperformed through periods of elevated inflation, rising interest rates and decelerating global growth that creates headwinds for many industries. The growth and resiliency inherent in infrastructure assets is derived from highly contracted or regulated asset bases, inflation linked to revenues and the ability to pass through operating costs to customers. Exposure to rising rates is mitigated by long-term capital structures, largely on a fixed rate basis. These established frameworks employed across revenue, expense and debt financing protect or expand margins through revenue compounding offsetting increases in our cost of capital. These factors will give us the confidence to continue investing capital through all market cycles. Previously, we've introduced the idea that we are in the early stages of an infrastructure super cycle. Since then, this concept has only gained momentum, particularly in the following areas. First, with respect to data infrastructure. Significant upgrades are required for aging infrastructure that is struggling to keep up with growing global demand. These networks are being replaced by faster fiber infrastructure to support elevated demand such as 5G. Secondly, we continue to see supply chain bottlenecks, particularly within our Transportation segment. that highlight the need for capital to add capacity, improve efficiency and reduce carbon emissions. The last 2 years have also uncovered the strategic importance of critical supply chain components, which have led to large multinationals building out new infrastructure in their home markets. This concept, often referred to as deglobalization, should provide significant opportunities for infrastructure investors. Third, our business is well positioned to benefit from investment opportunities created by the requirement for traditional and utilities and midstream companies to reduce their carbon footprint as well as help satisfy increasing demand from consumers for greener energy solutions. And lastly, the recent impact of geopolitical events has spotlighted the importance of domestic energy supply. We believe that natural gas and more specifically, LNG, will continue to be a leading transition fuel in the move towards net 0. And in addition, will play a key role in providing global energy security. Ultimately, we are well positioned to thrive in today's environment. We believe Brookfield Infrastructure provides an attractive way for investors to participate in the growing need for global infrastructure investment while benefiting from stable and predictable in-place cash flow streams. I'd like to conclude my remarks today with an outlook for Brookfield Infrastructure. Looking at the balance of the year, we are optimistic about all that we can accomplish. We expect to benefit from the following. Favorable operating conditions resulting in higher tariffs from elevated inflation levels that impact approximately 70% of our portfolio, higher utilization in our midstream assets related to strong commodity prices, the incremental cash flows associated with commissioning of several meaningful growth projects into full operation this year and finally, the over $2 billion of new investment opportunities that we have secured for 2022, which has positioned us to significantly exceed our annual capital deployment target of approximately $1.5 billion. Furthermore, our balance sheet is well capitalized, and we are actively progressing over $2 billion of capital recycling initiatives that will fund our large and advanced M&A pipeline. As I mentioned in the introduction, if you're interested in updates of the broader business, we encourage you to participate in Brookfield Infrastructure's Annual Investor Day, which will take place on September 29. For more information on this event -- more information of this event will be made available on our website throughout the summer. That concludes our prepared remarks, and we would now like to answer any questions. Michael, would you please advise if there are any at this time.

There are no further questions to be addressed.

Ladies and gentlemen, as there are no further questions or comments, I would like to thank you for taking the time to join us today.