Brookfield Infrastructure Corporation (BIPC) Earnings Call Transcript & Summary

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

Madam Chair, we've 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 am 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 that 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 that you may have submitted. Please note that in responding to questions and in talking about our new initiatives and our financial performance 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 unknown 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, 2022. Finally, we would like to ensure that all shareholders who are interested in asking your question have the opportunity to do so. We will make every effort to address questions during the allocated question-and-answer period. David Krant will now proceed with the presentation on behalf of the management team.

Thank you, Madam Chair, and good morning, everyone. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure Corporation or BIPC. On behalf of Sam, myself and the rest of the management team, we would like to thank all of our shareholders for their ongoing support. The content of today's presentation will focus on our recent accomplishments and highlights as well as provide an outlook for our business during the year ahead. We intend on providing a more comprehensive business and strategic update at our upcoming Investor Day to be held on September 21st, I encourage all shareholders to listen in. I'll begin the presentation with a brief overview of Brookfield Infrastructure and a reminder of the strategic rationale behind the formation of BIPC. Brookfield Infrastructure Partners, LP, or BIP, was spun off in 2008 and is a dual listed on the New York and Toronto Stock Exchanges. Since its inception, we have established a track record of creating long-term value for shareholders. During this time, we have increased funds from operations per unit and distributions by a compound annual growth rate of 16% and 10%, respectively. Although BIP performed well, we believe 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 created BIPC to offer investors an economically equivalent security that provided access to BIP's globally diversified portfolio, but in the form of a Canadian corporation. Equivalency is derived in exchangeability into BIP units on a one-for-one basis at the shareholders' election as well as an identical dividend to the distributions declared and paid by BIP. We believe that the eligible or qualified dividends paid by BIPC in Canada and the U.S., respectively, provide advantageous tax outcomes to certain shareholders. Ultimately, by having 2 listed Brookfield Infrastructure Securities, we can appeal to a more diversified group of investors. Looking back on the last year, we had several notable accomplishments. First, we reported strong financial results during 2022, with funds from operations or FFO per unit increasing 12% year-over-year. The strong performance led to a dividend increase of 6% to $1.53 annually. We also nearly doubled our annual deployment target by securing $2.9 billion of new investments. And lastly, we continue to build upon our track record of creating long-term value for 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. The stock continues to be well received by the market, generating a total return of approximately 110% since its inception in March of 2020. Moving ahead, the global macroeconomic environment over the past year has created market uncertainty and volatility. Fortunately, the high-quality infrastructure assets we own are essential for the functioning of the global economy and have a demonstrated ability to perform well throughout all market cycles. This resilience and ability to provide stable, predictable cash flow driven by several key characteristics of our business: First, the highly contracted or regulated revenues that is generally long term in duration. Second, our embedded inflation indexation, which expands or maintains margin during periods of elevated inflation. And finally, our business' ability to grow due to essential nature and role in promoting economic growth and the businesses we own. Brookfield Infrastructure as a highly contracted inflation protected and well-capitalized infrastructure business should perform well through market cycles. A few highlights of our business include approximately 90% of our FFO is either regulated or contracted. Over 80% of our FFO is protected from or indexed to inflation. And importantly, in this environment, over 90% of our debt is fixed rate with an average maturity of 7 years. And finally, we continue to benefit from macroeconomic tailwinds that are driving capital deployment opportunities, namely what we have coined the 3Ds. Further on this topic, digitalization, decarbonization and deglobalization or the 3Ds are 3 thematic trends creating significant investment opportunity for our business. First, digitalization refers to the investment opportunities that arise from the significant growth in data usage, substantial financial resources are required for upgrading existing digital infrastructure such as fiber, wireless infrastructure and data centers as well as increase -- as well as creating new data infrastructure projects. Secondly, decarbonization investment opportunities related to investments in utilities, transport or residential infrastructure businesses that reduce or eliminate emissions from the expansion of their networks or installation of new energy-efficient products. And finally, deglobalization supports the reshoring of essential and strategic manufacturing processes as well as the redefinition of supply chains, which have been under invested in for many decades. Growth from new investments is expected to be strong in 2023. We deployed $1.9 billion in the first quarter of 2023 to close acquisitions of HomeServe and a European telecom tower portfolio, which have both begun contributing to results. In addition, we have secured approximately $1.6 billion of new investments. These include -- in April, we agreed to acquire a premier European hyperscale data center platform. The business has approximately 100 megawatts of in-place capacity and a highly visible and derisked development plan. The transaction is expected to close in the third quarter of 2023, subject to customer closing conditions. Also in April, we announced our intention to privatize Triton International. Triton is the world's largest owner and lesser of intermodal shipping containers and is a critical provider of global transport logistics infrastructure with a fleet of over 7 million Twenty-foot Equivalent Units. Our equity commitment is expected to be approximately $1 billion at close, primarily funded by over $900 million of BIPC shares being included as part of the transaction. Closing is expected to occur in the fourth quarter, subject to customary closing commissions and a strengthened shareholder vote. I want to conclude my remarks today with Brookfield Infrastructure outlook. We expect 2023 will be another solid year for the company. In addition to strong underlying base business that continues to benefit from elevated inflation, results will also benefit from recently completed acquisitions. This growth should be sustainable over the long term given our large capital backlog of organic growth projects and our proven ability to grow the business throughout accretive -- through accretive new investments. Furthermore, our balance sheet is well capitalized, and we are actively progressing capital recycling initiatives that we expect to generate net proceeds of $2 billion in 2023. As I mentioned in the introduction, if you are interested in updates on the broader business, we encourage you to participate in Brookfield Infrastructure's Annual Investor Day, which will take place on September 21, 2023. More information on this event will be made available on our website throughout the summer. That concludes our prepared remarks this morning, and we would now like to answer any questions. Michael, would you please advise if there are any at this time?

Madam Chair, there are no further questions to be addressed.

Thank you, Michael, and thank you, David. 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.