Brookfield Infrastructure Corporation (BIPC) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. It is now 9 a.m. and time to begin the Annual Meeting of Shareholders of Brookfield Infrastructure Corporation. My name is Anne Schaumburg and as Chair of the Board, it is my pleasure to chair today's meeting. On behalf of the Board and its management team, I would like to extend a warm welcome to everyone joining us today. Voting during the meeting will take place on our virtual meeting platform. I will now explain this process. For each matter being voted upon, every holder of Class A exchangeable subordinate voting shares, which we will refer to at this meeting as the Class A shares, is entitled to 1 vote in respect of each share held at the close of business on April 25, 2025. The Class A shares as a class collectively hold 25% of the outstanding votes. And the Class B multiple voting shares, which we will refer to at this meeting as the Class B shares, all of which are held by a subsidiary, Brookfield Infrastructure Partners L.P., hold 75% of the outstanding votes. Adoption of a proposed motion requires a majority of the votes cast at the meeting by the holders of the Class A shares and the Class B shares voting together as a single class. Voting will be open for all resolutions at the same time and throughout the formal portion of the meeting. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote. If you voted in advance of the meeting and do not wish to revoke your previously submitted proxies, then no action is needed. If you vote on any matter during the meeting, all of your previously submitted votes in respect of all matters to be voted upon at this meeting will be automatically revoked. Accordingly, if you do vote on any matter during this virtual meeting, please ensure you vote on all matters for which you are entitled to vote. [Operator Instructions] Michael Ryan, our Corporate Secretary, who is serving as moderator of this virtual meeting, will read out the question and ask a member of management to respond to it. If we receive many questions that are similar, we will read one of the questions and indicate that we have received many similar questions. If you connected to this meeting as a guest, you will not be able to submit a question at this meeting. We will endeavor to answer all questions submitted during the allocated time. We recommend that you submit your questions related to the motions being tabled as soon as possible as it may take time for the virtual meeting platform to process them. I will now call the meeting to order and would ask Computershare Trust Company of Canada by its representative, Shirley Tom, to act as scrutineer. I will also ask our General Counsel and Corporate Secretary, Michael Ryan, to act as secretary of today's meeting. In the unlikely event that a technological failure disconnects my audio from this meeting, I have designated Michael to step in as Chair of the meeting. In the unlikely event of a serious technological failure that prevents the meeting from continuing, the meeting will be rescheduled. In addition to Michael, it is now my pleasure to introduce the other member of management with us today, David Krant, our Chief Financial Officer. Following the conclusion of the formal part of the meeting, there will be a presentation from management. I will now take us through the agenda for the meeting. As outlined in our management information circular, there are 3 items of business to be considered today: first, to receive the consolidated financial statements of the corporation for the fiscal year ended December 31, 2024, including the external auditor's report; second, to elect directors who will serve until the next Annual Meeting of Shareholders; and third, to appoint the external auditor and authorize the directors to set its remuneration. As mentioned, in connection with the business to be dealt with today, all voting will be conducted by online ballot through the virtual meeting platform. Voting is now open on all resolutions. In order to expedite the formal part of today's meeting, I have asked a certain shareholder to move various resolutions. Although this procedure will assist in the handling of the formal matters, it is not intended to discourage anyone from submitting questions in reference to any resolution after it has been proposed. I am advised that the notice calling this meeting and the management information circular were disseminated to voting shareholders in accordance with all applicable laws. I have asked the Corporate Secretary to keep a copy of the notice and proof of mailing with the minutes of this meeting. Based upon the scrutineer's preliminary report on attendance, the Corporate Secretary has confirmed that there is a quorum. I therefore declare the meeting properly constituted for the transaction of the business for which it has been called. Turning to the first item of formal business, I will now table the corporation's consolidated financial statements for the fiscal year ended December 31, 2024, together with the external auditor's report. Our annual financial statements have been mailed to shareholders who have requested them and are also available on our website.

Madam Chair, we have not received any questions or comments submitted in connection with the financial statements.

Second item of business at our meeting today is to elect directors who will serve until our next Annual Meeting of Shareholders. The 9 proposed nominees for election by holders of the corporation's Class A shares and Class B shares are: myself, Jeffrey Blidner, Malcolm Cockwell, William Cox, Roslyn Kelly, John Mullen, Daniel Muñiz Quintanilla, Suzanne Nimocks and Rajeev Vasudeva. 8 of the 9 nominees were elected at our last annual meeting in June 2024, were reappointed as directors as part of our corporate reorganization transaction in December 2024 and are standing for reelection today. Mr. Malcolm Cockwell, a current director of the Corporation, was appointed by the Board on January 30, 2025, and is standing for election to the Board for the first time. Information on all 9 director nominees is set out in our management information circular, which was posted on our website and is available from the company upon request.

Madam Chair, we have not received any questions or comments with respect to the nomination of directors.

We invite shareholders and proxy holders to submit their vote online if they have not already done so. As a reminder, if you have already voted or sent in your proxy, there is no need to do anything unless you wish to change your vote.

Madam Chair, I nominate for election the 9 nominees named in the management information circular dated May 8, 2025, to serve as directors of the corporation until the next Annual Meeting of Shareholders or until their successors are elected or appointed.

Thank you, [ Viram ]. I declare the nominations closed. 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. As there are 9 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. The third item of business today is the appointment of the corporation's external auditor and authorizing the directors to set its remuneration. As stated in the management information circular, the Audit Committee of our Board of Directors has recommended that Deloitte LLP be reappointed as the corporation's external auditor.

Madam Chair, I move that Deloitte LLP be reappointed as the external auditor of the corporation to serve until the next Annual Meeting of Shareholders and that the directors be authorized to set its remuneration.

Thank you, [ Viram ]. 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 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 9 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.sedarplus.ca.

Ladies and gentlemen, that completes the formal business of today's meeting. There being no other business, I declare the meeting concluded. Now that the meeting has concluded, David Krant will make a presentation on behalf of the management team. At the end of the presentation, David will 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, 2024. 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 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 am 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. The contents of today's presentation will focus on our recent accomplishments and financial performance as well as the growth tailwinds benefiting the infrastructure sector and the outlook for our business. We intend to provide a more comprehensive business update at our upcoming Investor Day to be held on Thursday, September 25. I encourage all shareholders to tune in. After my prepared remarks, we will hold a question-and-answer period. Now as we've done since our inception in 2020, I'll begin the presentation with a brief overview of Brookfield Infrastructure and the strategic rationale behind the creation of BIPC. Brookfield Infrastructure Partners L.P., or BIP, was spun off in 2008 as Brookfield's flagship-listed infrastructure company. Since then, we've established a track record of long-term value creation, increasing both funds from operations, or FFO, and distributions per unit by a compound annual growth rates of 14% and 9%, respectively. Although BIP had performed well, we believe there was a large pool of capital that would not or could not invest because of its limited partnership structure or its Bermuda domicile. To appeal to the broadest investor universe possible, we created BIPC to offer investors an economically equivalent security that provides access to BIP's globally diversified portfolio but in the form of a Canadian corporation. BIPC is exchangeable into BIP units on a one-for-one basis and maintains an identical dividend to the distributions declared and paid by BIP LP. 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. And with that background covered, let's review our performance for the last year. 2024 was another strong year for Brookfield Infrastructure as we delivered many of our strategic priorities. Most notably, we reported strong financial results during 2024 with overall FFO increasing 8% year-over-year. This performance led to a dividend increase of 6% to $1.72 per unit annually. We added approximately $1.8 billion of new projects to our record-setting capital backlog at attractive expected returns. We achieved our $2 billion target capital recycling program in what was a challenging but improving asset sale environment. And finally, we were active deploying capital across several accretive tuck-in or follow-on investments within our portfolio. Now last year was successful. We are proud to have delivered excellent risk-adjusted returns for our shareholders over the long term. This can be seen on Slide 9, where BIPC has provided shareholders with a total return of approximately 65% since inception in 2020. We are committed to delivering strong cash flow and income growth to shareholders that we believe will be reflected in our share price over long periods of time. Our ability to provide cash flow growth is centered around Brookfield Infrastructure's core investment highlights as a highly contracted, inflation-protected and well-capitalized infrastructure business that should perform well through market cycles. More specifically, over 85% of our FFO is contracted or regulated. Roughly 70% of that FFO is indexed to inflation and a further 15% protected from inflation through pass-through mechanisms. And approximately 90% of our debt is fixed rate with an average term of 8 years. And finally, we continue to benefit from macroeconomic tailwinds, namely the 3 Ds that have resulted in outsized deployment over the past several years and continue to provide ample investment opportunities in both new investments and through our existing capital backlog. To elaborate on the 3Ds briefly, digitalization, decarbonization and deglobalization are the 3 thematic trends creating significant investment opportunities for our business. Digitalization refers to investment opportunities that arise from the significant growth in data usage. Substantial financial resources are required for building or upgrading existing digital infrastructure. For our company, these investments are focused in the fiber, telecom tower and data center sectors. Secondly, decarbonization, which encapsulates investment opportunities related to investments in utilities, transport or residential infrastructure businesses to help expand rate base and networks or reduce emissions through energy efficiency programs. And finally, deglobalization, which 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. Now I want to conclude our remarks today with Brookfield Infrastructure's outlook. We expect 2025 will be another solid year for our business. In addition to a resilient base business that continues to provide stable cash flows, we anticipate solid growth going forward driven by the 3 Ds and our proven ability to grow the business through accretive new investments. So far this year, we have deployed over $1 billion of capital into growth initiatives and continue to deliver on our record backlog of organic growth opportunities. Lastly, we have secured approximately $1.7 billion of sale proceeds to date, making meaningful progress on our target monetization of over $5 billion of assets over the next 2 years. These asset sales will self-fund our future new investment opportunities. Now as I mentioned in my introductory remarks, if you're interested in updates on the broader business, we encourage you to participate in Brookfield Infrastructure's Investor Day, which will take place on Thursday, September 25. More information on this event will be made available on our website throughout the summer. Now that concludes the prepared remarks I had for this morning. And we'd now like to open up the line for any questions that we've received. Michael, would you please advise if you see any at this time?

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

Great. That concludes our prepared remarks. And now I'll turn it over to you, Anne.

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.