Brookfield Infrastructure Partners LP

Good day, ladies and gentlemen, and welcome to the Brookfield Infrastructure fourth quarter 2018 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and if you would like to ask a question at that time, you may press star and then the number one key on your touchtone telephone. If anyone should require operator assistance, please press star and then zero on your touchtone telephone. As a reminder, this call may be recorded. I would now like to introduce your host for today's conference, Melissa Lowe. You may begin.

Thank you, Operator, and good morning. Thank you all for joining us for Brookfield Infrastructure Partners' fourth quarter earnings conference call for 2018. On the call today is Bahir Manios, our Chief Financial Officer, Sam Pollock, Chief Executive Officer, and Ben Vaughn, Chief Operating Officer of Brookfield Infrastructure. Following the remarks, we look forward to taking your questions and comments. At this time, I remind you that in responding to questions and in talking about our growth initiative 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 our annual report on Form 20F, which is available on our website. With that, I'd like to turn the call over to Bihir.

Great. Thank you, Melissa, and good morning, everyone. I'm very pleased this morning to provide you with a quick overview of 2018, discuss our results of operations, and also touch on our liquidity positions. So first off, we've classified 2018 to have been a very active and successful year for our business, where we completed many key priorities that have enhanced our overall profile. Over the years, Brookfield Infrastructure's business has evolved greatly, not just in terms of size, but also the maturity profiles of our assets. As such, we've taken strides in repositioning our funding model to become much more self-reliant in nature with respect to how we fund our growth going forward. We've accomplished this by executing well on our asset rotation strategy, which is an integral component of our overall full investment cycle plan. The ability for us to buy and sell assets is important because it enables us to capture extra value for our unit holders. Our goal is to buy higher growth businesses where we can apply our operational expertise, thus earning higher returns. These investments are funded with proceeds generated from the sale of mature, de-risk businesses to investors with lower return hurdles. The value arbitrage between the two can be quite meaningful to our results. This strategy, in addition to being an alternative source of funding, allows us to utilize the capital markets only on an opportunistic basis to fund our growth. Going forward, we expect the majority of our growth to be funded by the proceeds from asset sales and cash flows retained in the business. This is different than when we started the business 10 years ago. In previous years, we issued equity to fund much of our M&A investment activities and large-scale capital projects. Even though our funding model is evolving, we still have excellent access to the capital markets. As a result, we may nonetheless issue equity when we have outsized investment opportunities or in circumstances when it makes financial sense to do so. But we are no longer dependent on this approach. Now on to our financial results for fiscal 2018. Our business generated funds from operations are FFO of $1.23 billion or $3.11 on a per unit basis. While FFO benefited from solid organic growth of 8% compared to 2017, results were impacted by the loss of income associated with asset sales and the time required to redeploy those proceeds. In addition, a stronger U.S. dollar reduced results by approximately $100 million compared to the prior year. Results in our utility segments were solid. Our operating groups contributed FFO of $576 million compared to $610 million for the prior year, which included approximately $60 million of additional income from the transition business we sold in 2018. Underlying performance remains strong, reflecting the benefits of capital commissioning to our rate base and inflation indexation, which led to a 5% increase in our FFO. These benefits were partially offset by the loss of income associated with the sale of our electricity transmission operations and higher borrowing costs relating to a debt financing at our Brazilian regulated gas transmission business, both of which were completed in the first half of the year. Results for our utility segment were also impacted by foreign exchange, which reduced earnings for the year by over 60 million. Our UK regulated distribution operations achieved another record year across all key performance indicators, including new sales and completed connections. At the end of July, our order book exceeded 1 million connections for the first time and increased further to almost 1.1 million by the end of the year. Momentum in this business has been sustained by robust growth in home completions in the country and a wide acceptance of our multi-utility offering by home builders. In addition, we recently secured two exciting opportunities for our utilities business. At our North American electricity transmission operation, we obtained the necessary approval to proceed with the construction of a 24-kilometer line connecting our operations to the largest electric utility in Texas. Our share of the project will require an investment of $33 million and should be complete by 2022. Our transport segment generated FFO of $518 million for the year, which was modestly lower than the prior year. Results on a constant currency basis actually increased by 5% as our operating groups benefited from inflation tariff increases and GDP-linked volume growth arising from solid economic fundamentals in the majority of the regions in which we operate. In particular, results reflect strong agricultural volumes at our rail operations and higher traffic at our port assets. These positive effects were partially offset by lower mineral volumes at our Australian rail operations, the impact from the handback of one of our state concessions in our Brazilian toll road business, and the impact of foreign exchange, which reduced our results in U.S. dollar terms by approximately $40 million. Our port operations delivered strong financial performance for the year, with FFO increasing 4% on a constant currency basis. The improvement in results was primarily driven by strong container volumes in most of our core markets around the world. On average, volumes were up by 3%, and in aggregate, our business currently delivers over 6 million lifts per year, which is 6% higher than the prior year. The growth in our volumes has been driven by new contract wins and increased capacity utilization on existing vessel calls. Additionally, in Australia, our team successfully secured three new contracts that will add traffic and over $4 million of incremental EBITDA annually. Our energy segment generated FFO of $269 million in 2018, 29% ahead of the prior year. Results in this segment benefited from the initial contribution of two sizable investments made in a Canadian midstream business, and a leading North American residential energy infrastructure company. We also benefited from a 16% increase in gas transport volumes at our U.S. gas transmission operations due to the production growth and contribution from the first phase of its Gulf Coast expansion project commissioned in the fourth quarter. Our North American district energy business was recently awarded a $10 million grant from the Canadian government through a low-carbon economy fund to finance the expansion of its deep lake water cooling system. The expansion will cost approximately $100 million, with BIP's share being $20 million, and will increase cooling capacity at our Toronto operations by over 25% to support growing demand for our services. Our data infrastructure segment contributed FFO of $77 million for the year, which was slightly ahead of the prior year. Results for the year were 5% higher in local currency due to the benefits of inflation indexation and contribution from capital investments made in the prior year. The strong underlying performance was partially offset by the impact of lower average hedge rates compared to the prior year. Our French telecom business recently secured a contract with one of our largest customers to build a minimum of 1,250 new towers over the next four years. Securing this contract reaffirms our strong built-to-suit tower offering, which captures growth driven by the increase in coverage requirements in France. This will require a €150 million investment, with BIP's share being approximately $35 million and is expected to generate levered returns in excess of 20%. Shifting now to our current financial position, there's been a considerable amount of volatility in equity markets recently. The trading price of our units was no exception and sold off in response despite infrastructure assets remaining highly sought after by private institutional investors. We were able to take advantage of this by repurchasing units under a normal course issuer bid. Since December, we have repurchased approximately 1.6 million units at an average price of $35. The markets have enjoyed a very strong January and our units have returned to pre-December pricing levels since. We currently have a strong financial position with total liquidity of 3.3 billion. of which over $2 billion is at the corporate level. This liquidity is expected to be further bolstered in the coming weeks with proceeds generated from the partial sale of our Chilean toll roads that Sam will touch on in his remarks. And finally, before I hand the call off to Sam, I'm very pleased to announce that based on our strong performance this past year, our robust overall liquidity position, and positive outlook for the business in 2019 and beyond, our board of directors approved a 7% increase in our quarterly distribution to approximately 50 cents per unit in 2019, which marks our 10th consecutive year of distribution increases. This year's distribution increase is at the midpoint of our long-term target range. In setting our distribution level, we decided to retain a greater amount of cash in the business to fund our growing backlog of organic growth projects which we expect will generate very strong risk-adjusted returns. And so with that, thank you for your time and attention this morning, and I'll now turn the call over to Sam.