Brookfield Infrastructure Partners LP

Good day, ladies and gentlemen, and welcome to the Brookfield Infrastructure Third Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance, please press star, then zero on your touch-tone 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' Third Quarter Earnings Conference Call for 2019. On the call today is Bahir Manios, our Chief Financial Officer, Sam Paulus, Chief Executive Officer, and Ben Vonn, our Chief Operating Officer. Following their remarks, we look forward to taking your questions and comments. At this time, I'd like to remind you that in responding to questions and in talking about our growth initiatives and our financial reporting 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 Bahir.

Great. Thank you, Melissa, and good morning, everyone. I'm pleased this morning to discuss our results of operations for the third quarter of 2019 and also provide a quick update on our funding plan, including the latest phase of our capital recycling program and liquidity position. So our operations performed well in the third quarter, generating funds from operations or FFO of $338 million. On a per unit basis, FFO was $0.82, representing a 15% increase over the third quarter of 2018. Results this quarter continued to benefit from strong organic growth of 9% with solid performance in each one of our operating segments. And that was driven by inflation indexation, additional volumes going through our networks, and almost $700 million of new capital projects that were commissioned into earnings over the past 12 months. In addition to the good underlying performance in each one of our segments, We also benefited from solid contribution from the $1.7 of capital that we put to work over the past 12 months. As these new investments were primarily funded with proceeds from the recycling of mature, de-risked assets, our FFO included an incremental contribution of $22 million in the quarter. Our results for the quarter also benefited by $9 million from improved hedge rates on our FFO compared to the prior year. which more than offset the impact of a weaker Brazilian real. Now I'll take you through results for each one of our segments. Firstly, FFO from our utility segment totaled $145 million for the quarter compared to $130 million in the prior year. This segment delivered 9% organic growth arising from $300 million of projects that were commissioned into rate base in the last year inflation indexation across our portfolio, and continued strength in connection activity at our UK regulated distribution business. In September, our UK regulated distribution business signed a 15-year strategic partnership agreement with Sky Fiber Broadband. The partnership will bring Sky's three leading products of TV, voice, and broadband onto our fiber network. As part of the deal, Sky will become the anchor tenant for broadband services in new and existing residential developments. The establishment of this strategic relationship with a Tier 1 internet service provider is an important milestone for our business as we look to build on the growth recently achieved with our fiber offerings. The inclusion of this broadband leader should make our traditional multi-utility bundle more attractive to home builders and further differentiate our product offering relative to our competitors. This quarter, we also advanced the build-out of our Brazilian electricity transmission business, which consists of projects that total 5,200 kilometers of transmission lines. During the period, we exercised our option to acquire 50% interest in a second segment of operating lines from our partner, bringing our ownership in this project to 100%. We currently own two operating transmission lines outright totaling 800 kilometers and expect FFO from this business to grow significantly over the next three years as we commission the remaining lines and acquire our partners outstanding interest. Our transport segment contributed FFO of 128 million compared to 119 million during the same period of 2018. Results in the current quarter benefited from volume growth across our ports and toll roads, as well as higher tariffs and rates that contractually escalate with local inflation. These positive contributions were partially offset by the impact of the sales of a 33% interest in our Chilean toll road and our European operations, both completed earlier this year. Our various operations within this segment are performing very well. Of note, our Brazilian transport businesses continue to show improvements in their results despite the impact of a weaker Brazilian real relative to the US dollar. Third quarter results highlight the resiliency of our cash flows that are earned through regulated tariffs at our toll roads and contracted volumes at our integrated logistics business. At our toll road, traffic levels continue to recover from the 2016 recession levels. Both light and heavy vehicle volumes at our existing roads are above prior year levels and have increased by over 8% since 2016 at our existing roads. At our rail business, FFO has increased approximately 25% relative to 2017, which is primarily attributable to the 2 billion real Port of Santos expansion that was completed two years ago. The expansion meaningfully increased the capacity of our network and removed bottlenecks that limited the volumes our networks could accommodate. Looking ahead, we expect consumer confidence in the country to strengthen as inflation and interest rates in the country are approaching all-time lows, and that should further benefit the results of our businesses in the country. FFO from our energy segment totaled $100 million, reflecting a 70% increase relative to the third quarter of 2018. The step change increase was primarily driven by contributions from the acquisition of a North American residential distributed energy business and a Canadian midstream operation and a fully contracted natural gas pipeline in India. Together, these new investments generated approximately $40 million of FFO in the current period. Results also benefited from strength at our U.S. gas transmission business as a result of new customer contracts and the commissioning of capital expansion projects. Over the last few months, our distributed energy operations in North America have successfully progressed several exciting organic growth initiatives. Of note, we commenced an eastward expansion of our Toronto district energy system that will provide sustainable heating and cooling to a growing expansion of the city. This expansion could potentially add up to 20 connections to our business and could meaningfully aid our results going forward in the business. FFO from our data infrastructure segment was $36 million for the period, almost double the amount earned in the prior year. and primarily reflects the contribution from recent investments that substantially expanded our global presence. These investments include a global data center business and a data distribution business in New Zealand. Additionally, our French telecommunication business reported organic growth of 5%, primarily the result of its built-to-suit tower expansion program. Integration efforts at our data distribution business in New Zealand are progressing well. We're looking to execute on a multifaceted margin improvement plan that should drive significant growth in the cash flows in this business in the next couple of years. We also announced the rollout of the first commercial 5G service offering in the country, which should position us well to capitalize on the growing data needs in the regions. So that completes my recap of our results for the quarter. Next up, I wanted to briefly touch on the state of our balance sheet and funding plans. Firstly, as we highlighted at our investor day in September, the monetary stimulus implemented post the financial crisis and subsequent evolution of the credit capital markets has enhanced the availability of capital across the credit spectrum. Despite the availability of debt financing, we remain committed to protecting our balance sheet through a conservative and disciplined approach to borrowing. We use leverage as an optimization tool, and in certain circumstances, this can mean accessing the leveraged finance markets. However, we do so prudently and without compromising the core objectives of preserving ample liquidity and ensuring resilience through economic cycles to minimize exposure to market and refinancing risk. In addition, we're always looking for ways to opportunistically benefit from this attractive interest rate environment. The completion of our $500 million Canadian corporate bond issuance in October is an example of this approach at work. We elected to access the bond market to lock in an attractive fixed rate of 3.4% for a 10-year term and will use the proceeds partially to redeem a $375 million series of notes in late 2020. This issuance extends our corporate maturity profile to six years and further de-risks our near-term funding and capital plans. We also proactively secured a long-term financing at our UK regulated distribution business amidst the favorable credit market backdrop. The financing has an average all-in cost of 2.4% and has an average term of approximately 15 years. We ended the quarter with over $3 billion of total liquidity, including approximately $2.2 billion at the corporate level. Our liquidity position will be supplemented by almost $600 million in the coming months upon closing of three recently signed capital recycling initiatives, which Sam will discuss further in his remarks. Overall, this latest phase of our capital recycling has been very successful. Thus far in 2019, we've secured or completed five initiatives. Once we close the three advanced sales that we're working on, we would have generated almost $1.1 billion of liquidity from our capital recycling initiatives in 2019. Furthermore, we're targeting additional proceeds of over $1 billion from this program next year, with some of these processes already launched. On a combined basis, this exceeds the $1.5 to $2 billion target that we announced earlier this year. And so with that, I thank you for your time this morning, and I'll turn the call over to Sam.