Brookfield Infrastructure Partners LP

Good day, ladies and gentlemen, and welcome to the Brookfield Infrastructure Partners' fourth quarter 2019 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' fourth quarter earnings conference call for 2019. On the call today is Bahir Manios, our Chief Financial Officer, and Sam Pollock, our Chief Executive Officer. We also have Sikandar Rashid, Senior Vice President, Investments and Brookfield Infrastructure Group, joining us as a guest speaker this quarter, as well as Ben Vaughn, 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 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 turn the call over to Bahir.

Thank you, Melissa, and good morning, everyone. I'm pleased this morning to discuss our results of operations and to also provide a quick update on our balance sheet and funding plan. After my remarks, I'll hand it off to Sikander, who will provide a spotlight on our approach to value creation and explain to you all the various things we're doing at Enercare. Sam will finish off the call with a discussion of our recent strategic initiatives and will provide an outlook for the year ahead. 2019 was a great year for Brookfield Infrastructure. Our financial results and operating performance were strong. Funds from operations, or FFO, totaled $1.38 billion, or $3.40 on a per-unit basis, and that represented an 11% increase on a comparable basis and 9% increase on a total basis over 2018. Operating conditions during the year were favorable in all regions. enabling us to execute on our full cycle investment strategy of acquiring high-quality assets, creating value through our active asset management programs, and recycling capital on an attractive basis. The capital markets were also strong, allowing us to raise equity to fund growth and to secure debt at historically low interest rates. Before I discuss our results for the various operating segments, I'm pleased to share with you that as a result of our strong financial and operating performance, robust liquidity position and positive outlook for the business, our board of directors approved an increase to our quarterly distribution of 7% to 0.5375 cents per unit starting in March of 2020 or $2.15 on an annualized basis. This increase is at the midpoint of our 5% to 9% long-term target and represents the 11th consecutive year of distribution increases for our company. Now onto our results, and as I noted earlier in my remarks, results for 2019 reflected solid organic growth and the execution of our asset rotation program. Our FFO benefited from organic growth of 9% and contributions from new investments. Our utility segment contributed FFO of $577 million in 2019. This is consistent with the prior year, which included the contribution of approximately $25 million from the Chilean electricity transmission business sold in 2018. The segment generated organic growth of 8%, reflecting inflation indexation and $300 million of capital commissioned into our rate base. Results also benefited from the initial contribution of the North American regulated natural gas transmission business acquired in October. These contributions were partially offset by the weakening of foreign currencies, which lowered our results in this segment by $14 million. Our UK regulated distribution business delivered exceptional results in 2019 despite the uncertainty surrounding Brexit. Results were driven by the installation of utility connections at approximately 200,000 new homes, the highest level of activity during our 10-year ownership, as well as the sale of 300,000 new connections, a level surpassed only by the record sales achieved last year. These results bring our current order book to an all-time high of 1.15 million connections. Our fiber offering performed well ahead of expectations with a 36% increase in sales, in part due to the successful rollout of our new fiber offering recently created as a result of our partnership with Sky Fiber Broadband. These positive trends, combined with capital commission into rate base, contributed to a 10% increase in FFO relative to the prior year. In October, we completed the acquisition of two operating natural gas transmission assets in North America, and our integration efforts are progressing well. These regulated assets operate under a take-or-pay arrangement with an investment-grade counterparty that extends through 2041. Our transport segment generated FFO of $530 million compared to $518 million in the prior year. Organic growth of 5% was driven by GDP-linked volume increases and higher tariffs across most of our operations. The segment benefited from strong agricultural volumes in Australia and Brazil and higher traffic and tariffs of 3% and 4% respectively across our global toll road portfolio. FFO from our port operations exceeded prior year levels by 25%, excluding the contribution from our European port operation, which was sold in mid-2019. This increase primarily reflects growth in container volumes at our UK operations, in addition to higher tariffs at our Australian port. In 2019, our UK port operation commissioned approximately 20 million pounds of capital projects for warehouse development automation initiatives, and capacity expansion at our container terminal in response to growing customer needs. The business is on track to increase its EBITDA by over 50% in the next two to three years. This increases the result of contributions from recently secured contracts, high probability growth from captive customers, and new revenues related to the commissioning of the world's largest biomass power stations. FFO from our energy segment was $412 million, an increase of 53% over the prior year. This significant increase is primarily attributable to the $1.2 billion of capital deployed to acquire two North American businesses in late 2018 and a natural gas pipeline in India in the first quarter of 2019. Results also benefited from organic growth of 16%, which was attributable to higher volumes at our North American natural gas pipeline business and new customer connections at our distributed energy businesses in North America. FFO from our data infrastructure segment totaled $136 million in 2019, an increase of over 75% relative to 2018. This step change in FFO was a result of contributions related to capital deployed at our French telecommunication business, as well as four new investments which enabled us to establish our global data infrastructure franchise. These acquisitions include three data storage operations in the U.S., Brazil, and Australia, as well as a data distribution business in New Zealand. Our French telecommunication business has been supporting customers with several large-scale organic growth projects. Through its built-to-suit tower program, the business has strengthened its relationships with major mobile network operators by assisting them in meeting their national coverage requirements. We commissioned 245 towers in 2019 and expect to have a total of approximately 1,000 built-to-suit towers operational in the first half of 2020. Additionally, our fiber-to-the-home deployment is ahead of underwriting, with almost 35% of the portfolio now built or under construction, and the first network scheduled to be completed in the first quarter of 2020. So that concludes our report on financial and operating results for the year. But before I conclude my remarks, I'll briefly touch on our current balance sheet and funding plans. The most noteworthy acquisition financing completed this quarter was the $2.6 billion of financing in the institutional term loan market that we did to fund the acquisition of our North American rail business. This debt issuance was heavily oversubscribed as credit investors continued to seek high-quality names that are financed at prudent levels. We achieved strong pricing and terms that are consistent with high-quality investment-grade issuers completing a seven-year financing with a coupon of LIBOR plus 200 basis points. We also capitalized on favorable markets to complete several important financings in our existing businesses. First, we raised approximately $2 billion Canadian dollars at our North American residential energy infrastructure operation to refinance existing higher-cost debt in that business, which Sikander will touch more on in his remarks. in addition to refinancing our debt at our UK port operation, which allowed for $110 million of capital to be returned to BIP, in addition to reducing our average annual financing cost by 3.5%. Despite a year of outsized capital deployment, our balance sheet remains healthy, with $3 billion of total liquidity in place at year-end, and almost $2 billion of that residing at the corporate level. We're also making good progress on the next phase of our capital recycling program, completing three asset sales that we announced last quarter. First, the sale of our Australian district energy and distribution business that we closed in November that generated net proceeds to BIP of 280 million. Second, we closed the divestment of our regulated distribution operation in Columbia with proceeds of 100 million to BIP. And finally, we completed the sale for further 33% interest in our Chilean toll road business in early February for $170 million. Furthermore, during the fourth quarter, we signed the binding agreement to sell our North American electricity transmission operation for proceeds of approximately $60 million to BIP. We established this business over a decade ago and as part of a government-led program to support renewable power generation in Texas. Since commissioning the transmission system in 2014, the company has been a best-in-class operator with an extensive track record of stable distributions. Given the de-risk mature state of the business and substantial investor demand for North American regulated assets, we viewed this as an opportune time for us to sell. The transaction is expected to close in mid-2020. and generate an IRR and a multiple of capital approximately 23% and 3.5 times respectively. So with that, thank you for your time this morning, and I'll turn the call over to Sikandar.