Brookfield Infrastructure Partners LP

Ladies and gentlemen, thank you for standing by, and welcome to Brookfield Infrastructure Partners' first quarter 2021 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. It is now my pleasure to introduce CFO, David Krent.

Thank you, Operator, and good morning, everyone. Thank you all for joining us for Brookfield Infrastructure Partners' first quarter earnings conference call for 2021. My name is David Krent, and I am the Chief Financial Officer of Brookfield Infrastructure Partners. Joining me today is Sam Pollack, our Chief Executive Officer, and our guest speaker this quarter, Gabrielle Montessi, Managing Director based in our London office. Following our remarks, we look forward to taking your questions. At this time, I'd like to remind you that in responding to questions, as well as talking about 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. We're pleased to report that Brookfield Infrastructure had a strong first quarter and that 2021 looks like it will be an excellent year. Coming off an extremely resilient 2020, the business generated first quarter funds from operations, or FFO, of $431 million, or 93 cents per unit, up 20% compared to the prior year. This solid start reflects the benefit of inflationary revenue escalators, as well as new contracts and capital expansion projects completed in the last year. Taking into account the 5% distribution increase announced in February, our payout ratio for the quarter was 70% of FFO. Many of our businesses are benefiting from higher volumes associated with robust demand for various industrial and agricultural commodities. Performance for the balance of the year will be further aided by GDP and consumer-related volume growth, which has not yet meaningfully contributed to results. The vaccine rollout remains in the early days in many countries. However, in the U.S. and U.K., where solid progress has been made, we are seeing immediate improvement in economic growth and consumer activity. These positive early indicators give us optimism that this trend will continue and our business will benefit as more regions participate in this recovery. Now, moving on to our strong results for the quarter, FFO grew organically by 8% due to inflationary tariff increases, modestly higher volumes associated with the early stages of economic recovery, and the completion of $800 million worth of capital projects commissioned in the last 12 months. Results for the quarter were further supplemented by favorable market dynamics produced by weather events that led to exceptional performance in our midstream segment. These positive factors were partially offset by the impact of foreign exchange in a number of our segments and a higher management fee relative to the prior year. The utility segment generated FFO of $166 million, up 7% over the prior year on a constant currency basis. All businesses within this segment are performing well, with results benefiting from inflation indexation and the commissioning of almost $400 million of capital into rate base over the last year. These contributions were partially offset by the sale of two mature businesses in 2020. New connection activity at our UK regulated distribution operation exceeded planned by approximately 15% during the quarter. These results reflect good levels of construction activity that has been unaffected by government-imposed restrictions, as well as positive momentum in the housing sector. The business also recorded strong connection sales, with several large multi-utility projects secured during the quarter. We believe this momentum will persist, supported by an advanced vaccination rollout and economic restrictions having largely been lifted. Within our utility operations in Brazil, results that our regulated gas transmission business increased 21% in local currency terms compared to the prior year. This increase is primarily attributable to annual inflationary tariff adjustment that was confirmed at the end of 2020. Following the quarter, a new law was enacted to promote continued investment and growth in Brazil's energy sector. The law removes the expiration date of pipeline authorizations, thereby converting this asset base to a perpetual franchise. We have also advanced the build-out of our electricity transmission operations in the country, with the completion of approximately 600 kilometers of transmission lines during the quarter. The platform now has approximately 2,600 kilometers of operating transmission lines, which distribute electricity that is primarily generated from renewable energy sources. We're on track to complete the balance of the projects, which represent a further 2,700 kilometers over the next 18 months. FFO from our transport segment was $162 million, an increase of 17% over the prior year. The gradual reopening of economies has contributed to volume growth at our rail and ports businesses, Supported by robust demand for commodities in Australia and Brazil, volumes on our rail networks increased almost 10%. Volumes on our container terminals increased by almost 20% compared to the prior year, driven primarily by consumer-led activity in the United States and Australia. Results also benefited from the contribution of our U.S. LNG export terminal that was acquired in September. These positive factors were partially offset by asset sales as a result of our capital recycling initiatives and foreign exchange. During the quarter, the regulator of Australian Bulk Export Terminal provided a final decision confirming the transition to a light-handed regulatory framework. Under this model, we will directly negotiate pricing with the users of the terminal instead of operating under a single regulated tariff. The new framework will become effective in July and will allow the company to establish rates that better reflect the economic value of the facility to customers. Contracts with customers will retain the favorable features that existed under previous frameworks such as our availability-based revenues and the socialization of customer obligations. FFO from our midstream segment totaled $146 million for the quarter, nearly a two-fold increase over the prior year. Strong performance reflects robust customer demand and the completion of an expansion at our U.S. gas pipeline. Results for the quarter also benefited from the operational strength and preparedness of our gas storage business through the extreme weather conditions experienced in the United States. In March, our U.S. gas pipeline commissioned the second phase of its Gulf Coast expansion. The project will increase transport capacity in the region and was completed on time and below budget. Relative to a $200 million total capital investment, or approximately $75 million net to BIP, the expansion will generate annual EBITDA of approximately $45 million on a 100% basis, or $17 million net to BIP. This FFO is under long-term contracts with an investment-grade counterparty. Completion of this important project coincided with a partial monetization of the business that Sam will touch on in his remarks. FFO from the data segment totaled $60 million, an increase over 40% versus the prior year. This reflects the contribution of the Indian Telecom Tower acquisition completed in August, as well as organic growth of 7% across our existing businesses. This organic growth includes inflationary price increases built into our telecom tower and data center customer contracts. as well as the rollout of additional points of presence and fiber to the home at our French telecom operation. We advanced two priorities within our data transmission and distribution platform during the quarter. First off, we significantly de-risked the cash flow profile of our French telecom business through the execution of 15-year contract extensions with two mobile network operators, or MNO, customers. Secondly, our Indian Telecom Tower operation finalized a long-term master services agreement and commenced hosting services for a second leading M&O. We are now focused on the rollout of these services to additional tower locations across our network in India, as well as increasing co-location on our tower infrastructure. Now, before turning the call over, I'll briefly touch on our balance sheet, which is in excellent shape due to ample liquidity levels and a well-laddered maturity profile. Credit markets also remain highly supportive for the type of assets we own. With no material asset maturities in 2021, our focus for the year will be on completing opportunistic financings across our portfolio. With revenues largely adjusted for inflation, our focus on financing assets with long-term fixed rate debt will provide further operational leverage in an economic recovery. We have a healthy pipeline of prospective investment opportunities and substantial available liquidity to support these. Total liquidity currently exceeds $4 billion, of which $2.6 billion is at the corporate level. Secured capital recycling initiatives will add over $1.3 billion to our corporate liquidity in the coming months, and we expect to further enhance our position by $1 billion to $1.5 billion through the monetization of additional mature assets in the next year. With that, I will now pass the call over to Gaz.

Thank you, David, and good morning, everyone. I'm pleased to be joining you on today's call to provide a spotlight on our UK port operation, PDPorts. We acquired PDPorts in 2010 as part of the recapitalization of popcorn and brown infrastructure. Ever since, our management team has worked tirelessly to diversify the port's customer base and reinvent the business. Today, as we shift towards a more sustainable economy, we believe PDPorts is on the brink of yet another transformation. But before I jump into more detail around its growth potential, Let me take a step back and provide a quick overview of the merits of the business. As with any island country, port infrastructure is vital to the UK economy, with an estimated 90% of the country's goods traded arriving by sea. Our operations span 13 sites and serve as the gateway to Northern England through critical rail and road linkages. This group of scarce, well-located and connected landlord ports unlock worldwide markets and offer direct transport links to all corners of the UK. The business today is highly diversified through the following revenue streams. First, our statutory harbor authority status provides the perpetual right to look after a river system and charge customers to pass through it. These fees contribute over 40% of EBITDA and provide recurring, stable, and inflation-linked cash flows. Second, as a landlord port, we lease land adjacent to the port under long-term agreements with high-quality counterparties. These leases have embedded inflation escalation, extremely high renewal rates given the strategic location of the port, and contribute approximately 40% of EBITDA. Last, our port operation services contribute approximately 20% of EBITDA and involve handling services integral to our customer supply chains. The evolution of the port, however, did not happen overnight. The best position of the business and enable it to benefit from attractive regional dynamics We delivered on several value creation activities over the past decade. And to mention just a few, we developed a port-centric strategy focused on integration with customer supply chains and attracting new volumes to the port. We reinvested over $120 million of operating cash flows to expand facilities, enhance capacity, and modernize our infrastructure. We actively attracted new long-term customers to the region, including the development of the world's largest biomass power station, and we invested in port automation to transition away from carbon-intensive activities into renewable and sustainably sourced goods and products. And we refinanced P-Port's legacy capital structure, increasing debt levels in the business commensurate with its growing EBITDA. The business has performed extremely well in the last decade, and the next 10 years look to be even better. With the success of its vaccine rollout, the UK is poised to experience near-term economic expansion ahead of many other parts of the world This coincides with the emergence from nearly a half decade of Brexit-induced trade overhang. Furthermore, to encourage additional investment and promote new trade relationship with the EU, the UK government awarded eight coveted free port status designations, one of which was given to Teesside, PD Port's main location. This status provides benefits from tax savings, simplified custom procedures, streamlined redevelopment processes, and government support. In addition to a favorable macroeconomic backdrop, the business has highly visible near-term growth. First, PDPorts receives annual inflationary tariff increases on 80% of its revenues, which bodes well for near-term inflationary expectations. Second, we anticipate highly captive customers to continue to provide growth opportunities and incremental revenues as legacy conservancy and property charges contractually reset to market rates. Further, we have large-scale expansions underway, including expected new volumes from the development of the world's largest poly-highlight mine and an almost two-fold increase in our container terminal capacity. Finally, the region is recognized as a renewable energy hub and has received core status as a center of renewable engineering from the UK government. We are confident that this highly visible growth opportunity should contribute to doubling EPTA over the next five years and could even triple results by 2030. So with that, I thank you for your time this morning, and we'll turn the call over to Seth.