Brookfield Infrastructure Partners LP

Good day and thank you for standing by. Welcome to the Brookfield Infrastructure Partners LP second quarter 2026 results conference call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, David Krant, Chief Financial Officer. Please go ahead.

Thank you, Crystal, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' second quarter 2026 earnings conference call. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, our Chief Operating Officer, Ben Vaughn, as well as Dave Joint, a managing partner on our investments team, and Leif Williams, the managing director focused on AI infrastructure investments. I'll begin the call today with the discussion of our second quarter 2026 financial and operating results, followed by an update on our asset sale initiatives. I'll then turn the call over to Sam who will discuss our new investments and provide an outlook for the business. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risk, and future results may differ materially. For further information on known risk factors, I would encourage you all to review our latest annual report on Form 20F, which is available on our website. We are pleased to report that in addition to Brookfield Infrastructure delivering strong financial results this quarter, we have also made meaningful progress across our strategic initiatives. Beginning with our financial and operating results in the second quarter, We generated FFO of $702 million or 89 cents per unit. This represents a 10% increase compared to the prior year on both a quarterly and year-to-date basis, which is in line with our long-term growth target. The increase reflects organic growth within our 6% to 9% target range, driven by inflation-linked rate increases in our utility segment, strong activity levels across our transport and midstream businesses, and the commissioning of new capital projects in our data segment. Results also benefited from the strong cash contribution from new investments, which are generating returns meaningfully above the yield on our completed asset sales. I'll now go through our results by segment in more detail. Starting with our utility segment, we generated FFO of $196 million, an increase of 5% versus the prior year. The increase was driven by inflation indexation, The contribution from capital commission into our rate base and the acquisition of a South Korean industrial gas business completed last year. This growth was partially offset by foregone earnings from asset sales, including the largest of four confessions within our Brazilian electricity transmission operation and our Mexican regulated natural gas transmission business, both of which contributed results in the comparable period. Moving on to our transport segment. FFO was $311 million, representing a 7% increase over the prior year after normalizing for capital recycling activity. The increase was driven by broad-based strength across our operations, with volumes across our rail, port, and toll road operations increasing between 3% and 7% year over year. In addition, results benefited from the contribution from our North American rail car leasing platform which closed on January 1st. These contributions were partially offset by the foregone earnings associated with the sale of a 49% interest in our Australian export terminal, the sale of our Australian container terminal business, and a partial sale of our UK port operation, all of which closed last year. Our midstream segment generated FFO of $183 million, up 17% compared to the same period last year. The increase reflected strong organic growth across the portfolio, particularly at our Canadian diversified midstream business, which benefited from strong asset utilization as well as elevated commodity pricing. Results also benefited from the contribution of our recently acquired U.S. refined products pipeline system, which more than offset the lost earnings with the sale of our U.S. gas pipeline last year. FFO from our data segment was $154 million, representing an increase of 36% compared to the prior year. The increase was driven by the contribution from our U.S. bulk fiber network acquired last September, as well as income generated by our data center developers and the initial contribution from our partnership with Intel to construct semiconductor foundries in Arizona. Turning to our balance sheet and capital recycling program. Public markets have been increasingly effective exit channel for us. So far in 2026, we have generated meaningful proceeds from public market transactions, reflecting both the quality of the businesses we have built and the depth of investor demand for scaled high-quality infrastructure platforms. IPOs and follow-on public market monetizations provide us with an attractive path to crystallize value, broaden the buyer universe, and retain flexibility to participate in future upside. They also give us optionality alongside private sale alternatives, supporting value maximization across multiple potential exit paths. The most recent example was the IPO of our U.S. co-location data center operation on the New York Stock Exchange. Since our initial investment in 2018, we have transformed the business into a scaled platform with large presence in across major U.S. markets, serving more than 1,700 customers. A key value driver in this transformation was the acquisition of over 40 sites through a bankruptcy process which scaled the platform, optimized the portfolio, and accelerated its growth. During our ownership, we have increased EBITDA by more than four times and expanded capacity from 115 megawatts to approximately 390 megawatts. The IPO represents the next step in our value creation plan. The transaction generated gross proceeds of approximately $1.2 billion at an attractive valuation. Brookfield retains a 64% ownership interest in the business and will continue to participate in future value creation, including the potential to grow the platform to approximately 1 gigawatt of capacity through equipment optimization and under-roof expansion. In the quarter, we also advanced monetizations across two listed businesses in India. At our Indian Telecom Tower portfolio, we sold a 7% interest through the capital markets. Similarly, at our Indian gas transmission operation, we completed several smaller sell-downs to public market investors following our inaugural sale last year, exiting a further 14% of the business. Combined, these transactions generated nearly $100 million of proceeds net to BIP. Adding to our asset sale progress, we executed a second transaction under our established framework for monetizing de-risked and contracted container portfolios at our global intermodal logistics operations. On July 1st, we completed a sale of a majority interest in a portfolio of contracted containers, generating approximately $60 million to BIP. Finally, at our North American rail car leasing platform, we generated approximately $20 million in proceeds at our share. These proceeds were primarily generated through our structured investment framework, which provides for the transfer of ownership to our partner over time. Now together, these transactions further support our ability to self-fund growth while recycling capital at attractive valuations. So far in 2026, we have generated nearly $1.2 billion of proceeds from our asset sales. with several sale processes well underway that give us confidence in achieving our capital recycling objective for this year. That concludes my remarks this morning, and I'll now turn the call over to Sam.

All right, thank you, David, and good morning, everyone. The first half of the year was active on both sides of our asset rotation strategy. In addition to the asset sales David just discussed, we have secured or deployed over $800 million into new investments. This includes the acquisition of Clarus, New Zealand's leading gas infrastructure utility, with closing expected in the coming weeks, and an increased equity commitment to the Bloom Energy Framework to support an additional CAPEX project. Looking beyond the projects already secured, momentum in AI infrastructure is accelerating, with our AI factory strategy gaining traction globally and expanding our pipeline of investment opportunities. In the US, Brookfield was selected by the Department of Energy to develop an AI data center campus in Kentucky designed to support over 1.2 gigawatts of compute capacity. We have formed a consortium to advance the project through a bring your own power model. In South Korea, Brookfield, NABIR and NVIDIA announced plans to develop 200 megawatts of sovereign compute capacity. Under the proposed arrangement, Brookfield would act as the exclusive capital partner to finance the deployment of GPUs at the campus, supporting one of South Korea's largest planned sovereign compute developments. We also expanded our framework with Bloom fivefold, from $5 billion to $25 billion of total CapEx, creating a significant pipeline of future deployment opportunities for behind-the-meter power solutions for leading hyperscale customers. Together, These initiatives demonstrate the breadth of our AI infrastructure opportunity set and our ability to originate large scale projects on a bilateral basis by combining our digital infrastructure and power expertise with flexible capital at scale to support leading energy and technology partners globally. As these opportunities progress, we will only commit material capital once appropriate commercial arrangements are secured and our risk adjusted return objectives are met. With a broader opportunity set in front of us, converting our growing pipeline to capital deployment is a key focus for the balance of the year. We are advancing opportunities across sectors and geographies through traditional M&A and strategic capital partnerships, where leading companies are seeking long-duration capital at scale and an aligned operating partner. Together, these channels provide multiple avenues to deploy capital into high-quality opportunities at attractive risk-adjusted returns. One of our strategic initiatives for the year is to complete the recently announced corporate simplification to convert BIP and BIPC into a single publicly traded corporation, Brookville Infrastructure Partners Inc. We believe the simplified structure will provide improved trading liquidity, increased demand from index funds and ETFs, and broader access to investors who prefer a traditional corporate structure, among other benefits. We expect the simplification to be tax deferred for Canadian and US investors and completed without any meaningful cost to the business. Special meetings of BIP unit holders and BIPC shareholders will be held on October 14th and we anticipate completing the simplification in the fourth quarter of 2026. Ultimately, we expect this simplification to drive long-term value for all security holders. In closing, We enter the second half of 2026 from a position of strength. Resilient operating performance, a healthy balance sheet, and meaningful proceeds from recent asset sales provide significant flexibility to pursue attractive growth opportunities. This concludes my remarks, and I'll pass it back over to the operator, Crystal, to open the line for Q&A.