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.

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, You will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by. We compile the Q&A roster. And our first question will come from Sherilyn Radborn from TD Cowan. Your line is open.

Thanks very much and good morning. So clearly the market has become more anxious about the capex going into AI and data centers and the timing of the payoff. So I was hoping you could speak to the opportunity set and just how BIP is able to maintain its investment guardrails against that backdrop. And maybe you could touch on whether you're seeing degradation in contract terms more broadly across that space.

Hi, Cheryl, and maybe I'll start off and then I can ask Leif Williams who's with our AI infrastructure group to add further color. Maybe just to begin with, as far as the momentum in the sector and the demand signals that we're seeing, we've definitely seen no reduction in the developments underway or the speed to which our clients are looking to bring forward projects. While capital markets have obviously pulled back in the last couple of weeks, customers, and our customers are the largest hyperscales in the world, are obviously thinking about Longer term trends as opposed to short term gyrations. I would say your question regarding degradation of contracts, we've always told our investors that we will only deal with the highest quality customers and invest in those projects where We have, as I mentioned earlier, proper risk-adjusted returns. And the main guardrail, to be honest, is the fact that all these projects require a significant amount of debt capital. And in order to source that debt capital, you need to have highly high-quality counterparties. and if you don't then you're not going to be able to raise the equity capital to be honest and so while there might be some smaller projects that others might be pursuing where they're taking on lesser quality counterparties in our case we're only dealing with the best and we're not seeing any degradation in terms. You know maybe since we have Leif on the line, Leif do you want to talk about any Are there any trends that you're seeing as far as new developments?

Yeah, thanks, Sam, and thanks for the question, Sherilyn. I think from a commercial terms perspective, I think, as Sam said, we continue to see strong contracts from our customers. I think in terms of development yields, I would say it's still kind of high single digits, low double digits. I think that you see that move a little bit with interest rates and so we are in a slightly higher interest rate environment than maybe in the past and I think you see that that ultimately flows into development yields and as well as the annual escalator and so again whereas historically that's fluctuated between two to three percent I think right now you're seeing that really at the higher end of that range so it's really more two and a half to three percent and then the last key commercial term I would highlight is on lease term and so again typically the focus for greenfield projects is 15 years plus and we are starting to see customers who are open to a 20-year initial lease term and again from our perspective that's a crucial input to developer returns and so overall I would just characterize it as a strong market on the private side. We see very good demand and we think that it's a great opportunity to deploy capital and attractive risk-adjusted returns.

Thank you for that detail. Just to make this call not all about data. I thought I would ask about where else you're seeing opportunities outside of data. One area where we're seeing some sort of news and potential activity is industrial carve outs with resource companies looking to sort of focus on core operations and carve out utilities and things of that nature. Are you seeing that in your pipeline as well?

Yeah, maybe just to touch on the first part of your question, and I could come back to maybe Carbos, but you're asking where we're seeing knock-on effects in other parts of our business. And one area where you might not expect there to be a lot of impact is in our transportation business. where we're seeing a lot of what we always refer to as the domino effect of all these developments are requiring products and assets from different parts of the world and so we're seeing that reflected in trade flows and so maybe Dave joined to runs our transportation business. We have him on the line here. He can talk a bit about what we're seeing through Triton from a transportation perspective.

Yeah, thanks, Sam, and thanks, Sharon, for the question. Overall, I think you've seen a very strong quarter for us on transportation, but what might be a little bit hidden by that is that a lot of that strong demand is actually coming from the big buildups of data centers themselves. And so if you look at Chinese exports on a year-to-date basis. It's up nearly 20%. And what is underneath that is machinery and motors and transformers and pumps and valves and tubing that goes into lots of the machinery that goes into the complex itself. And that is flowing through certainly a very strong demand environment for our container leasing business, but also for our ports and our rails on a global basis.

And maybe just to answer your last question, and maybe we'll keep it short but we are definitely focused on strategic partnerships and carve outs in a number of sectors. That's something that worked well on the rail car leasing side that we recently did and we're seeing a number of industrial companies looking to take advantage you know of capital available you know from the infrastructure players like ourselves you know to to source low-cost capital grow their operations and so that is a focus and hopefully you know some of the transactions will announce in the coming quarters we'll we'll demonstrate that.

Thank you for the time.

Thank you Cheryl.

Thank you. One moment for our next question. Our next question will come from Devin Dodge from BMO Capital Markets. Your line is open.

Thanks, Sarah. Good morning. It seems like the AI factory strategy is really starting to gain traction here. It's obviously great to see. And it seems like there's, based on your comments, there's still a lot of irons in the fire. Just wondering if you can frame how large of an opportunity the AI factory strategy could be over time, and maybe just for the projects and frameworks that you've secured to date, just any thoughts on potential equity commitments and deployment timing from a good perspective.

Okay, well, again, I might ask Leif in a second to just comment on some of the initiatives we have globally. some are still in the early stage and so we can't get into too much specifics on them but you know I'd say we've been you know busy developing a number of them for the past year and to extent that they are you know sovereign AI factories those tend to take a bit of time just because of the nature of dealing with governance I think on the potential deployment, I think if we look out over a longer term timeframe, in a three to five year timeframe, I think we see the potential for BIP to be significant and a major component of our investment. But what I would say is because many of these opportunities are development related there is a delay draw component to them you know the capital gets deployed over a period of time so I think you know the significant dollars for the AI factories will come you know in a couple of years as opposed to the next year or two so I think I would just cost you from that perspective even though you know we're you know we're discussing large dollars here I think they're somewhat back-end loaded to use that terminology. But maybe now just to get into some of the projects we're working on. Leif, do you want to just give a quick update?

Yeah, absolutely. Thanks for the question, Devin. So I think as Sam articulated, we see a massive opportunity in the space. We think that in excess of 100 gigawatts of incremental load will be required over the next decade. and I guess when you think about that really hyperscalers are looking for partners who can engage at scale and can really help move the needle from that perspective. And so when you think about building out a gigawatt plus scale campus, That's a huge, huge undertaking. And we announced a project yesterday in West Kentucky that is located on a Department of Energy site that will ultimately serve a data center with in excess of 1.2 gigawatts of IT load. I know that type of project will require up to $100 billion in private capital. that will support both the data center itself as well as the compute inside and the power generation that will support it. and we think that that last piece is a really crucial component to building out these AI factories. Being able to indicate that there will not be an adverse impact to local rate payers and that these AI factories are bringing their own generation. We think that that's crucial both for the data center itself from a practical perspective in terms of having the electrons available but also from a social license perspective and ensuring that there's strong local support and that these sites are bearing the cost of the grid that is ultimately required. And so from Brookfield's perspective we've been looking for sites like this around the world given our global footprint. As mentioned we announced a large-scale project yesterday in the U.S. but we also have large-scale sites in Canada, in Europe, we recently announced one in South Korea and so we think that we're very well positioned to be a partner of choice for these large technology companies and sovereign governments around the world.

Okay thanks for that and then just the follow-up to that is you know just For your data center businesses, there seems to be growing pushback around the build out of these facilities. Definitely seen that more recently in the US. How do you think this plays out over time? Do you build where there's less resistance or are there different approaches being pursued that could address at least some of the concerns from governments and local communities?

Yeah, thanks, Devin. It's Ben here. and I think as you noted there definitely is an increased nimbyism or pushback against certain data center developments and there are also I just make the observation there's lots of sort of false narratives and perceptions out there about the industry itself you know our experience is that many local communities do welcome data center investments and from a geography perspective, I think as you noted, it's probably, the NIMBYism is probably most prevalent in the US right now. We are noting that it's growing, I would say, in the European market and we are starting to see some of this type of pushback in smaller markets like Canada as well. So it's definitely a dynamic. In terms of the false perceptions themselves, They mostly relate to things like water consumption, rising electricity rates, and noise, a perception that data centers create a lot of local noise. And so what the industry broadly is focusing on are very fulsome solutions to those types of issues, because there are examples where those issues do manifest themselves, although by and large the industry you know is good at these things but the specific things are closed-loop water cooling as an example where the consumption of water is de minimis being neutral to actually positive on electricity rates and in supporting local utilities in supporting their local grids and minimizing noise so with that I just say you know our businesses that were focused on and our operating companies were leaders on all of these fronts in the industry and we are seeing support from many local communities. So in terms of your question of where data centers get developed, I do think that the industry itself, there are lots of false perceptions and the industry is actively working on ensuring that it has solutions to all the concerns and we're just focusing on the geographies where developments are welcome.

Okay, thanks for that, Ben. I'll turn it over.

Okay, thank you.

Thank you. Our next question will come from Maurice Choi from RBC Capital Markets. Your line is now open.

Thanks, and good morning, everyone. Or good afternoon. Good morning. Just a quick question on AI for a moment. Notwithstanding all the comments that you just made about nimbyism and an earlier response about timing of payoff for the CapEx and AI, You've obviously been quite successful in signing a number of AI-related deals in Kentucky and South Korea. Maybe you were front-running the investor day a little bit, but I'm curious whether you see these AI opportunities as progressing in line with your prior projections, or are there pockets of the AI infrastructure value chain that you think may be accelerating?

Well, maybe Dave can talk about just... from our business plan perspective, how it's playing out. And your second question was, can you repeat that?

Whether or not you felt all these AI opportunities were progressing in line with your prior projections or were there pockets of the value chain that you think may be accelerating?

Yeah, well, I'll start. and good morning Maurice. Look I think from a business plan perspective I'd say it's fairly in line with what we had expected from a deployment perspective. I think maybe the pace of the announcement and the initial frameworks agreed to maybe have accelerated a little faster than we would have thought but otherwise from a pure investing perspective I think we're right on track. You will recall at Investor Day last year we said Look, if the AI infrastructure strategy kind of unfolds the way we thought it would, we would be deploying $500 million of equity a year into this strategy. And look, I think with Bloom to date, we've probably done, you know, the contracts we have in place would probably put us close to $100 million a year to date. And if we do upsize the framework and participate, that'll certainly get us closer to, you know, the midpoint or the high end of that range we gave. And then so, you know, as we look ahead to the following years to come, I think as we progress the commercial fronts on the AI factories in the various regions that Leif referred to, I think that'll help achieve that $300 to $500 million of equity invested in AI infrastructure on an annual basis. So I think we're kind of in line with where we thought we'd be.

And maybe just on your second part of your question about are we seeing all the various pockets of the value chain generating opportunities for us and Our AI group commonly refers to $7 trillion of potential opportunities, which obviously is a big number. But you can already see with the magnitude of the projects that we've signed, the market is massive. We generally talk about four areas where we see opportunities. would be AI factories. Two would be compute. Three would be behind the meter power opportunities. And then we kind of have a catch-all area of adjacencies related to AI. And so in terms of the first three, I think you can see that we are actually advancing the strategy quite well. So in terms of compute, we've established radiance. which is our in-house neocloud and we've already signed agreements with customers to provide compute and the most recent one would be with Naver obviously which will scale that up dramatically. Behind the meter power opportunities, Bloom is a poster child for that and I don't think we could have asked for anything better than that relationship. And then in terms of the AI factory, you know, Leif just described all the different ones that, you know, we're pursuing. And, you know, we expect those to be, you know, shovel ready hopefully in the next number of quarters. So in terms of the first three components, I think absolutely, you know, we've demonstrated the opportunities. and on the adjacencies you know that's really you know in all parts of our business you know seeing opportunities come out of AI and and and you know as Dave mentioned you know we're seeing you know trickle-on effects into our transition business so I think the the opportunity set is absolutely developing as we expected and I think as you alluded to our upcoming Investor Day presentation. We'll probably touch on this a lot more.

Looking forward to that. If I could finish off with a comment that you've made, I think quoting you on a press release, the public markets have been increasingly effective exit channels to maximize value in the capital recycling program. Can you unpack that a little bit for us, especially relative to the private channels that You've utilized more in the past or perhaps how the private channels have they have changed?

Yeah, maybe I'll answer that question. So in short, you know, nothing's changed on the private channels. So the private channels remain open and all the various, you know, we refer to our tools in our toolkit to to exit. remain very relevant and we're executing them as we speak. What has changed in the last nine to 12 months is just the fact that the equity capital markets opened up and were very receptive to new IPOs, which we hadn't really seen for a couple of years. Prior to doing the Rock Point IPO, I think the previous one was probably DBI, which was like 2020 or something like that. So going back three, I guess maybe longer, five years. And so we're just taking advantage of the market as it exists, as really just a competing source of capital to the private markets and In some industries it's competitive, in other industries it's less so. And the market, you know, the window opens and closes. It's probably closed for the next little bit, but I suspect it will reopen just given some of the exciting companies that we know are coming to market in the fall. So we definitely don't think this market is shut for sure. It's going to reopen. and we'll continue to consider it on other opportunities.

Thanks, Dr. Culler. Thank you very much.

Thank you. And as a reminder, to ask a question, please press star 1-1. Thank you. And I am showing no further questions from our phone lines. I'd now like to pass the conference back to Sam Pollock for any closing remarks.

All right. Well, thank you, Crystal. And thank you to everyone for joining the call this morning. We hope everyone's enjoying their summer so far for those in the Northern Hemisphere. And look forward to hosting all of you for our Investor Day in Toronto on September 29th. and we look forward to providing you an update on all our strategic priorities and our growth outlook. In the meantime, thank you again and I hope you have a great day.

Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.