CorEnergy Infrastructure Trust, Inc.

Q4 2022 Earnings Conference Call


spk_0: hello and welcome to core energies conference call to discuss the fourth quarter twenty twenty two results at this time all participants had been placed on us and only mode the floor will be open for questions and comments falling the presentation if you wish to ask a question please press star one on your phone to enter the question cute at any time i would now like to turn to call overture mac cramps and better relations for core energy please go ahead
spk_1: thank you all about you everyone for joining today core energy infrastructure trust conference call with me today are they show the the yeah german it was and president the cfl and chrysanthemum tea the carried not sir dave robert and crests will provide updates on our business operations and results at all three will be available for q and i don't like into his gf ga than a vice president an ancestral in called like city has been an integral part of for energy for many years it will be taking over the investor relations well as their behavior not a good i was of the company is been a pleasure to meet many of you and to be a part of an amazing team earlier this morning we published a press release announcing a was quarter results for twenty twenty two we expect to follow up on take a a later date i would like to remind everyone that the statements made during the course of this presentation run up surely historical maybe forward looking statements and subject to the state harbor protection and elba under applicable securities laws important factors that could cause actual results to differ materially from those for in the forward looking statements are got enough eyes that the fcc he thought us are available on the investor relations section of our website we do not update are forward looking statements during his car we will make reference a certain i got metrics which are involved in our families as panama results with boy we encourage all due to review a complete disclosures risk factors gap numbers and as non gap metrics with the related reconciliations not that i would now like turn color the day shall be please go ahead thanks man to the morning everyone it's been an eventful couple of months and a period of change for core energy we will discuss the challenges we're facing and our sponsors including streamlining or executive team want to be gained by introducing rabbit waldron as new president of core energy in this role rabbit will oversee both the crimson and no gas organizations as well as take on increase responsibility over the day to day operations probably will continue to serve a cfl for the near term kids along diverse career and the energy sector with experience as an engineer fires professional and a business executive robert join crimson and twenty fourteen as cfl and it's been active in all facets of the business since that time his knowledge of our california pipe and operations has been a valuable asset to me and i believe our investors as we have navigated uncertain times over the past two years the coroner to acquire crimson it was an easy decision to offer robert the coroner to eat cfl role i believe the company and shoulders of benefit greatly from his expanding opponents is pregnant ross like introduced chris husband are cheap accounting officer who present the financial report today as expand and enhance his leadership role a coin get christmas been an integral part of our senior leadership team since twenty twenty one prior that he or ten years as keep accounting officer at a private the p company and began his career at pwc the company fortunate to have such a knowledgeable accountant and a strong leader i'm excited for both of these colleagues as they expand their influence at core energy
spk_2: a natural recalled robert to spend a couple of minutes of anyone or operations and chris will provide the financial comments and outlook robert
spk_3: thanks dave i'm grateful and humbled by the confidence and support showing by the board game and the rest day a car energy organization and my new role as president the core energy team from top to bottom including a deep finance and accounting groups supporting me it's best in class and i'm excited about our future turning to the recent quarter the fourth quarter saw it continued daddy performance from a predictable know get from a mega natural gas operations that third st louis and the surrounding area we have several projects in the work from my gas and a mega for example in mega
spk_1: we received a notice to proceed on the utility energy service contract project that fort line of work were mega system is the natural gas local delivery system for the bay
spk_3: activity are expected to begin in mid twenty twenty four for more as we are in a project to support potential increasing cut through a on that system these potential projects would add additional long term contract it revenue to that division
spk_4: turn into a crimson assets
spk_3: on our last call be indicated that crimson volumes increased in the third quarter twenty twenty two do operational issues elsewhere in california which continued into the fourth quarter however we noted before the temporary increase the third party operational issues have now been resolved february and volumes of return to a lower level closer the qt twenty twenty two by which we we believe will continue indefinitely we put we believe the disruption in global supply patterns which began a year ago are still influencing california refiners and we have acts and we have experienced unprecedented volume shift as a result in order to offset the body decline in the first quarter point twenty three concerned filed the thirty six percent rate increase on it's a said pablo bay pipeline and one hundred and seven percent rate increase on it's kale and pipeline based on the regulated cost of service tariffs structure the fp be filing with protest by shippers it will proceed through this cpc process with resolution expected and twenty twenty four or twenty twenty five the case could kill him file and is expected to resolve be resolved shortly thereafter however we're always open to negotiate with our shippers to find a resolution acceptable the all parties which could result in batters been resolved earlier in california we continue to believe our our crimson pipelines are critically commit state energy infrastructure operating under fix tariffs for volumes transported with long term investment grade customers while the last year's been more challenging has been a more challenging time for crimson when we had planned we believe the that's a tall profitably fulfill critical energy to california for decades to come look into the future crimson athletes have significant untapped value in the energy transition a california even as we work through these present challenges we are advancing a readiness for the new hydrogen a carbon capture and sequestration markets emerging a california or trump's assistant and rights away provide a critical linkage between large carbon emissions sources and perspective stories reservoirs and asset we believe would be difficult or even impossible to replicate the day we're working with multiple partners to determine the best path forward in these new market opportunities
spk_1: the commercial case for feel to captures bettering in california than any other state the recent federal legislation increased carbon capture credits from fifty dollars a time to eighty five dollars or ten and a hundred eighty dollars of time for director capture plus in many cases it possible the also take advantage of the lcs credit
spk_3: the california air resources board has set aggressive climate goals of a forty percent reduction in carbon emissions by twenty thirty and and carbon neutrality by twenty forty five and identified dcs as a central pillar to their target finally we continue to make progress on our it he or she admission is we intend to publish an updated yeah see progress report update update with the filing of of our ten k for twenty twenty two some of the highlights include scope one and two emissions have been reduced by fifty six percent from the twenty twenty one big flight we i've initiated a plan to reduce methane emissions by an estimated sixty five percent by twenty twenty five and we have implemented board oversight of wide ranging cyber security at the a few programs for a critical business system with that i'll turn over the christie's dress the financials and other notable blood
spk_5: it's robert
spk_3: the majority of our assets for regulating we always have the option to entry terrorists are said declining volumes a door interesting cause what we only do so after we had exhausted other avenues such as the true cost efficiencies
spk_6: we previously announced and began collecting a ten percent tariff increase on from the tail and system and it had personal turf increased on the proposed thirty five percent tariff in truth on from the southern california system in que three twenty twenty two
spk_1: the company plans to file again collecting an additional ten percent interest on it's southern california as pb and tail on systems on the anniversary date had their original filing the tell the matters are resolved we believe president cost of service fully justified all because it increases however it left and to die for their own for most shipping routes on our system we believe our rates are economically advantageous for our customers and the environment compared to the alternatives our rights are not the reason for volume shift away from our pipeline in our opinion
spk_6: looking at the results fourth quarter revenue was thirty six point five million an increase of thirty three million last quarter as a result of study performance from august an omega and improved volume in california
spk_1: we expect the queue on twenty twenty three california volume be less than a keyboard as the operational issues that occurred in twenty twenty two with a third party pipeline have been addressed during february twenty twenty three but a three month and it december thirty first twenty twenty two we have adjusted ebitda of nine point four million and adjusted net loss of five hundred and fifty three thousand cab with the negative two point eight million impacting are going to cover dividends as such a bore can target managed to track magician spend evidence on both are series a preferred and common equity for energy seven point three seven five percent theory they accumulate reading about preferred stock or true given him during any period which given the not paid and he agreed theory day you motive redeemable for forgiveness must be paid prior to the company resuming common dividend payments consistent with our practice or board will continue to evaluate different each court making a decision on dividend payment based on the most current data available is i bought separately bring the bit difficult period and missouri dividend payments as soon as practicable
spk_6: wrap up our twenty twenty your commentary unfortunately on march third twenty twenty three after discussion with the company's management or audit committee determine the company's twenty twenty one century and twenty twenty one and twenty twenty two can you require we statement due to an air of accounting for he vs arising from over allocation of from the net income to not controlling interest payment is not affect key metrics company previously disclosed that period including never adjusted net income cat and a just give it up and had no impact on the company devaluation or decision including declaration of prefer or common stock dividends
spk_1: i refer you to our a kid without earlier today for additional information
spk_6: rarity thing or twenty twenty three adjusted a lack of thirty three to thirty five million inclusive of made an expense and the range of nine to ten million made the capital expenditures are expected to be in the range of ten to eleven
spk_1: because they're not expected to do you ever brought the eric you to project timing and human on twenty twenty three and response the tough market conditions we have relied a corporate structure produce corporate una
spk_6: produce twenty twenty two infinite been to pay out and senior management took a ten percent thousand reduction the impact of all these actions are included in both are twenty twenty three hour and rated filings the man that realignment which is expected to reduce the layers of management answer my new organization will result in a one point one billion restructuring charge and few on twenty twenty three
spk_1: liquidity a quarter and with approximately thirty two point eight million including cash at seven point eight million and fifty million of undrawn revolver availability a predatory does play certain restrictions on utilization of cash and revolver capacity finally in february twenty twenty three readmitted our credit facility to extend the maturity to may twenty twenty four about the further step down and certain the ratio of from few on twenty twenty three que three by three different about additional time to manage or near term debt maturity and pursue pretty thin out them on innovation and leverage reduction and this shudders
spk_0: at the time will take questions or are covering analysts are insecure saw colors before closing the call but you thank you at a time will be conducting a question and answer session if you have any questions or comments please press star one on your phone at this time we ask that while posing your question you please pick up your handset of listening on speakerphone to provide optimum sound quality once again please press star one if you have a question at the same and please hold while we pull for questions
spk_7: and we did have a question coming from some an actual from stiefel some on your line of life
spk_8: thank you good morning
spk_9: can you is there any update i guess on terms of the motivation
spk_3: in issues that you've undertaken and what asset you're looking at a potentially to use to reduce debt yet somehow take that you know we we don't have anything to announce yet on that as your as you think about the company at the officer that the first one of the first thing to think about and monetizing
spk_9: montag in assets to low to decrease leverage and and damn provide a little more breathing room for my covenants and the we're we're looking at all opportunity there as well and refinancing opportunity than and the longer term projects heard nothing specific to announce had on that on the app that monitored nations like gotcha i'm i'm in minutes i think about ukraine facility be extended
spk_10: my guess is essentially by three months a
spk_11: that i guess that would become car current in may of this year
spk_9: it will okay i'm sorry ah in and thinking about ah
spk_3: sort of your expenditures that you've gotten and i notice in a in i notice he said they're that they're going to be lumpy and but is there anything to just help us for timing and terms are you expect to incur those expenses so the the lumpy nelson in yeah yeah you can see how that washington kurt in in in our disclosure and nabbed an empty in a section and we disclosed that that maintenance expense which is inside of the but the and of operating and them maintenance capital
spk_10: separately so it's hard to predict below that we were we have seen have done a lot of work on in twenty twenty three budget budgeting process to try to move them out and have thought what we don't anticipate be as lumpy the world last year
spk_9: but it's it's really hard to say
spk_3: quarter to quarter exactly what that will be
spk_6: okay when nettleton incurred okay and it
spk_9: lesson from you when you guys anticipate having your kale
spk_12: christie have a data the date on that
spk_13: we don't have a specific date yet but we don't expect it to go beyond the and arch which would be our i'm kind of filing deadline within the ninety days
spk_0: got it
spk_1: right i'm i think that as a for me thank you very much
spk_0: excellent

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