CORR - Earnings call transcript Q2 2018 | CorEnergy Infrastructure Trust, Inc.

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Operator

Greetings and welcome to CorEnergy Infrastructure Second Quarter 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It would now like to turn the conference over to Lesley Schorgl, Manager-Investor Relations. you. Thank begin. Please

Lesley Schorgl

joining call. for CEO Trust quarter second President; Thank am CorEnergy joined earnings Chairman. I Green, Schulte, today XXXX Rick you Executive Infrastructure by and David

this this a CorEnergy’s subject statements could call, in forward-looking in documents of As to our website. results, in on SEC. non-GAAP with presentation will that are from press purely be statements Wednesday, this earnings The the replay those issued available made an release and presentation CorEnergy’s be be conference the and materially our not Important Dave the to CEO, President materials are We results Safe call between in filings GAAP now we are Relations related section on second course and our securities the this the of as as Schulte, These differ the under speak found will recent our information reminder, Investor well the included you website. statements. Reconciliations our which update historical audio XX-Q do of and not discussed the events. forward-looking and protection, and during for available cause about filing. forward-looking Harbor discuss call, laws. available quarter are may to can release statements applicable on factors actual that

David Schulte

us for the XXth week, everyone Thank today. and $X.XX declared joining on consecutive to you, dividend. thanks Lesley, its CorEnergy call quarterly Last

in that Cox case Gulf transaction the proxy this approval, FERC subject end another the expectation will progressing Gulf the quarter rate Pipeline and MoGas at Gathering as shareholder process the largest Oil. the an of indicates of with operator, Isle filed its is general expected. the third that The by May, year. is of close and System, being our tenant a Mexico is Coast acquired to The transaction announced, asset, previously As Energy of Grand

points. Finally, our million repurchase preferred a up Board opportunistic stock to program of for Directors authorized $XX buying of at

would this covenants credit excess rents repurchases we On the quarterly program. financial the Pinedale subject to be results. use to our $X.X LGS Slide would flows X, for of participating cash expect type as under such Now Any stock we layered received this of facility. from the million our

were Our diluted NAREIT net last with and income from and AFFO sequentially, FFO up FFO consistent quarter.

coverage for January a coverage quarters, accounting we've over a X, of straight to of for AFFO to described. target due pause the X.XX, related policy was believe implemented on certain two lower on is XXXX. source X X.X it adjustment, dividends investors ratio some to the the is the quarter line and next at new growth, to it the again, our than to continue will accounting Our excess dividend which I which potential want target is threshold, because the long-term

than discussed use debt capital However, the a we've reinvestment from in rather flow cash paying income-generating in of And field-level a past, recovery. portion received thus, retains it in for and assets represents of that out dividends. repayment as CorEnergy our assets pipeline rents the

current to determine our utilize And board quarter. we CorEnergy target to measure the undertake. in to benefit securities. used as pay with our million ratio little for repurchase We debt authorized participating These certain previously down, the flows opportunistically reached $X.X purpose. intend said was from to cash And amount have same annualized second of these in also AFFO coverage to using rents excess rents largely to stated dividend us the repurchases excess GAAP between the our our could

X. Slide Turning to

quarter first from and structure the capital CorEnergy's year-end that see unchanged You'll largely of XXXX. remains

under our shares total to capitalization preferred to at end XX%. is XX%. of of low the our debt target target And range currently our ratio total Our at total is equity

Now preferred our in market. utilize shares availability program of financing On balance the of borrowing ample prudently and not is believe to like we're our considering the to without revolver, market. attention which we sheet And recent potential quarter-end, intend cash, borrowing to base we is to to our our $XXX source announcing as we're the of your credit manage in driven we today, open had with seeing have in we'd a draw the funds X, repurchase clear, Slide the at facility we pipeline even contingency. REIT on status to that trends liquidity act repurchase assets. million a base intention transactions be it To

stock of the XX Portland future to with indices from the the now have Over cap following several a indices, and we on REITs in of And could the the are other and assets future real traditional companies as defining gain their as expected the additional these update classification scale, use on REITs outperformed of large on and focus retail more property receiving it coming Zenith demand market for have qualifications, separate diversify benchmark differ a our estate's to We'll REITs from which We flows. them. funds. inclusion forming as REIT as a investors broader from due REIT Energy that gain continued within and non-traditional for recap are Terminal and markets, in we'll used But specialty residential number wider we XXXX range see including we awareness to REIT CorEnergy's on. Currently, real so converting may fund accordingly. portfolios investors finish of our a years, disqualifies Slide the sector the act the GICS anticipate regulations IRS of and market indices have last REITs, to related which weeks, their notification The structure. initiatives continue or a believe to X. office,

Our executed in at was Leonard June. XX-year Utility Fort Service Contract Energy Wood

that would of provide with projects Department We for held many began have efficiency water since the and kickoff and the comprehensive Defense energy meetings improvements. of evaluation

our the rate case these realized with beginning We be incremental the income And expect to year MoGas' of we'll with monitor expectation to beginning to the to year-end. the acquisitions target next line million FERC, questions. by range by now of up million we our of and to one continue or progress like $XX by our XXXX. within of two I'd to end to implement projects complete $XXX maintain open

Operator

Thank question Our Oxford Please comes Barry proceed. first D.A. you. the [Operator Instructions] Davidson. line of from with

Barry Oxford

acquisition, are I I looking the When how buyback should reconcile versus a things? how Thanks thinking at doing about be major that? guys. do Or you two guys those share

David Schulte

with bit Barry a that of we that of that as that it internally all based question at excess one cash Board return comes above quarter, a it Thanks – little been in of it Directors and about is flows our receive It's capital. of clear when once. rents our is time dividend for to we over has well. And and thinking not the quite and a bit on portion level, us a

So what the is on using us reduce our our to share do flexibility balance proceeds repurchase permits risk to have those sheet. program around

are The Now we most got that don't in We've have offer really, maturities. any And debt regard. flexibility to modest preferred amounts. very these repay scheduled the is early. debt

quarterly of coming to back manage to tried our that the are a an flows in availability extra direction. is on changes just exercise modest call, As the cash in And amount these part our emphasize in significant cash maintaining prudence our revolver. we we're on

Barry Oxford

nature. mild will substituting be So be right, an more okay, wouldn't acquisition. it in It for

David Schulte

of believe we on is the don’t our that investment that We're signal anybody. trying question. cash trying to return That No, manage so. excess in We're fair not to is is just in that recognized to prudently rents.

Barry Oxford

I activity, would that an imagine. And be accretive should

David Schulte

We believe Yes. that materially Not is. be accretive as but it it should accretive.

Barry Oxford

Sure. of look projects looking of look of X at, for January the does compare at number today? what you year at, it, and you're acquisition call that When you at how that let's just looking with kind this you're

David Schulte

reference, on would this year, not what one otherwise. have and indications that last ended three reasons into and deep through we're this for resulted level is few of higher projects than And with over much of pricing Those actively diligence at several the this purposes, Four dives I dropped year. being We or that a just the of it year activity the carried or reviewed or by either proceeded transactions not is seven just interest over still were for but we've say reason – our And call, another we and counterparties. worked our interest either year-end. number are carrying that in on of those today to was that year. a us, mentioned

activity we months. XX been – of high in the level it's as our today is So are last as

Barry Oxford

anything sent LOI, you proposal. Not but necessarily proposal? for Have out

David Schulte

proposals. I Yes. that The seven were mentioned

Barry Oxford

okay. Okay,

David Schulte

of four those are And being actively still worked.

Barry Oxford

Right.

theoretically? working towards hopefully, – of working with, you're them, one with so So at an four, you're least LOI those

David Schulte

option information and based thinking around intent an Typically, of process. our out assessment other money spending our we might that interest, scopes would dedicated thoughts have, things at towards counterparty's letter some then assets the provide be of versus would point, getting to they of we then the to start At a the scale, and acceptability time about. which that closing. That of indication which and expect we be exclusivity, the on effort pricing

Barry Oxford

for on Got color that. Thanks the you.

I the you year. it when guys. – to a beginning think let's at comes the it you're that's just of think than like spot say, better sounds I acquisitions were, Thanks in

David Schulte

little building. over higher projects, We today a XX and been raised months thank year is a with ago. a – fairly our Barry lead steady And But activity history. was has a which consistent ago new our know equity, long You you. is it times of course, relatively of lot The build. on it's than our been there's of level process one

Barry Oxford

Appreciate color. the Great.

David Schulte

Yes, thank you.

Operator

you. Instructions] [Operator you. Thank Thank

line Our of proceed. next question comes Please with the Akyol Selman Stifel. from

Selman Akyol

would million? execute you do whole you fulfilled to take that buyback if that afternoon. How anticipate Good you. $XX Thank it you on the long

David Schulte

probably it's Selman, authorization. about I'll very circumspect a be it, one-year and

a income-generating for it of redeployment. would next execute cash, outset, husbanding we course, the that over periodically, meantime came different XX months, assets. debt the part back the something that. that That's be up if can had or we deploy what of or repayment deleveraging of the So either And purpose we in to in mentioned is we could use expect at

in it. we're hurry a spend not So to go

Selman Akyol

I it. got my you is talked what sort would about is to you $XX Is of million the the this return of trying capital deploy you. of way in was that the year? the guess mind a return I much capital and reconcile of I

David Schulte

year. share XX million Yes, outstanding. about our $X ratio coverage about is. with a It It's $XX is a million shares

Selman Akyol

So okay. that's what you're got I at looking it, it.

David Schulte

That's what yes. we're looking at,

Selman Akyol

And me They're it turn just of just all could currently They the you leasing Zenith? continue well? as asset then, option can way the on the to outcomes from they have the or buy you. just or Okay. remind leasing back

David Schulte

with years predetermined today. of XX could the where continued in XX-month above. And favor they windows terminate, that termination option and the asset an they – and of base a was also at lease, All is those one price. If of payment the as windows there's five-year do a purchase in it well they as terminate But runway we're their lease to have rents. a five-year

that would assess if was So try that options to to time us give terminated.

Selman Akyol

Got you. quarter? third then have And the you the this to expect notice, do when before end of

David Schulte

date it we the is And in the to to. be this X expect would September so we third extended – have quarter. resolved would that

Selman Akyol

very right, All you. Got thank much. you

David Schulte

Thanks Selman.

Operator

you. Thank

comes proceed. Investor. question Private Please the David line Our from Adams, of next

David Adams

changes through about in change Hi, occurring are of over Coast? Dave, ownership? question – I Is Cox there material there had of Energy taking the of Gulf transaction provisions any that the lease the for a

David Schulte

They're We have yet of an not Cox directly. to business. owner spoken the not

the And that the that though, the no me. information meantime in have they closing. contingencies them to Gulf after access their implications we us. public excuse in expect proxy, Coast closing proxy There's price have that the until would – any or purchase with contact for wouldn't so – have have Energy that we In in filed direct to filed transaction

is, is So – our to and proceed lease as don't they permission so assumable either. need our

expect don't So changes. any we

David Adams

building relationships do you control area? they know, in them? foresee I do assets a that chance there of – Is through their other don't And

David Schulte

other one with the that deal we've of assets a and Mexico, shallow qualified they time are contact Coast is this for they to production of party At party no which with. Well, direct though, in Energy control had them. do Gulf the an reasons Gulf attractive

any – we – relationship any this not be It'd don't at of potential additional so don't time. there. anticipate speculative opportunities we And aware we're

David Adams

bit the little – And are Okay. case? can rate rate if fill a me What the you is on impact for approved, not CORR? what the here the is

Rick Green

This is Rick Green.

something will Commission go adjustment simply a But to for the the we rate go were that It off work forward. by effect that us a what That ultimately, if different make to an else. there'll MoGas will we'll you works the be into our going we'll spring/summer increase the $XX that a into million, And continue speculate million would On and filed or effect of December FERC and case, is. XXXX. – decision $XX is could it And that process. through the way give the million amount that put $XX than really we'll that rates – is be that can't X.

David Adams

would you outcome going ability forward? the And decision of dividend see that pay any affecting the to

Rick Green

No.

David Adams

Okay. Thank you.

Operator

you. Thank

We for remarks. queue me Allow at in have questions floor over further to to management time. no back the this hand closing

David Schulte

reporting on to growing appreciate more a Thank that that again. portfolio we've uneventful the and throughout year. but had look rest working we're the about and quarter, you, Thanks, everyone today, forward busy the of for relatively tuning we in

Operator

concludes Thank conference. you. This today's

this your disconnect you your at time. may for And thank lines You participation.

CorEnergy Infrastructure Trust (CORR) 2 Aug 182018 Q2 Earnings call transcript