CORR - Earnings call 3 2023 | CorEnergy Infrastructure Trust, Inc.

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Operator

Greetings. Welcome to the CorEnergy Third Quarter 2023 Results Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to your host, Matt Kreps, Investor Relations at CorEnergy.

You may begin.

Matt Kreps

thank Call. for and Infrastructure today's Holly, Conference Trust you, you, joining everyone, CorEnergy Thank today Dave our me and With are CFO; Waldron, Chairman; and President Robert Chris Huffman, Chief Officer. Schulte, Accounting CEO and Chris and be results and operations Q&A. will will our available on Robert business updates and for provide

Earlier our quarter this our for results announcing we release published XXXX. morning, press third

We expect to file our Form XX-Q later today.

presentation and may Relations remind everyone cause harbor under are during of do to of that We materially update discussed this differ from our made SEC. be safe that our results filings the historical purely statements not statements to that statements the like forward-looking protection our not would Investor forward-looking the the with subject the laws. I available section could in the applicable are forward-looking actual These website. those are to Important course available statements. securities documents in the on factors

are non-GAAP we During We will call, numbers which reconciliations. complete results to our part encourage metrics this our disclosures, to you reporting. GAAP non-GAAP the review with make certain filings and factors, financial of our related as metrics, reconciled risk reference those in

would to ahead. I now that, with Please call over to And the Robert turn like go Waldron.

Robert Waldron

everyone. Hello,

structure these filings do. work say The well in each through as expenses, rate improve third addressed still made that progress areas as quarter escalating expected came work in but have we worked the volumes as capital lower I'm being our our largely through sale. through and as of pleased to we have which primarily to MoGas are to

and MoGas for process Omega. sale the with Starting

the around close calendar year. continue We expect to will the end it of

information puts end year. our the to an FTC may the request which on Both submitted clock items, and all of initial due CorEnergy the decision the delayed a around closing was recall, have Spire from the for you requested FTC. As additional calendar

pending deleverage addressing convertible due Crimson May, in debt plan to balance which from in credit the us our will the we our maturity XXXX. proceeds the on sale, allow sheet, August to With facility focus then

which Spire MoGas Our the and to are the million St. $XXX third May sale entities continue proposed the XX. included their serve performance announced Omega in Louis in quarter. operations, steady These area,

to Turning assets. Crimson our

result volume to see upstream regulatory producers something decline drilling when the producers as will headwinds it the change. continue have are We The California on likely compared -- volume decades. difficulties finding declines has to unclear over next the new in the it for And changes, to of continue ways in lack But side changed. wells. the permitting. environment despite last or to in The slow steeper is unless of that if new X will the not decade

refinery products. the a day than PXX On 'XX. we in result new volumes conversion historical did a November average positive note, of SPB as higher on approximately the to were pending renewable nominations refined a see XX,XXX barrels X-month

as volumes The The data, over for PXX point. to conclusions PXX complex crude QX can't X material the is convert month to experience could supply now. oil on KLM of XXXX, long-term we isn't any draw it positive a until so on but refinery officially scheduled X data months adjust refining without a volatility the next X California to and SPB chain California

inflationary the expense pressures every has like years. given the in world, category, Crimson, of virtually X rest escalations cost last experienced the over extraordinary the

above X expense. well expense have categories interest are electricity which inflation: there increased and However, maintenance,

costs maintenance interest and to to electricity While to are from upward I XXXX into continue potentially higher don't here, anticipate beyond. the trajectory continue our their rate anticipated and move

XXXX interest in which 'XX. has on likely focus in resulted State Fire in expenses California crude yet The increased and pipelines, higher Marshal higher has oil

comply. efficient more reasonable the All glad requirements and operations, result in and new safer so are to of we're

is transition expense rates to also they electric electrical charged the continue higher increase has address hazard. by energy expected increased the as for utilities support and and to around reason California per-unit is general dramatically electricity The safety fire grid

As costs. adjust to to be overcome tariffs a these higher regulated able should utility, Crimson

rate-setting the speed these seen also X too accommodate of last is over to years. in slow the change However, to have X process the volumes and we expenses

XX.X% As the this increases negative on current a previously requests total filing filing for This immediate -- will not acceleration of tariff help week, KLM. on XX eliminate result, tariff requested them previously of rate systems. on pending tariff to does requested increase XX.X% just cash KLM The those but request accelerates SPB increase an flows. and the point SPB increases the file a an the and -- rather

the The the but company XXXX hopeful CPUC at [ is the from timing response XXXX QX a of ] unknown, for latest. resolution is (sic) the

fund that operated filing Our shareholders has over spill the gap. XXXX, flow simply into in not says negative likely fair cash flows will to XXXX Crimson that with the cash Crimson it's which have and

expenses these pay the which is The business. for shippers increased safely for to should critical operate their pipeline,

While one. is side this on I of of we right request type are believe facts frequently the CPUC, granted the by the not on this

see continue energy to are transition, contribute to opportunities which expected to in years. flow positive in We X X cash promising

Crimson selling restoring However, structure capital near addressing profitability. and in and our Omega, MoGas primary is focus to the term our

notable over Chris it financials and With to other the that, items. I'll to address turn

Chris Huffman

balance of Thanks, address to Similar and sale then noteworthy quarter and I results with Crimson last the pending, sheet MoGas Omega items. corporate will Robert.

volumes in decreased transported Crimson QX.

Crimson distribution natural our by impact PLA offset below the revenue be affected remain California drilling rates continue development increase decline was new Southern slight to decrease activity. results low pipeline that on of permits and to California quarter-over-quarter. levels. by transportation generate a on favorable limitations and And increases volumes rate However, historical in and

included are levels. inventory Crimson the should that of note I to PLA normal also million the compared reducing unusually historical which quarter trends These The of PLA PLA during $X was the revenue barrels PLA reflected high as sales more quarter sales, in quarter quarter previous regardless sales are that in the sold. are was transportation $X levels they quarter. within million in third during which earned they are representative in

progress on As pipeline implementing XX% mentioned, total the our on KLM on third system XX% a Southern collecting end of XX% our rate our requested are and total California our rate on of of reminder our increases Robert requested system. the requested XXX% increase as previously increase increase of rate XX% quarter, tariff we system, our total our XX% SPB on of

quarter, additional an rate for XX% increase not request accelerated implement first And is on fourth implement increases will an increase our KLM we our if the the additional on granted. will During of system our XXXX, during XX% system. we quarter SPB

the quarter. increase of and if KLM are benefit refund full requests subject not to financial for the be The for the and on XX% SPB XX% results to earned. are The in rate found SoCal rate increases included

cost-reduction the of in Turning to previously rate evident and were results, quarter-over-quarter. These already implementation XXXX and announced outlook third The initiatives the $XXX,XXX are administrative in benefit our our with approximately included savings cost quarter general and company's side. case full costs down filings.

of reductions, have And Even cost we with increases. formal costs cost process. these the our believe requested fully justifies all defended service CPUC inside we Crimson's

our our tariffs. of protest of as succeed that delaying, only avoiding are traded rate on not in I company, And cases aware a requested might costs. believe we will publicly the shippers our note the implementation

shipper of their rates. our application recoverable. to our of be And we rate result, delay application requested reduced costs are have retroactive part motivation a not process, litigation as As may since

escalation given of requested We to service, have rate the to we rate implemented earning continue fully volumes whether cost the expense back initial the bring us be since our SPB once KLM around -- cases. will the evaluate cases and enough the seen to and filing uncertainty

refinery have finalize our in as well the light XXXX SPB on clarity electrical the maintenance KLM We expect volumes expenses. and beyond to as post of more escalating and and conversion PXX forecast

should At regulated have Crimson the on ourselves to a X capital. the a not we over the process return environment for regulatory to reasonable and highly the in was the years. day, dynamic its is found But last earn expect end X of designed entity

adjusted of we $X.X loss $X.X X million adjusted and months For XX, ended the of September EBITDA net had million.

during Our was EBITDA maintenance capital interest to insufficient both quarter. expenditures expense the accrued adjusted and cover

management's The our continue agreed and equity. Series to preferred A Board common with on dividends suspension of evaluated these both results recommendation the and

accrue Series A accrued CorEnergy's cumulative A preferred Series X.XXX% company reminder, Any period be redeemable dividends payments. redeemable any common will during in paid. preferred a dividends stock cumulative must resuming As are to not dividend dividends the prior which paid

effects were most the evaluate no stock, of the made has Although cash Board current quarter, statements. the dividends on continue upon to dividend available. the The payment included unpaid financial decision cumulative the based making dividends in payments the each will company the data preferred on

to XX-Q, order financial will filed face. company and disclosed deleverage on sale increases mitigants focused and mitigate rate are MoGas risks implementing which the We risks the today. in completing our requested later in and our we third quarter These are be associated the

outlook, of adjusted million. our maintenance of to the maintaining in which $XX range year Omega, range Regarding we of $X includes XXXX are million, EBITDA inclusive and full to MoGas million million expense our $XX results of the $XX

costs. to These is expected back are capital expected range which majority of resulted project to be the the not half of uniform the $XX.X Maintenance bearing to $XX.X million XXXX timing, these throughout expenditure due now year has the costs million. of to be in in

enter the our outlook, cash flow our budgeting process. XXXX not reflect we uncertainty While we yet providing as XXXX face our comments

this our At closing time, you. will call. questions from before the Thank covering analysts stockholders institutional take we or

Operator

Instructions] Selman is today first question Stifel. at for [Operator Akyol Your from coming

Selman Akyol

quarter, I expect guess $XXX would to still to that all guess, guess Or pretty come to going to, sign-offs? should I this you million. be that guess, it MoGas. as of in all down to relates materially? more guys you expenses, do transaction forward, trying I approval I $X get get And see we So And that and had, million related

Robert Waldron

that. take I'll

first work was from bulk FTC the the for of was little to think it There should a largely significantly that should spillover probably but third the in third. fourth be the done -- down quarter. I quarter, in expense the us

Selman Akyol

guess end more color then you Got is it. any got And it or on additional now there? Spire's I

Robert Waldron

Yes. is in right is it really FTC's hands the And everything it's now. and certified. It's -- -- in

Selman Akyol

of is pretty see then that as Do you we fire Or into additional Is everything, kind it and an you you Okay. you with it just ever-increasing the And guys coming tightness? talked much done? more marshal about you're think guys of complied and 'XX? like go regulations.

Robert Waldron

Yes.

smart just our around, like understand that requirements. crude like make having very that inspections, them, pipes; inspections we we've deal and of, know think things California. normally those that welded idle little everything they're arms scrutiny pigging not around It's pipelines of awareness have history have just it's insulated under So in-line corrosion also, It's assets and with sure in properly specific insulation on we or gotten facilities potentially heightened pipes, which pipeline. But issues; a how idled; the long-seam lines Crimson. around don't a areas, to and specific to the then typical oil and

required All I'd And the fire And are I those now. out right understand pretty last as operating thing be what think we've or a working have in we figured we'll is And been much of of outlook. with over to doing basis. lot be in things, go-forward great our -- and on it more so detail mentioned, XXXX will us a have the I to year that California. marshal, say, the

fire their on I'd But also operations. expenses. we they And that general, audits of levels maintenance work They've just and different those been rolling staffing significantly is in say level through higher 'XX those increased -- And is focused, on the of as more scrutiny we reflected we've areas through facing just more they're higher that have in post expenses. focus. the marshal -- COVID, and in been

Selman Akyol

And that's this? guess, expense, uptick to why that's maintenance to Got -- all going the it. in related I it's

Robert Waldron

our some Exactly. And that we general see expense and 'XX generally, obviously we 'XX 'XX over the that -- I into of 'XX mean, by to spill increased the these see. initiatives But in outlook. it's the escalation expect activity. -- to and increase some was due and there's marshal fire

Selman Akyol

just the filing the I accelerated last you think of me alluded it. rate comments, of it. this pending and the terms I missed to sort just Got one in then And in for cases. on your And

XXX%? and your on it -- tariff of on doesn't on less remaining you've you that that system SPB XX% for of the So asked the the get remaining will Crimson system, KLM something increase -- then the the

Robert Waldron

Exactly.

of double summer there takes that recommended we in something -- rate, then 'XX it So rate depending go period or and and didn't is took SPB adjustment on the where full full -- the expenses ask. it the is on depending slightly we but to go. be to KLM. an where there on not just going We the case higher to And to KLM, in volumes

forward right really to the for what to for of really what instead But of rates the the is think trying waiting we're reduce on to the this, case on bringing rate we solve with assets. system be Crimson are the cash burn resolved,

for we've on Now asked our treatment cases. retroactive rate

come would rate all we that flow while to collect And cash increases. for be we that that able the So incurred back. we'll waited negative

the right for there's like it's And -- this. think But I we situations what it's eye. just our have we're just And And like pattern in like company we think is the cases has, is be granted. X given much. it's I a request. received it it's been too reasonable it -- and do, feel And trying should feel to bull's where approval that fact

Selman Akyol

then yes or either them it. long it Got will say And to no? how take

Robert Waldron

to -- we've CPUC hard to they be the reasonable of predict been the of We've want timelines capital, struggle certainly a not say. control doesn't to -- flow. can cash been -- challenging change lived be utility think cost all should you utility its it's earning as through It's look, the negative and process. CPUC We --

So we're CPUC, it's is very of they'll expedited respond it manner. and -- an But will but it's garner kind not not the path. optimistic it -- attention unprecedented, this just of in that a well-trodden just the

to predict so And it's timing. hard the

the going it commissioners front will the And aware traction, obviously it. to of the that timing get do in is we're estimate. everything very difficult so ALJs of we gain -- are would or situation, explain they think we But it but to to

Selman Akyol

Okay.

Robert Waldron

thing to about 'XX be and And be is latest. maybe California KLM, QX say 'XX. But it which to request that combined, we 'XX and we why is now this we case didn't resolved rate that case, Southern QX QX I San that one in the the resolved will is Pablo expect include that's expect or

And call so short be to going -- to resolved because it, -- be months in, acceleration resolved months get case the total order, that's of rate should resolved should XX why XX we XX order it think let's immediate this in the from of now. is in months,

And should it quickly. be upon so acted pretty

Operator

to now reached We have end call closing the of Robert and for will the turn the remarks. session, question-and-answer over I

Robert Waldron

today. you Thank for joining us

and working to diligently are We challenges, updates provide as resolve appropriate. our current we'll

team their for this work I year. dedication hard want our to thank and

team remained throughout MoGas and Our maintaining Omega on process, team has divestiture this our up the management focused efficient operations Crimson and senior after really earlier year. stepped while has the safe changes

to including of It's contact an our meeting a you'd like Please day. corporate and with great time. a Have such work group if people, arrange group. to team dedicated our honor professional a IR

Operator

you and conference, lines participation. your today's this for time. may concludes This you disconnect Thank at your

CorEnergy Infrastructure Trust (CORR) 7 Nov 232023 Q3 Earnings call transcript