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BIP Misses Q2 Earnings Estimates

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Brookfield Infrastructure Partners L.P. (BIP - Free Report) announced second-quarter 2013 earnings of 60 cents per unit, 25.9% lower than the Zacks Consensus Estimate of 81 cents.  However, the results of the partnership were much higher than the year-ago loss of 16 cents.

The year-over-year improvement was due to higher funds from operations (FFO), gains on certain asset sales and hedging items, partially offset by greater depreciation and amortization expense associated with an increased asset base.

Total Revenue

Total revenue at the end of the second quarter was $462 million, up 25.5% from the prior-year quarter.

The total revenue of the partnership was 24.4% lower than the Zacks Consensus Estimate of $611 million.

Operational Update

The partnership’s direct operating costs during the quarter were $202 million, increasing 8% from the comparable prior-year period. A similar trend was noticed for general & administrative and depreciation & amortization expenses, which increased 18.1% and 56.6%, respectively, from the comparable prior-year period.

Adjusted EBITDA in the reported quarter was $284 million, up 41.3% from the prior-year quarter. This was due to higher contribution from Utilities and Transport segments.

Interest expenses in the reported quarter increased 20% year over year to $90 million.

During the quarter the partnership announced the sale of its Canadian and U.S. timberlands for combined proceeds of $640 million.

Financial Update

The partnership exited the quarter with a strong cash balance. Cash & cash equivalents as of Jun 30, 2013, was $419 million, higher than $263 million as of Dec 31, 2012. The planned divestiture of its assets is likely to further increase its cash balance in the second half of 2013.

Cash from operating activities at the end of the second quarter was $223 million versus $100 million recorded in the year-ago quarter.

During the quarter the partnership raised its corporate revolving credit facility by $500 million to $1.4 billion, adding nine new lenders to its bank group. The agreements were made on favorable terms, enabling the partnership to have access to additional capital at a very low cost.

In May, the partnership issued $340 million of equity, which was two and a half times oversubscribed.

Other Company Releases

NiSource Inc. (NI - Free Report) reported earnings of 23 cents per share in the second quarter, lagging the Zacks Consensus Estimate of 24 cents by 4.17%.

Northwestern Corporation (NWE - Free Report) announced second quarter 2013 operating earnings of 35 cents per share, 16.7% above the Zacks Consensus Estimate of 30 cents.

Integrys Energy Group, Inc. reported second quarter 2013 pro forma earnings of 45 cents per share, surpassing the Zacks Consensus Estimate of 32 cents by 40.6%.

Our View

The partnership continues to strategically acquire and/or divest assets. Consequent to the second quarter, Brookfield Infrastructure reached an agreement to sell a 42% interest in its New Zealand regulated distribution business and expects to receive $410 million from this transaction by the end of 2013.

In August the partnership signed definitive documents to acquire 100% of Entergy Solutions District Energy for $130 million. This acquisition will complement the system that Brookfield Infrastructure acquired in downtown Toronto in Oct 2012.

Based in Hamilton, Bermuda Texas, Brookfield Infrastructure Partners was founded in 2007. The partnership owns and operates infrastructural assets on a global scale. The high quality, long life assets allow the partnership to generate consistent cash flow. The partnership currently retains a Zacks Rank #4 (Sell).

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