Brookfield Infrastructure Partners L.P. (NYSE:BIP) continues to benefit from the acquisition of a natural gas transmission business in Brazil, which helped power results again in the first quarter. In addition to that, recent expansion projects and higher volumes across its legacy assets helped bolster results during the quarter.

Brookfield Infrastructure Partners results: The raw numbers

Metric

Q1 2018

Q1 2017

Year-Over-Year Change

Funds from operations (FFO)

$333 million

$261 million

27.6%

FFO per unit

$0.85

$0.71

19.7%

Data source: Brookfield Infrastructure Partners.

A pipeline heading into an industrial area at dusk.

Image source: Getty Images.

What happened with Brookfield Infrastructure Partners this quarter? 

Acquisitions helped lead the way:

  • The utilities segment generated $169 million of FFO, an impressive 69% above the year-ago quarter, thanks to the purchase of a stake in a natural gas transmission business in Brazil. In addition, the company benefited from rate increases and inflationary adjustments. Brookfield also completed construction on the first of several new electricity transmission lines in Brazil in March, which is now starting to generate earnings.
  • The transportation segment produced $137 million in FFO, up 11.4% year over year. Driving this increase were higher tariffs and volumes in its Brazilian rail and South American toll road businesses, helped in part by the commissioning of a toll road expansion project.
  • The energy segment generated $66 million in FFO, up 6.5% versus the year-ago period mainly due to new contracts, higher transport volumes, and an additional equity investment in its North American natural-gas transmission joint venture with pipeline giant Kinder Morgan (NYSE:KMI). Brookfield and Kinder Morgan have successfully turned around the operations of that pipeline system, which is now generating strong earnings growth.
  • FFO from the communications infrastructure segment was $19 million, which is flat year over year due to the stability of its operations.

What management had to say 

CEO Sam Pollock commented on the company's results:

2018 is off to a good start. With the sale of our Chilean electricity transmission business, we continue to demonstrate our full cycle investment strategy. The proceeds dramatically increased our total liquidity, which now stands at over $4 billion. We can use this substantial liquidity to fund our strong backlog of organic growth projects, and opportunistically deploy into new investment initiatives on a value basis.

Brookfield has already started putting some of this liquidity to work so that it can offset the income it will lose from the sale of its Chilean business. The company currently has $2 billion of organic growth projects underway, including building electricity transmission lines and toll roads in Brazil, installing smart meters in the U.K., and laying fiber-to-the-home in France, which should help expand FFO in future quarters.

Looking forward 

While Brookfield is slowly transitioning away from its reliance on acquisitions to drive growth, the company does have several in the pipeline. It recently acquired an 11% stake in Gas Natural, which is the second largest gas distribution network in Columbia, and it's working with partners to buy a controlling interest. In addition to that, the company is in discussions with its joint venture partner to purchase its 50% interest in the entity that is building electricity transmission lines in Brazil. Finally, the company sees a significant opportunity in the North American energy infrastructure sector and is in various stages of discussions with several large midstream energy companies on a variety of transactions.

Matthew DiLallo owns shares of Brookfield Infrastructure Partners and Kinder Morgan. The Motley Fool owns shares of and recommends Kinder Morgan. The Motley Fool recommends Brookfield Infrastructure Partners. The Motley Fool has a disclosure policy.