Brookfield Infrastructure Partners Restarts Its Growth Engine in Q4

Brookfield Infrastructure Partners' (BIP -1.48%) financial results started bouncing back to end 2018, with the company closing several acquisitions as part of its portfolio-refresh program. Those new additions, as well as others that should follow shortly, position the company to hit the accelerator in 2019.

Brookfield Infrastructure Partners results: The raw numbers

Data source: Brookfield Infrastructure Partners.

What happened with Brookfield Infrastructure Partners this quarter? 

Recent additions boosted results:

• Brookfield's utilities segment generated $138 million in FFO, which was 19.8% lower than 2017's fourth quarter due to the sale of its electricity transmission business in Chile as well as some foreign exchange headwinds. After adjusting for those factors, the company delivered solid underlying performance as FFO increased 5% year over year.
• The transportation segment produced $129 million in FFO, which was 7.2% below the year-ago period. Several issues hurt results, including lower mineral volumes on its Australian railroads, the return of a concession to operate a toll road in Brazil, and foreign exchange fluctuations. Those issues masked the solid underlying performance of the company's transportation businesses, which would have delivered a 5% year-over-year increase in FFO, driven by inflationary rate increases, volume growth linked to gross domestic product, strong agricultural volumes on its rail systems, and a solid performance at its ports.
• The energy segment's FFO skyrocketed 60.7% year over year to $90 million thanks to the contribution from recent acquisitions, including the first phase of Enbridge's (ENB 0.11%) Western Canadian natural gas gathering and processing business.
• Brookfield's data infrastructure segment produced $20 million in FFO, up more than 5% year over year thanks to recently completed expansion projects and higher rates on contracts due to inflation.
• For the full year, Brookfield Infrastructure generated $1.23 billion, or $3.11 per unit, of FFO. While total FFO increased 5%, it was flat on a per-unit basis because the company sold equity in late 2017 to help fund some of its expansion initiatives. 

Image source: Getty Images.

What management had to say 

CEO Sam Pollock commented on the company's results and strategic initiatives:

2018 was an extremely active and successful year. We executed on our asset rotation strategy, an integral component of our full cycle investment plan, and as a result, are able to fund our secured transactions without need for equity issuance. The business also generated solid results, and we deployed over $2.5 billion into organic growth projects and new investments.

Brookfield Infrastructure Partners completed several major transactions last year. It started by selling its electricity transmission business in Chile, which generated $1.1 billion in proceeds. The company then reinvested that capital into several transactions, including a natural gas utility in Colombia, a residential energy infrastructure business in North America, and Enbridge's gathering and processing business in Western Canada. Those transactions were part of the $1.9 billion in acquisitions the company secured last year. On top of that, it invested about $800 million into organic expansion projects across all four of its operating platforms.

Check out the latest Brookfield Infrastructure earnings call transcript.

Looking forward 

Brookfield recently closed the acquisition of a U.S. data center business as well as one in Australia. Meanwhile, the company expects to close another data center investment in South America this month as well as the purchase of a natural gas pipeline business in India. And the company remains on track to complete the final phase of its deal with Enbridge by midyear. Those new additions position the company to increase FFO up to $3.60 per unit on an annualized basis.

At the same time that the company is buying assets, it's also working to sell mature businesses. Brookfield recently agreed to sell up to 33% of its stake in a toll road business in Chile, which when combined with a recapitalization of that business, should generate $365 million in proceeds. The company has five more asset sales in progress, which could bring in $1.5 billion to $2 billion in cash over the next 12 to 18 months. Those sales will provide Brookfield with the money to reinvest in higher-returning opportunities in the future.