Brookfield Infrastructure Partners L.P. (BIP +1.90%) reported first-quarter results before the opening bell on Tuesday. Like many U.S. companies with global operations, the infrastructure management specialist's results were pinched by the strong dollar. However, when we wipe away the impact of currencies the company's results were strong and should gain momentum in 2015 thanks to a number of compelling opportunities in the pipeline.
A look at the numbers
Brookfield reported funds from operations, or FFO, of $186 million, or $0.89 per unit. That is flat with the first quarter of 2014 even though the company added several new investments over the past year. Holding back that growth was a $15 million impact from foreign exchange movements. In fact, if currencies are backed out the company actually would have grown FFO by 11% over the prior year on a "same-store" basis.
The company's utility segment led this growth, generating segment FFO of $95 million. That was up from $89 million in the first quarter of last year on the back of continued strength in connections activity at its U.K. regulated distribution business, new growth projects coming online, and lower costs.
Brookfield's transportation segment generated FFO of $96 million, which was flat from last year's first quarter. The segment enjoyed strong volume and tariff growth, along with a significant contribution from its rail business in Brazil. However, the strong U.S. dollar and rising interest rates in Brazil muted all of the division's positive momentum.
Finally, Brookfield's energy segment generated FFO of $28 million, which was $2 million higher than the first quarter of last year. Fueling this growth was the company's district energy platform, which offset some weakness in its North American natural gas transmission business.
A look ahead
Brookfield has several strategic opportunities in its pipeline that it expects to drive meaningful growth in 2015. In fact, right as the quarter ended the company closed its $500 million French telecom infrastructure transaction. In addition, Brookfield is working on two transactions in Brazil that represent $450 million in capital deployments.
The first opportunity is the acquisition of additional shares in its Brazilian toll road subsidiary from public minority partners. The second potential deal is for a stake in Invepar, a Brazilian company that owns a large toll road, an airport, and an urban mobility company. In that deal, Brookfield is providing a debtor in possession loan to a Brazilian construction company to facilitate the acquisition of its stake in Invepar.
Brookfield sees several compelling opportunities beyond these two deals in Brazil. That's why the company proactively raised $1.4 billion earlier this year to boost its corporate liquidity to $2.3 billion. Management expects 2015 to be a very active year as it believes it is well positioned to capture many of the opportunities it sees on the horizon.
Investor takeaway
While Brookfield's FFO was flat over last year, that's entirely due to the strong U.S. dollar. Overall, the company's operations are driving meaningful growth, which it sees accelerating in 2015 due to a number of compelling acquisition opportunities. These opportunities should drive strong distribution growth in the future.
