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Aug 17, 2017 10:56 AM Pricing delayed 20 minutes

CorEnergy Announces Second Quarter 2017 Results and Dividends

Aug 2, 2017

KANSAS CITY, Mo.--(BUSINESS WIRE)-- CorEnergy Infrastructure Trust, Inc. (“CorEnergy” or the “Company”) today announced financial results and dividend declarations for the second quarter, ended June 30, 2017.

Second Quarter Performance Summary

Second quarter financial highlights are as follows:

    Ended June 30, 2017
    Per Share
Total Basic     Diluted
Net Income (Attributable to Common Stockholders)1 $6,877,043 $0.58 $0.58
NAREIT Funds from Operations (NAREIT FFO)1 $12,287,971 $1.03 $0.94
Funds From Operations (FFO)1 $12,014,732 $1.01 $0.93
Adjusted Funds From Operations (AFFO)1 $12,499,249 $1.05 $0.94
 
Dividends Declared to Common Stockholders $0.75
1   Management uses AFFO as a measure of long-term sustainable operational performance. NAREIT FFO, FFO, and AFFO are non-GAAP measures. Reconciliations of NAREIT FFO, FFO and AFFO, as presented, to Net Income Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.
 

Recent Developments

  • Underwriters exercised partial over-allotment option of the 7.375% Series A Preferred Stock offering
  • Expanded and enhanced business development and accounting teams
  • Concluded non-binding open season on the MoGas Pipeline
  • Amended and restated credit facility agreement
  • Repaid term loan, reducing leverage ratios

“Recently, CorEnergy executed a number of financial and organizational initiatives. We completed a preferred stock offering and used the proceeds to refinance our credit facility. We expanded our business development team and enhanced our accounting, tax and SEC compliance team,” said CorEnergy CEO Dave Schulte. “As of July 31, 2017, CorEnergy had approximately $146.7 million of liquidity for potential acquisitions.”

Dividend Declaration

Common Stock: A second quarter 2017 dividend of $0.75 per share (or $3.00 per share annualized) was declared for CorEnergy’s common stock. The dividend is payable on August 31, 2017, to shareholders of record on August 17, 2017.

Preferred Stock: For the Company’s 7.375% Series A Cumulative Redeemable Preferred Stock, a cash dividend of $0.4609375 per depositary share was declared for the second quarter. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on August 31, 2017, to shareholders of record on August 17, 2017.

Financing Update

7.375% Series A Cumulative Redeemable Preferred Stock: On May 10, 2017, the underwriters of CorEnergy’s April 2017 preferred equity issuance purchased an additional 150,000 depositary shares at $25.00 per share, partially exercising their overallotment option. This increased the total number of depositary shares issued in the offering to 2.95 million shares and the total proceeds, net of underwriters’ discounts and other offering expenses, to approximately $71.2 million.

CorEnergy Credit Facility: On July 28, 2017, CorEnergy entered into an amended and restated credit facility agreement (the “Credit Facility”), which provides revolving borrowing commitments of up to $161.0 million, subject to the limitations of a borrowing base. The Company’s prior credit facility was comprised of $108.0 million in revolving borrowing commitments and a $45.0 million term loan.

The Credit Facility has a maturity date of July 28, 2022, subject to a springing maturity on February 28, 2020, and thereafter, if the Company fails to maintain certain liquidity requirements from the springing maturity date through the maturity date of the Company’s convertible notes on June 15, 2020. Borrowings under the Credit Facility will bear interest on the outstanding principal amount using a LIBOR pricing grid, which is expected to equal a LIBOR rate plus an applicable margin of 2.75%-3.75%. There is a fee of 50 basis points on unused portions of the Credit Facility.

Portfolio Update

MoGas Pipeline: Following the conclusion of its open season on June 30, 2017, MoGas Pipeline does not expect any immediate incremental revenue to result from that initiative, but MoGas continues to explore means to offset the decline in revenue from the amended Laclede contract, which will become effective November 1, 2018. Such opportunities may include shippers transporting gas across MoGas to strike on Rockies, Mid-continent, Eastern and Gulf Coast basin basis differentials given its strategic location and numerous pipeline interconnects, new end-user customers, new cogeneration customers, and increased capacity from existing shippers. In addition, MoGas has the right to request from FERC adjustments to its rates to mitigate the effect of higher operating costs or lost revenues, by filing such a request any time MoGas deems necessary and appropriate.

Outlook

CorEnergy believes acquisitions enhance the stability of its operations, reducing risk to existing stockholders, because of the diversification benefits and added potential for dividend growth. The Company is evaluating a broad set of infrastructure opportunities and anticipates transacting on one to two acquisitions per year in 2017 and 2018, with a target range of $50 to $250 million per project. CorEnergy intends to finance these acquisitions through the use of capacity on its revolver, partnerships with co-investors, portfolio level debt, and, if beneficial to existing stockholders, prudent preferred and/or common equity issuances. There can be no assurance that any of these acquisition opportunities will result in consummated transactions.

CorEnergy intends to continue paying quarterly dividends of $0.75 per share ($3.00 annualized) based on rents received. The Company targets revenue growth of 1-3% annually from existing contracts. Based on low inflation and current production levels, CorEnergy does not anticipate significant inflation-based or participating rents in 2017.

Second Quarter 2017 Earnings Conference Call

CorEnergy will host a conference call on Thursday, August 3, 2017, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 (for international, 1-201-689-8035) approximately five to ten minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit.

A replay of the call will be available until 10:59 p.m. Central Time on September 3, 2017 by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 17944. A replay of the conference call will also be available on the Company’s website.

About CorEnergy Infrastructure Trust, Inc.

CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a real estate investment trust (REIT) that owns essential energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from operators of our assets, primarily under triple-net participating leases. For more information, please visit corenergy.reit.

Forward-Looking Statements

This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any distribution paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants.

Notes

1 NAREIT FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and after adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. FFO as we have presented it here, is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and dividend income and net realized and unrealized gain or loss on other equity securities. CorEnergy defines AFFO as FFO Adjusted for Securities Investments plus provision from loan losses, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligations, income tax expense (benefit) unrelated to securities investments, noncash costs associated with derivative instruments and certain costs of a non-recurring nature, less maintenance, capital expenditures (if any), amortization of debt premium and other adjustments as deemed appropriate by management. Reconciliations of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO to Net Income Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

 
 
Consolidated Balance Sheets (Unaudited)
           
June 30, 2017 December 31, 2016
Assets
Leased property, net of accumulated depreciation of $62,187,684 and $52,219,717 $ 479,290,402 $ 489,258,369
Property and equipment, net of accumulated depreciation of $10,969,426 and $9,292,712 114,749,839 116,412,806
Financing notes and related accrued interest receivable, net of reserve of $4,100,000 and $4,100,000 1,500,000 1,500,000
Other equity securities, at fair value 9,147,158 9,287,209
Cash and cash equivalents 37,280,689 7,895,084
Deferred rent receivable 18,464,918 14,876,782
Accounts and other receivables 3,376,336 4,538,884
Deferred costs, net of accumulated amortization of $2,814,294 and $2,261,151 2,581,420 3,132,050
Prepaid expenses and other assets 601,428 354,230
Deferred tax asset 2,019,051 1,758,289
Goodwill   1,718,868     1,718,868  
Total Assets $ 670,730,109   $ 650,732,571  
Liabilities and Equity
Secured credit facilities, net (including $7,701,316 and $8,860,577 with related party) $ 41,035,695 $ 89,387,985
Unsecured convertible senior notes, net of discount and debt issuance costs of $2,361,512 and $2,755,105 111,638,489 111,244,895
Asset retirement obligation 12,204,201 11,882,943
Accounts payable and other accrued liabilities 2,191,053 2,416,283
Management fees payable 1,745,325 1,735,024
Unearned revenue   543,050     155,961  
Total Liabilities $ 169,357,813   $ 216,823,091  
Equity
Series A Cumulative Redeemable Preferred Stock 7.375%, $130,000,000 and $56,250,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 52,000 and 22,500 issued and outstanding at June 30, 2017 and December 31, 2016, respectively $ 130,000,000

$

56,250,000
Capital stock, non-convertible, $0.001 par value; 11,901,681 and 11,886,216 shares issued and outstanding at June 30, 2017 and December 31, 2016 (100,000,000 shares authorized) 11,902 11,886
Additional paid-in capital 343,585,389 350,217,746
Accumulated other comprehensive loss   (5,218 )   (11,196 )
Total CorEnergy Equity   473,592,073     406,468,436  
Non-controlling interest   27,780,223     27,441,044  
Total Equity   501,372,296     433,909,480  
Total Liabilities and Equity $ 670,730,109   $ 650,732,571  
 
 
Consolidated Statements of Income and Comprehensive Income (Unaudited)
           
For the Three Months Ended For the Six Months Ended
June 30, 2017     June 30, 2016 June 30, 2017     June 30, 2016
Revenue
Lease revenue $ 17,050,092 $ 16,996,072 $ 34,116,618 $ 33,992,144
Transportation and distribution revenue 4,775,780 5,064,680 9,786,370 10,164,131
Financing revenue               162,344  
Total Revenue   21,825,872     22,060,752     43,902,988     44,318,619  
Expenses
Transportation and distribution expenses 1,362,980 1,378,306 2,698,550 2,740,631
General and administrative 2,558,339 2,773,240 5,619,579 6,063,092
Depreciation, amortization and ARO accretion expense 6,005,995 5,737,025 12,011,903 11,033,843
Provision for loan loss and disposition       369,278         5,014,466  
Total Expenses   9,927,314     10,257,849     20,330,032     24,852,032  
Operating Income $ 11,898,558   $ 11,802,903   $ 23,572,956   $ 19,466,587  
Other Income (Expense)
Net distributions and dividend income $ 221,440 $ 214,169 $ 264,902 $ 589,742
Net realized and unrealized gain (loss) on other equity securities 614,634 1,199,665 70,426 (429,087 )
Interest expense   (3,202,837 )   (3,540,812 )   (6,657,234 )   (7,466,821 )
Total Other Expense   (2,366,763 )   (2,126,978 )   (6,321,906 )   (7,306,166 )
Income before income taxes   9,531,795     9,675,925     17,251,050     12,160,421  
Taxes
Current tax expense (benefit) 57,651 203,652 23,891 (474,079 )
Deferred tax expense (benefit)   38,084     206,786     (260,762 )   (370,609 )
Income tax expense (benefit), net   95,735     410,438     (236,871 )   (844,688 )
Net Income 9,436,060 9,265,487 17,487,921 13,005,109
Less: Net Income attributable to non-controlling interest   435,888     310,960     818,271     659,461  
Net Income attributable to CorEnergy Stockholders $ 9,000,172 $ 8,954,527 $ 16,669,650 $ 12,345,648
Preferred dividend requirements   2,123,129     1,037,109     3,160,238     2,074,218  
Net Income attributable to Common Stockholders $ 6,877,043   $ 7,917,418   $ 13,509,412   $ 10,271,430  
 
Net Income $ 9,436,060 $ 9,265,487 $ 17,487,921 $ 13,005,109
Other comprehensive income (loss):
Changes in fair value of qualifying hedges / AOCI attributable to CorEnergy stockholders 3,006 3,005 5,978 (208,071 )
Changes in fair value of qualifying hedges / AOCI attributable to non-controlling interest   702     703     1,396     (48,647 )
Net Change in Other Comprehensive Income (Loss) $ 3,708   $ 3,708   $ 7,374   $ (256,718 )
Total Comprehensive Income 9,439,768 9,269,195 17,495,295 12,748,391
Less: Comprehensive income attributable to non-controlling interest   436,590     311,663     819,667     610,814  
Comprehensive Income attributable to CorEnergy Stockholders $ 9,003,178   $ 8,957,532   $ 16,675,628   $ 12,137,577  
Earnings Per Common Share:
Basic $ 0.58 $ 0.66 $ 1.14 $ 0.86
Diluted $ 0.58 $ 0.66 $ 1.14 $ 0.86
Weighted Average Shares of Common Stock Outstanding:
Basic 11,896,616 11,912,030 11,892,670 11,927,984
Diluted 11,896,616 15,383,892 11,892,670 11,927,984
Dividends declared per share $ 0.750 $ 0.750 $ 1.500 $ 1.500
 
 
Consolidated Statements of Cash Flows (Unaudited)
               
For the Six Months Ended
June 30, 2017     June 30, 2016
Operating Activities
Net Income $ 17,487,921 $ 13,005,109
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income tax, net (260,762 ) (370,609 )
Depreciation, amortization and ARO accretion 12,949,644 12,149,782
Provision for loan loss 5,014,466
Non-cash settlement of accounts payable (171,609 )
Gain on repurchase of convertible debt (68,734 )
Net distributions and dividend income, including recharacterization of income 148,649 (117,004 )
Net realized and unrealized (gain) loss on other equity securities (70,426 ) 429,087
Unrealized gain on derivative contract (16,453 ) (132,094 )
Common stock issued under directors compensation plan 30,000 30,000
Changes in assets and liabilities:
Increase in deferred rent receivable (3,588,136 ) (4,777,761 )
Decrease in accounts and other receivables 1,162,548 1,044,197
Decrease in financing note accrued interest receivable 95,114
Decrease (increase) in prepaid expenses and other assets 134,023 (143,996 )
Increase (decrease) in management fee payable 10,301 (63,961 )
Decrease in accounts payable and other accrued liabilities (53,621 ) (133,100 )
Increase in unearned revenue   29,695     54,094  
Net cash provided by operating activities $ 27,791,774   $ 26,014,590  
Investing Activities
Proceeds from assets and liabilities held for sale 644,934
Purchases of property and equipment, net (13,745 ) (372,230 )
Proceeds from asset foreclosure and sale 223,451
Increase in financing notes receivable (202,000 )
Return of capital on distributions received   61,828     2,134  
Net cash provided by investing activities $ 48,083   $ 296,289  
Financing Activities
Debt financing costs (2,512 ) (193,000 )
Net offering proceeds on Series A preferred stock 71,170,611
Repurchases of common stock (2,041,851 )
Repurchases of convertible debt (931,266 )
Dividends paid on Series A preferred stock (3,433,984 ) (2,074,218 )
Dividends paid on common stock (17,318,618 ) (17,570,352 )
Distributions to non-controlling interest (480,488 )
Advances on revolving line of credit 44,000,000
Payments on revolving line of credit (44,000,000 )
Principal payments on secured credit facilities   (4,389,261 )   (54,002,815 )
Net cash provided (used) by financing activities $ 1,545,748   $ (32,813,502 )
Net Change in Cash and Cash Equivalents $ 29,385,605 $ (6,502,623 )
Cash and Cash Equivalents at beginning of period   7,895,084     14,618,740  
Cash and Cash Equivalents at end of period $ 37,280,689   $ 8,116,117  
 
Supplemental Disclosure of Cash Flow Information
Interest paid $ 5,777,328 $ 6,758,715
Income taxes paid (net of refunds) 132,202 3,437
 
Non-Cash Investing Activities
Change in accounts and other receivables $ $ (450,000 )
Net change in Assets Held for Sale, Property and equipment, Prepaid expenses and other assets, Accounts payable and other accrued liabilities and Liabilities held for sale (1,776,549 )
 
Non-Cash Financing Activities
Reinvestment of distributions by common stockholders in additional common shares $ 516,565 $ 331,823
 
 
NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation
 
    For the Three Months Ended     For the Six Months Ended
June 30, 2017     June 30, 2016 June 30, 2017     June 30, 2016
Net Income attributable to CorEnergy Stockholders $ 9,000,172 $ 8,954,527 $ 16,669,650 $ 12,345,648
Less:
Preferred Dividend Requirements   2,123,129   1,037,109   3,160,238     2,074,218  
Net Income attributable to Common Stockholders $ 6,877,043 $ 7,917,418 $ 13,509,412 $ 10,271,430
Add:
Depreciation 5,822,383 5,539,667 11,644,679 10,629,420
Less:
Non-Controlling Interest attributable to NAREIT FFO reconciling items   411,455   411,455   822,910     822,910  
NAREIT funds from operations (NAREIT FFO) $ 12,287,971 $ 13,045,630 $ 24,331,181 $ 20,077,940
Add:
Distributions received from investment securities 252,213 215,139 475,379 474,873
Income tax expense from investment securities 310,622 533,765 114,862 58,128
Less:
Net distributions and dividend income 221,440 214,169 264,902 589,742
Net realized and unrealized gain (loss) on other equity securities   614,634   1,199,665   70,426     (429,087 )
Funds from operations adjusted for securities investments (FFO) $ 12,014,732 $ 12,380,700 $ 24,586,094 $ 20,450,286
Add:
Provision for loan losses, net of tax 369,278 4,409,359
Transaction costs 211,269 1,000 470,051 37,915
Amortization of debt issuance costs 468,871 470,506 937,742 1,087,603
Amortization of deferred lease costs 22,983 22,983 45,966 45,966
Accretion of asset retirement obligation 160,629 174,375 321,258 358,457
Unrealized (gain) loss associated with derivative instruments 10,619 33,820 (16,453 ) 57,695
Less:
Non-cash settlement of accounts payable 171,609 171,609
Income tax benefit 214,887 123,327 351,733 297,709
Non-Controlling Interest attributable to AFFO reconciling items   3,358   9,064   6,709     45,868  
Adjusted funds from operations (AFFO) $ 12,499,249 $ 13,320,271 $ 25,814,607   $ 26,103,704  
 
Weighted Average Shares of Common Stock Outstanding:
Basic 11,896,616 11,912,030 11,892,670 11,927,984
Diluted 15,351,161 15,383,892 15,347,215 15,406,339
NAREIT FFO attributable to Common Stockholders
Basic $ 1.03 $ 1.10 $ 2.05 $ 1.68
Diluted $ 0.94 $ 0.99 $ 1.87 $ 1.59
FFO attributable to Common Stockholders
Basic $ 1.01 $ 1.04 $ 2.07 $ 1.71
Diluted $ 0.93 $ 0.95 $ 1.89 $ 1.61
AFFO attributable to Common Stockholders
Basic $ 1.05 $ 1.12 $ 2.17 $ 2.19
Diluted $ 0.94 $ 0.99 $ 1.94 $ 1.95

Source: CorEnergy Infrastructure Trust, Inc.

CorEnergy Infrastructure Trust, Inc.

Investor Relations

Lesley Schorgl, 877-699-CORR (2677)

info@corenergy.reit