CorEnergy Releases First Quarter 2014 Results
KANSAS CITY, Mo.--(BUSINESS WIRE)-- CorEnergy Infrastructure Trust, Inc. (NYSE: CORR) (“CorEnergy” or the “Company”) today announced financial results for the first quarter ended March 31, 2014.
First Quarter Highlights and Subsequent Events
- Declared first quarter 2014 dividend distribution of $0.129, payable on May 22, 2014
- Reiterating annualized dividend guidance of no less than $0.52 per share – a 4% increase over the prior quarter
- Completed two transactions in the first quarter, the Portland Terminal Facility acquisition and Black Bison transaction
- Formally elected to be treated as a REIT for the 2013 tax year
“CorEnergy delivered an excellent first quarter by investing accretively, growing FFO and AFFO at a superior rate, increasing annualized dividend guidance by 4 percent and prudently managing our balance sheet,” said David Schulte, Chief Executive Officer of CorEnergy.
“Consistent with our disciplined growth strategy, we expanded our asset portfolio, closing two transactions in the first quarter. We also completed a highly successful follow-on equity offering. We are increasing our full-year outlook, reflecting the strength of CorEnergy’s business model and confidence around transaction execution.”
Quarterly Performance Review
CorEnergy reported total revenues of $10.0 million in the quarter ended March 31, 2014. A first quarter dividend of $0.129 was declared on April 30, 2014, and is payable on May 22, 2014. Total assets were $331.6 million and total stockholders' equity was $221.9 million as of March 31, 2014, compared to $283.9 million and $177.2 million, respectively, at Dec. 31, 2013. The increase in total assets and stockholders’ equity is primarily due to the acquisition and financing of the Portland Terminal Facility. Net income attributable to common stockholders was $2.1 million, or $0.07 per common share.
Because the Company now operates as a REIT, management believes that non-GAAP performance measures utilized by REITs, including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”), also provide useful insights into CorEnergy’s operational performance. AFFO for the quarter ended March 31, 2014, was $0.14 per share as compared to $0.13 per share for the quarter ended Dec. 31, 2013.
| First Quarter Ended March 31, 2014 Financial Summary | ||||||||||
| For the Three Month Period Ended March 31, 2014 | ||||||||||
| Total | Per Share | |||||||||
| Net Income (attributable to CorEnergy Stockholders) | $ | 2,105,159 | $ | 0.07 | ||||||
| Funds From Operations (FFO) | $ | 4,535,932 | $ | 0.15 | ||||||
| Adjusted Funds From Operations (AFFO) | $ | 4,201,785 | $ | 0.14 | ||||||
FFO and AFFO are non-GAAP measures presented in accordance with the guidelines for calculation and reporting issued by the National Association of Real Estate Investment Trusts. FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO an important supplemental measure of operating performance that is frequently used by securities analysts, investors and other interested parties. CorEnergy defines AFFO as FFO plus transaction costs, amortization of debt issuance costs, deferred leasing costs, above-market rent, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), amortization of debt premium and other adjustments as deemed appropriate. Management uses AFFO as a measure of long-term sustainable operational performance.
Portfolio Update
As previously announced, CorEnergy closed an acquisition of a petroleum products terminal facility (the "Portland Terminal Facility") for $40 million in cash on January 21, 2014. The Portland Terminal Facility is leased to a subsidiary of Arc Logistics Partners LP (NYSE: ARCX) under a 15-year triple net participating lease.
As announced on March 17, 2014, CorEnergy closed a transaction to finance the acquisition by Black Bison Water Services, LLC (“Black Bison”) of salt water disposal properties and related capital improvement projects. The financing will be secured by three salt water disposal properties serving oil and gas producers in Wyoming’s Powder River Basin and Green River Basin.
Outlook
CorEnergy expects its energy infrastructure assets – the Pinedale LGS, the Eastern Interconnect Project, the Portland Terminal Facility, Mowood and Black Bison – to produce stable and recurring revenues in 2014. The Company believes that the cash flows from its holdings will support 2014 annualized dividend payments of no less than $0.52 per share. The Company has a broadening set of opportunities in the pipeline, which provide the potential to reach $50 to $200 million per project type. There can be no assurance that any of these acquisition opportunities will result in consummated transactions. The Company has a $20 million revolving credit facility in place, which can be utilized for future acquisitions. As of March 31, 2014, there were no outstanding borrowings against the facility. The Company expects to utilize balance sheet resources, including prudent leverage when available, supplemented with accretive equity issuance as needed.
Dividend Policy
In 2013, CorEnergy changed its fiscal year as part of its transition from a business development company to a REIT. As a result of this change, the dividend payment schedule for calendar 2014 will vary from prior years. Going forward, the Company intends to maintain a quarterly February/May/August/November dividend payment cycle. Dividend payouts may be affected by cash flow requirements and remain subject to other risks and uncertainties.
2014 First Quarter Earnings Conference Call
CorEnergy will host a conference call Tuesday, May 13, 2014, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 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.corridortrust.com.
A replay of the call will be available until 11:59 p.m. Central Time June 13, 2014, by dialing 877-660-6853. The Conference ID # is 13582140. A replay of the webcast will also be available on the company’s website at corenergy.corridortrust.com through May 13, 2015.
About CorEnergy Infrastructure Trust, Inc.
CorEnergy Infrastructure Trust, Inc. (NYSE: CORR), primarily owns midstream and downstream U.S. energy infrastructure assets subject to long-term triple net participating leases with energy companies. These assets include pipelines, storage tanks, transmission lines and gathering systems. The Company’s principal objective is to provide stockholders with an attractive risk-adjusted total return, with an emphasis on distributions and long-term distribution growth (reported to our investors on Form 1099). CorEnergy is managed by Corridor InfraTrust Management, LLC, a real property asset manager focused on U.S. energy infrastructure real assets, and is an affiliate of Tortoise Capital Advisors, L.L.C., an investment manager specializing in listed energy investments, with approximately $16.4 billion of assets under management in NYSE-listed closed-end investment companies, open-end funds and other accounts as of April 30, 2014. For more information, please visit corenergy.corridortrust.com.
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.
| CorEnergy Infrastructure Trust, Inc. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| March 31, 2014 | December 31, 2013 | |||||||||
| Assets | (Unaudited) | |||||||||
| Leased property, net of accumulated depreciation of $15,815,415 | ||||||||||
| and $12,754,588 | $ | 271,125,556 | $ | 232,220,618 | ||||||
| Other equity securities, at fair value | 24,107,243 | 23,304,321 | ||||||||
| Cash and cash equivalents | 23,095,733 | 17,963,266 | ||||||||
| Property and equipment, net of accumulated depreciation of | ||||||||||
| $2,108,495 and $2,037,685 | 3,247,673 | 3,318,483 | ||||||||
| Financing note and related accrued interest receivable, net | 4,107,955 | - | ||||||||
| Lease receivable | 438,239 | 711,229 | ||||||||
| Accounts receivable | 2,213,860 | 2,068,193 | ||||||||
| Intangible lease asset, net of accumulated amortization of | ||||||||||
| $802,832 and $729,847 | 291,939 | 364,924 | ||||||||
| Deferred debt issuance costs, net of accumulated amortization of | ||||||||||
| $717,670 and $572,830 | 1,080,684 | 1,225,524 | ||||||||
| Deferred lease costs, net of accumulated amortization of $78,613 | ||||||||||
| and $63,272 | 841,849 | 857,190 | ||||||||
| Hedged derivative asset | 611,326 | 680,968 | ||||||||
| Income tax receivable | - | 834,382 | ||||||||
| Prepaid expenses and other assets | 433,618 | 326,561 | ||||||||
| Total Assets | $ | 331,595,675 | $ | 283,875,659 | ||||||
| Liabilities and Equity | ||||||||||
| Current maturities of long-term debt | $ | 3,528,000 | $ | 2,940,000 | ||||||
| Long-term debt (net of current maturities) | 66,178,000 |
67,060,000 |
||||||||
| Accounts payable and other accrued liabilities | 2,786,408 | 2,920,267 | ||||||||
| Unearned revenue | 2,844,914 | - | ||||||||
| Deferred tax liability | 4,991,526 | 5,332,087 | ||||||||
| Income tax payable | 198,865 | - | ||||||||
| Line of credit | 483,105 | 81,935 | ||||||||
|
Total Liabilities |
$ | 81,010,818 | $ |
78,334,289 |
||||||
| Equity | ||||||||||
| Warrants, no par value; 0 and 945,594 issued and outstanding at | ||||||||||
| March 31, 2014 and December 31, 2013, respectively (5,000,000 | ||||||||||
| authorized) | $ | - | $ | 1,370,700 | ||||||
| Capital stock, non-convertible, $0.001 par value; 31,635,537 shares | ||||||||||
| issued and outstanding at March 31, 2014 and 24,156,163 shares | ||||||||||
| issued and outstanding at December 31, 2013 (100,000,000 shares | ||||||||||
| authorized) | 31,635 | 24,156 | ||||||||
| Additional paid-in capital | 220,458,108 | 173,441,019 | ||||||||
| Accumulated retained earnings | 665,698 | 1,580,062 | ||||||||
| Accumulated other comprehensive income | 706,783 | 777,403 | ||||||||
| Total CorEnergy Equity | 221,862,224 | 177,193,340 | ||||||||
|
Non-controlling interest |
28,722,633 | 28,348,030 | ||||||||
| Total Equity | 250,584,857 | 205,541,370 | ||||||||
| Total Liabilities and Equity | $ | 331,595,675 | $ |
283,875,659 |
||||||
| CorEnergy Infrastructure Trust, Inc. | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | ||||||||||||
| For the Three Months Ended | ||||||||||||
|
March 31, 2014 |
March 31, 2013 |
|||||||||||
| Revenue | ||||||||||||
| Lease revenue | $ | 6,762,408 | $ | 5,638,244 | ||||||||
| Sales revenue | 3,259,530 | 2,515,573 | ||||||||||
| Financing revenue | 25,619 |
- |
||||||||||
| Total Revenue | 10,047,557 | 8,153,817 | ||||||||||
| Expenses | ||||||||||||
| Cost of sales (excluding depreciation expense) | 2,707,358 | 2,003,639 | ||||||||||
| Management fees | 783,868 | 643,814 | ||||||||||
| Asset acquisition expenses | 16,217 | 31,817 | ||||||||||
| Professional fees | 399,128 | 454,183 | ||||||||||
| Depreciation expense | 3,131,637 | 2,857,036 | ||||||||||
| Amortization expense | 15,341 | 15,279 | ||||||||||
| Operating expenses | 222,741 | 206,904 | ||||||||||
| Directors' fees | 65,034 | 18,000 | ||||||||||
| Other expenses | 168,708 | 122,706 | ||||||||||
| Total Expenses | 7,510,032 | 6,353,378 | ||||||||||
| Operating Income | 2,537,525 | 1,800,439 | ||||||||||
| Other Income (Expense) | ||||||||||||
| Net distributions and dividend income | $ |
- |
$ | 13,124 | ||||||||
| Net realized and unrealized gain on trading securities | - | 316,063 | ||||||||||
| Net realized and unrealized gain on other equity securities | 1,294,182 | 2,425,986 | ||||||||||
| Interest expense | (821,921 | ) | (737,381 | ) | ||||||||
| Total Other Income | 472,261 | 2,017,792 | ||||||||||
|
Income before income taxes |
3,009,786 | 3,818,231 | ||||||||||
| Taxes | ||||||||||||
| Current tax expense | 854,075 | 285,891 | ||||||||||
| Deferred tax expense (benefit) | (340,562 | ) | 735,053 | |||||||||
| Income tax expense, net | 513,513 | 1,020,944 | ||||||||||
|
Net Income |
2,496,273 | 2,797,287 | ||||||||||
| Less: Net income attributable to non-controlling interest | 391,114 | 384,534 | ||||||||||
|
Net Income attributable to CORR Stockholders |
$ | 2,105,159 | $ | 2,412,753 | ||||||||
| Net income | $ | 2,496,273 | $ | 2,797,287 | ||||||||
| Other comprehensive income: | ||||||||||||
| Changes in fair value of qualifying hedges | ||||||||||||
| attributable to CORR stockholders | (70,620 | ) | - | |||||||||
| Changes in fair value of qualifying hedges | ||||||||||||
| attributable to non-controlling interest | (16,511 | ) | - | |||||||||
|
Net Change in Other Comprehensive Income |
$ | (87,131 | ) | $ | - | |||||||
|
Total Comprehensive Income |
2,409,142 | 2,797,287 | ||||||||||
| Less: Comprehensive income attributable to non-controlling interest | 374,603 | 384,534 | ||||||||||
|
Comprehensive Income attributable to CORR Stockholders |
$ | 2,034,539 | $ | 2,412,753 | ||||||||
| Earnings Per Common Share: | ||||||||||||
| Basic and Diluted | $ | 0.07 | $ | 0.10 | ||||||||
| Weighted Average Shares of Common Stock Outstanding: | ||||||||||||
| Basic and Diluted | 29,973,357 | 24,141,720 | ||||||||||
| Dividends declared per share | $ | 0.125 | $ | 0.125 | ||||||||
| CorEnergy Infrastructure Trust, Inc. | ||||||||||||||||||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF EQUITY | ||||||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||
| Additional | Accumulated Other | Retained Earnings | ||||||||||||||||||||||||||||||||||
| Capital Stock | Paid-in | Comprehensive | (Accumulated | Non-Controlling | ||||||||||||||||||||||||||||||||
| Shares | Amount | Warrants | Capital | Income | Deficit) | Interest | Total | |||||||||||||||||||||||||||||
| Balance at December 31, 2012 | 24,140,667 | 24,141 | 1,370,700 | 175,256,675 | - | 4,209,023 | 29,981,653 | 210,842,192 | ||||||||||||||||||||||||||||
| Net income | - | - | - | - | - | 4,502,339 | 1,466,767 | 5,969,106 | ||||||||||||||||||||||||||||
| Net change in cash flow hedges | - | - | - | - | 777,403 | - | 181,762 | 959,165 | ||||||||||||||||||||||||||||
| Total comprehensive income | - | - | - | - | 777,403 | 4,502,339 | 1,648,529 | 6,928,271 | ||||||||||||||||||||||||||||
| Dividends | - | - | - | (1,923,760 | ) | - | (7,131,300 | ) | - | (9,055,060 | ) | |||||||||||||||||||||||||
|
Distributions to non-controlling |
||||||||||||||||||||||||||||||||||||
|
interest |
- | - | - | - | - | - | (3,282,152 | ) | (3,282,152 | ) | ||||||||||||||||||||||||||
|
Reinvestment of dividends paid |
||||||||||||||||||||||||||||||||||||
|
to stockholders |
15,496 | 15 | - | 108,104 | - | - | - | 108,119 | ||||||||||||||||||||||||||||
| Balance at December 31, 2013 | 24,156,163 | $ | 24,156 |
$1,370,700 |
$ | 173,441,019 | $ | 777,403 | $ | 1,580,062 | $ | 28,348,030 | $ | 205,541,370 | ||||||||||||||||||||||
| Net income | - | - | - | - | - | 2,105,159 | 391,114 | 2,496,273 | ||||||||||||||||||||||||||||
| Net change in cash flow hedges | - | - | - | - | (70,620 | ) | - | (16,511 | ) | (87,131 | ) | |||||||||||||||||||||||||
| Total comprehensive income | - | - | - | - | (70,620 | ) | 2,105,159 | 374,603 | 2,409,142 | |||||||||||||||||||||||||||
| Net offering proceeds | 7,475,000 | 7,475 | - | 45,617,088 | - | - | - | 45,624,563 | ||||||||||||||||||||||||||||
| Dividends | - | - | - | - | - | (3,019,523 | ) | - | (3,019,523 | ) | ||||||||||||||||||||||||||
|
Reinvestment of dividends paid |
||||||||||||||||||||||||||||||||||||
|
to stockholders |
4,374 | 4 | - | 29,301 | - | - | - | 29,305 | ||||||||||||||||||||||||||||
|
Warrant expiration |
- | - |
(1,370,700) |
1,370,700 | - | - | - | - | ||||||||||||||||||||||||||||
| Balance at March 31, 2014 | ||||||||||||||||||||||||||||||||||||
| (Unaudited) | 31,635,537 | $ | 31,635 | $ | - | $ | 220,458,108 | $ | 706,783 | $ | 665,698 | $ | 28,722,633 | $ | 250,584,857 | |||||||||||||||||||||
| CorEnergy Infrastructure Trust, Inc. | |||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||||
| For the Three Months Ended | |||||||||||||
| March 31, 2014 | March 31, 2013 | ||||||||||||
| Operating Activities | |||||||||||||
|
Net income (Loss) |
$ | 2,496,273 | $ | 2,797,287 | |||||||||
| Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||||||||||||
| Deferred income tax, net | (340,561 | ) | 735,053 | ||||||||||
| Depreciation | 3,131,637 | 2,857,036 | |||||||||||
| Amortization | 233,166 | 216,738 | |||||||||||
| Realized and unrealized gain on trading securities | - | (316,063 | ) | ||||||||||
| Realized and unrealized gain on other equity securities | (1,294,182 | ) | (2,425,986 | ) | |||||||||
|
Unrealized gain on derivative contract |
(17,489 | ) | - | ||||||||||
| Changes in assets and liabilities: | |||||||||||||
| Increase in accounts receivable | (145,667 | ) | (741,371 | ) | |||||||||
| Decrease in lease receivable | 272,990 | - | |||||||||||
| (Increase) decrease in prepaid expenses and other assets | (107,057 | ) | 136,042 | ||||||||||
|
Increase (decrease) in accounts payable and other accrued liabilities |
8,017 | (349,318 | ) | ||||||||||
| Increase (decrease) in current income tax liability | 1,033,247 | (3,647,016 | ) | ||||||||||
| Increase (decrease) in unearned income | 2,844,914 | (711,228 | ) | ||||||||||
| Net cash provided by (used in) operating activities | $ | 8,115,288 | $ | (1,448,826 | ) | ||||||||
| Investing Activities | |||||||||||||
| Proceeds from sale of long-term investment of trading and other equity securities | - | 4,557,379 | |||||||||||
| Deferred lease costs | - | (5,620 | ) | ||||||||||
|
Acquisition of leased assets |
(41,887,644 | ) | - | ||||||||||
| Purchases of property and equipment | - | (41,163 | ) | ||||||||||
| Issuance of financing note receivable | (4,107,955 | ) | - | ||||||||||
| Return of capital on distributions received | 491,260 | 314,340 | |||||||||||
| Net cash (used in) provided by investing activities | $ | (45,504,339 | ) | $ | 4,824,936 | ||||||||
| Financing Activities | |||||||||||||
| Payments on lease obligation | - | (20,698 | ) | ||||||||||
| Debt financing costs | (220,000 | ) | (10,999 | ) | |||||||||
| Net offering proceeds | 45,624,563 | - | |||||||||||
| Dividends paid | (2,990,215 | ) | (2,968,442 | ) | |||||||||
| Advances on revolving line of credit | 1,523,266 | 139,397 | |||||||||||
| Payments on revolving line of credit | (1,122,096 | ) | - | ||||||||||
|
Principal payment on credit facility |
(294,000 | ) | - | ||||||||||
|
Net cash provided by (used in) financing activities |
$ | 42,521,518 | $ | (2,860,742 | ) | ||||||||
| Net change in cash and cash equivalents | $ | 5,132,467 | $ | 515,368 | |||||||||
| Cash and cash equivalents at beginning of period | 17,963,266 | 17,680,783 | |||||||||||
| Cash and cash equivalents at end of period | $ | 23,095,733 | $ | 18,196,151 | |||||||||
| Supplemental Disclosure of Cash Flow Information | |||||||||||||
| Interest paid | $ | 690,570 | $ | 531,318 | |||||||||
|
Income taxes paid (refunds received) |
$ | (179,172 | ) | $ | 3,895,800 | ||||||||
| Non-Cash Investing Activities | |||||||||||||
| Change in accounts payable and accrued expenses related to acquisition expenditures | $ | 78,121 | - | ||||||||||
| Non-Cash Financing Activities | |||||||||||||
| Reinvestment of distributions by common stockholders in additional common shares | $ | 29,305 | $ | 49,141 | |||||||||
| Change in accounts payable and accrued expenses related to debt financing costs | $ | (220,000 | ) | - | |||||||||
| CorEnergy Infrastructure Trust, Inc. | |||||||||||
| NON-GAAP FINANCIAL MEASURES RECONCILIATION | |||||||||||
| FFO and AFFO Reconciliation | |||||||||||
| For the Three Months Ended | |||||||||||
| March 31, 2014 | March 31, 2013 | ||||||||||
| Net Income (attributable to CorEnergy Stockholders): | $ | 2,105,159 | $ | 2,412,753 | |||||||
| Add: | |||||||||||
| Depreciation | 3,131,637 | 2,857,036 | |||||||||
| Distributions received from investment securities | 491,260 | 314,339 | |||||||||
| Income tax expense, net | 513,513 | 1,020,944 | |||||||||
| Less: | |||||||||||
|
Net realized and unrealized gain on trading securities |
- | 316,063 | |||||||||
|
Net realized and unrealized gain on other equity securities |
1,294,182 | 2,425,986 | |||||||||
| Non-controlling interest attributable to FFO reconciling items | 411,455 | 411,378 | |||||||||
| Funds from operations (FFO): | 4,535,932 | 3,451,645 | |||||||||
| Add: | |||||||||||
| Transaction costs | 16,217 | 31,817 | |||||||||
| Amortization of debt issuance costs | 144,840 | 128,474 | |||||||||
| Amortization of deferred lease costs | 15,279 | 15,279 | |||||||||
| Amortization of above market leases | 72,985 | 72,985 | |||||||||
| Noncash costs associated with derivative instruments | (17,489 | ) | 3,350 | ||||||||
| Less: | |||||||||||
| EIP lease adjustment | 542,809 | 542,809 | |||||||||
| Non-controlling interest attributable to AFFO reconciling items | 23,170 | 26,330 | |||||||||
|
Adjusted funds from operations (AFFO): |
4,201,785 | 3,134,411 | |||||||||
| Weighted Average Shares | 29,973,357 | 24,141,720 | |||||||||
| FFO per share | $ | 0.15 | $ | 0.14 | |||||||
| AFFO per share | $ | 0.14 | $ | 0.13 | |||||||
CorEnergy Infrastructure Trust, Inc.
Katheryn Mueller, Investor
Relations,
877-699-CORR (2677)
info@corridortrust.com
Source: CorEnergy Infrastructure Trust, Inc.
Released May 12, 2014