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CorEnergy Announces Second Quarter 2017 Results and Dividends
KANSAS CITY, Mo - August 2, 2017 - 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:
 
For the Three Months 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 in to 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 webcasted 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
1NAREIT 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.

Contact Information:
CorEnergy Infrastructure Trust, Inc.
Investor Relations
Lesley Schorgl, 877-699-CORR (2677)
info@corenergy.reit


1100 Walnut Street, Suite 3350, Kansas City, MO 64106 Main:816-875-3705  | Fax:816-875-5875  | corenergy.reit










Consolidated Balance Sheets
 
 
 
 
 
June 30, 2017
 
December 31, 2016
Assets
(Unaudited)
 
 
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 (1)
$
0.94

 
$
0.99

 
$
1.87

 
$
1.59

FFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.01

 
$
1.04

 
$
2.07

 
$
1.71

Diluted (1)
$
0.93

 
$
0.95

 
$
1.89

 
$
1.61

AFFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.05

 
$
1.12

 
$
2.17

 
$
2.19

Diluted (2)
$
0.94

 
$
0.99

 
$
1.94

 
$
1.95

(1) Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.
(2) Diluted per share calculations include a dilutive adjustment for convertible note interest expense.