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CorEnergy Announces Third Quarter 2018 Results
KANSAS CITY, MO - October 31, 2018 - CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or the "Company") today announced financial results for the third quarter, ended September 30, 2018.
Third Quarter Performance Summary
Third quarter financial highlights are as follows:
 
For the Three Months Ended
 
September 30, 2018
 
 
 
Per Share
 
Total
 
Basic
 
Diluted
Net Income (Attributable to Common Stockholders)1
$
5,300,449

 
$
0.44

 
$
0.44

NAREIT Funds from Operations (NAREIT FFO)1
$
11,438,997

 
$
0.96

 
$
0.89

Funds From Operations (FFO)1
$
12,119,724

 
$
1.02

 
$
0.93

Adjusted Funds From Operations (AFFO)1
$
12,193,922

 
$
1.02

 
$
0.92

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
•
Maintained dividend: Declared common stock dividend of $0.75 per share for the third quarter 2018, in line with the previous 12 quarterly dividends
•
Pinedale LGS: Continued to receive participating rents
•
Grand Isle Gathering System: Tenant, Energy XXI Gulf Coast, completed merger with Cox Oil
"The last several months have been a transitional time for CorEnergy," said President and CEO, Dave Schulte. "We have a new tenant, Cox Oil, at our largest asset, where the lease terms remain the same. We continue to make progress with our rate case at MoGas and are actively seeking and reviewing acquisition opportunities, while adhering to the disciplines which have served us well in the past."

1

Portfolio Update
Grand Isle Gathering System: On October 18, 2018, EGC completed its previously announced acquisition by an affiliate of privately-held Cox Oil for $322 million. The Grand Isle Lease Agreement was assumed by the new operator as a result of the transaction.
Pinedale LGS: CorEnergy has continued to receive participating rents, despite UPL's financial results being adversely affected by lower realized natural gas prices. UPL's capital plan for the remainder of 2018 is to operate three rigs, two of which will be focused on vertical development and one on horizontal development. The company announced that its third quarter 2018 production was above the mid-point of its guidance.
Outlook
CorEnergy regularly assesses its ability to pay and grow its dividend to common stockholders above the current level of $0.75 per quarter. The Company targets long-term revenue growth of 1-3% annually from existing contracts, through inflation-based and participating rent adjustments, and additional growth from acquisitions. There can be no assurance that any potential acquisition opportunities will result in consummated transactions.
Dividend Declaration
Common Stock: A third quarter 2018 dividend of $0.75 per share was declared for CorEnergy's common stock. The dividend is payable on November 30, 2018, to stockholders of record on November 15, 2018.
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. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on November 30, 2018 to stockholders of record on November 15, 2018.
Third Quarter Earnings Call
CorEnergy will host a conference call on Thursday, November 1, 2018, 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 1:00 p.m. Central Time on December 1, 2018, by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 37821. A replay of the conference call will also be available on the Company’s website.

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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.

3

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 other 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 Investment plus (gain) loss on extinguishment of debt, provision for loan losses, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, income tax expense (benefit) unrelated to securities investments, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring 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

4


Consolidated Balance Sheets
 
 
 
 
 
September 30, 2018
 
December 31, 2017
Assets
(Unaudited)
 
 
Leased property, net of accumulated depreciation of $88,045,846 and $72,155,753
$
449,790,735

 
$
465,956,467

Property and equipment, net of accumulated depreciation of $15,125,893 and $12,643,636
110,714,627

 
113,158,872

Financing notes and related accrued interest receivable, net of reserve of $4,600,000 and $4,100,000
1,000,000

 
1,500,000

Other equity securities, at fair value
1,161,034

 
2,958,315

Cash and cash equivalents
19,611,813

 
15,787,069

Deferred rent receivable
27,464,068

 
22,060,787

Accounts and other receivables
2,849,364

 
3,786,036

Deferred costs, net of accumulated amortization of $1,123,618 and $623,764
3,005,061

 
3,504,916

Prepaid expenses and other assets
764,090

 
742,154

Deferred tax asset, net
4,854,108

 
2,244,629

Goodwill
1,718,868

 
1,718,868

Total Assets
$
622,933,768

 
$
633,418,113

Liabilities and Equity
 
 
 
Secured credit facilities, net of debt issuance costs of $224,096 and $254,646
$
38,129,904

 
$
40,745,354

Unsecured convertible senior notes, net of discount and debt issuance costs of $1,377,526 and $1,967,917
112,580,474

 
112,032,083

Asset retirement obligation
9,275,041

 
9,170,493

Accounts payable and other accrued liabilities
4,514,447

 
2,333,782

Management fees payable
1,821,311

 
1,748,426

Income tax liability
32,426

 
2,204,626

Unearned revenue
6,826,557

 
3,397,717

Total Liabilities
$
173,180,160

 
$
171,632,481

Equity
 
 
 
Series A Cumulative Redeemable Preferred Stock 7.375%, $130,000,000 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 52,000 issued and outstanding at September 30, 2018 and December 31, 2017
$
130,000,000

 
$
130,000,000

Capital stock, non-convertible, $0.001 par value; 11,949,298 and 11,915,830 shares issued and outstanding at September 30, 2018 and December 31, 2017 (100,000,000 shares authorized)
11,949

 
11,916

Additional paid-in capital
319,741,659

 
331,773,716

Total Equity
449,753,608

 
461,785,632

Total Liabilities and Equity
$
622,933,768

 
$
633,418,113









5



Consolidated Statements of Income and Comprehensive Income (Unaudited)
 
 
 
 
 
 
 
 
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
September 30, 2018
 
September 30, 2017
Revenue
 
 
 
 
 
 
 
Lease revenue
$
18,391,983

 
$
17,173,676

 
$
54,259,701

 
$
51,290,294

Transportation and distribution revenue
4,244,722

 
5,270,628

 
12,071,858

 
15,056,998

Total Revenue
22,636,705

 
22,444,304

 
66,331,559

 
66,347,292

Expenses
 
 
 
 
 
 
 
Transportation and distribution expenses
2,241,999

 
2,384,182

 
5,349,419

 
5,082,732

General and administrative
3,046,481

 
2,632,546

 
8,881,314

 
8,252,125

Depreciation, amortization and ARO accretion expense
6,289,459

 
6,017,664

 
18,868,871

 
18,029,567

Provision for loan losses
—

 
—

 
500,000

 
—

Total Expenses
11,577,939

 
11,034,392

 
33,599,604

 
31,364,424

Operating Income
$
11,058,766

 
$
11,409,912

 
$
32,731,955

 
$
34,982,868

Other Income (Expense)
 
 
 
 
 
 
 
Net distributions and dividend income
$
5,627

 
$
213,040

 
$
65,292

 
$
477,942

Net realized and unrealized gain (loss) on other equity securities
(930,147
)
 
1,340,197

 
(1,797,281
)
 
1,410,623

Interest expense
(3,183,589
)
 
(2,928,036
)
 
(9,590,427
)
 
(9,585,270
)
Loss on extinguishment of debt
—

 
(234,433
)
 
—

 
(234,433
)
Total Other Expense
(4,108,109
)
 
(1,609,232
)
 
(11,322,416
)
 
(7,931,138
)
Income before income taxes
6,950,657

 
9,800,680

 
21,409,539

 
27,051,730

Taxes
 
 
 
 
 
 
 
Current tax expense (benefit)
(8,393
)
 
65,131

 
(54,727
)
 
89,022

Deferred tax expense (benefit)
(738,274
)
 
126,440

 
(1,751,615
)
 
(134,322
)
Income tax expense (benefit), net
(746,667
)
 
191,571

 
(1,806,342
)
 
(45,300
)
Net Income
7,697,324

 
9,609,109

 
23,215,881

 
27,097,030

Less: Net Income attributable to non-controlling interest
—

 
431,825

 
—

 
1,250,096

Net Income attributable to CorEnergy Stockholders
$
7,697,324

 
$
9,177,284

 
$
23,215,881

 
$
25,846,934

Preferred dividend requirements
2,396,875

 
2,396,875

 
7,190,625

 
5,557,113

Net Income attributable to Common Stockholders
$
5,300,449

 
$
6,780,409

 
$
16,025,256

 
$
20,289,821

 
 
 
 
 
 
 
 
Net Income
$
7,697,324

 
$
9,609,109

 
$
23,215,881

 
$
27,097,030

Other comprehensive income:
 
 
 
 
 
 
 
Changes in fair value of qualifying hedges / AOCI attributable to CorEnergy stockholders
—

 
3,038

 
—

 
9,016

Changes in fair value of qualifying hedges / AOCI attributable to non-controlling interest
—

 
710

 
—

 
2,106

Net Change in Other Comprehensive Income
$
—

 
$
3,748

 
$
—

 
$
11,122

Total Comprehensive Income
7,697,324

 
9,612,857

 
23,215,881

 
27,108,152

Less: Comprehensive income attributable to non-controlling interest
—

 
432,535

 
—

 
1,252,202

Comprehensive Income attributable to CorEnergy Stockholders
$
7,697,324

 
$
9,180,322

 
$
23,215,881

 
$
25,855,950

Earnings Per Common Share:
 
 
 
 
 
 
 
Basic
$
0.44

 
$
0.57

 
$
1.34

 
$
1.71

Diluted
$
0.44

 
$
0.57

 
$
1.34

 
$
1.71

Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
 
 
 
Basic
11,939,360

 
11,904,933

 
11,928,929

 
11,896,803

Diluted
11,939,360

 
11,904,933

 
11,928,929

 
11,896,803

Dividends declared per share
$
0.750

 
$
0.750

 
$
2.250

 
$
2.250


6


Consolidated Statements of Cash Flows (Unaudited)
 
 
 
 
 
For the Nine Months Ended
 
September 30, 2018
 
September 30, 2017
Operating Activities
 
 
 
Net Income
$
23,215,881

 
$
27,097,030

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Deferred income tax, net
(1,751,615
)
 
(134,322
)
Depreciation, amortization and ARO accretion
19,929,691

 
19,350,053

Provision for loan losses
500,000

 
—

Loss on extinguishment of debt
—

 
234,433

Non-cash settlement of accounts payable
—

 
(221,609
)
(Gain) loss on sale of equipment
(8,416
)
 
4,203

Net distributions and dividend income, including recharacterization of income
—

 
148,649

Net realized and unrealized (gain) loss on other equity securities
1,797,281

 
(1,410,623
)
Unrealized loss on derivative contract
—

 
13,154

Common stock issued under directors' compensation plan
67,500

 
67,500

Changes in assets and liabilities:
 
 
 
Increase in deferred rent receivable
(5,403,281
)
 
(5,383,904
)
Decrease in accounts and other receivables
936,672

 
685,312

Increase in prepaid expenses and other assets
(22,001
)
 
(105,866
)
Increase in management fee payable
72,885

 
26,732

Increase in accounts payable and other accrued liabilities
2,436,421

 
2,437,100

Decrease in current income tax liability
(2,172,200
)
 
—

Increase in unearned revenue
121,731

 
29,695

Net cash provided by operating activities
$
39,720,549

 
$
42,837,537

Investing Activities
 
 
 
Purchases of property and equipment
(94,980
)
 
(50,924
)
Proceeds from sale of property and equipment
17,999

 
—

Return of capital on distributions received
—

 
91,201

Net cash (used in) provided by investing activities
$
(76,981
)
 
$
40,277

Financing Activities
 
 
 
Debt financing costs
(264,010
)
 
(1,342,681
)
Net offering proceeds on Series A preferred stock
—

 
71,161,531

Dividends paid on Series A preferred stock
(7,190,625
)
 
(5,830,859
)
Dividends paid on common stock
(25,718,189
)
 
(26,034,749
)
Distributions to non-controlling interest
—

 
(1,126,231
)
Advances on revolving line of credit
—

 
10,000,000

Payments on revolving line of credit
—

 
(44,000,000
)
Principal payments on secured credit facilities
(2,646,000
)
 
(38,066,400
)
Net cash used in financing activities
$
(35,818,824
)
 
$
(35,239,389
)
Net Change in Cash and Cash Equivalents
$
3,824,744

 
$
7,638,425

Cash and Cash Equivalents at beginning of period
15,787,069

 
7,895,084

Cash and Cash Equivalents at end of period
$
19,611,813

 
$
15,533,509

 
 
 
 
Supplemental Disclosure of Cash Flow Information
 
 
 
Interest paid
$
6,404,134

 
$
6,301,929

Income taxes paid (net of refunds)
2,117,473

 
197,202

 
 
 
 
Non-Cash Financing Activities
 
 
 
Change in accounts payable and accrued expenses related to debt financing costs
$
(255,037
)
 
$
—

Reinvestment of distributions by common stockholders in additional common shares
1,113,727

 
727,518

Common stock issued upon conversion of convertible notes
42,654

 
—




7


NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited)
 
For the Three Months Ended
 
For the Nine Months Ended
 
September 30, 2018
 
September 30, 2017
 
September 30, 2018
 
September 30, 2017
Net Income attributable to CorEnergy Stockholders
$
7,697,324

 
$
9,177,284

 
$
23,215,881

 
$
25,846,934

Less:
 
 
 
 
 
 
 
Preferred Dividend Requirements
2,396,875

 
2,396,875

 
7,190,625

 
5,557,113

Net Income attributable to Common Stockholders
$
5,300,449

 
$
6,780,409

 
$
16,025,256

 
$
20,289,821

Add:
 
 
 
 
 
 
 
Depreciation
6,138,548

 
5,823,777

 
18,416,138

 
17,468,456

Less:
 
 
 
 
 
 
 
Non-Controlling Interest attributable to NAREIT FFO reconciling items (1)
—

 
411,455

 
—

 
1,234,365

NAREIT funds from operations (NAREIT FFO)
$
11,438,997

 
$
12,192,731

 
$
34,441,394

 
$
36,523,912

Add:
 
 
 
 
 
 
 
Distributions received from investment securities
5,627

 
242,412

 
65,292

 
717,791

Less:
 
 
 
 
 
 
 
Net distributions and dividend income
5,627

 
213,040

 
65,292

 
477,942

Net realized and unrealized gain (loss) on other equity securities
(930,147
)
 
1,340,197

 
(1,797,281
)
 
1,410,623

Income tax (expense) benefit from investment securities
249,420

 
(589,125
)
 
491,407

 
(703,987
)
Funds from operations adjusted for securities investments (FFO)
$
12,119,724

 
$
11,471,031

 
$
35,747,268

 
$
36,057,125

Add:
 
 
 
 
 
 
 
Loss on extinguishment of debt
—

 
234,433

 
—

 
234,433

Provision for loan losses, net of tax
—

 
—

 
500,000

 
—

Transaction costs
66,895

 
35,822

 
123,791

 
505,873

Amortization of debt issuance costs
353,639

 
382,745

 
1,060,820

 
1,320,487

Amortization of deferred lease costs
22,983

 
22,983

 
68,949

 
68,949

Accretion of asset retirement obligation
127,928

 
170,904

 
383,784

 
492,162

Non-cash loss associated with derivative instruments
—

 
29,608

 
—

 
13,155

Less:
 
 
 
 
 
 
 
Non-cash settlement of accounts payable
—

 
50,000

 
—

 
221,609

Income tax benefit
497,247

 
397,554

 
1,314,935

 
749,287

Non-Controlling Interest attributable to AFFO reconciling items (1)
—

 
3,366

 
—

 
10,075

Adjusted funds from operations (AFFO)
$
12,193,922

 
$
11,896,606

 
$
36,569,677

 
$
37,711,213

 
 
 
 
 
 
 
 
Weighted Average Shares of Common Stock Outstanding:
 
 
 
 
 
 
 
Basic
11,939,360

 
11,904,933

 
11,928,929

 
11,896,803

Diluted
15,393,644

 
15,359,479

 
15,383,386

 
15,351,348

NAREIT FFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
0.96

 
$
1.02

 
$
2.89

 
$
3.07

Diluted (2)
$
0.89

 
$
0.94

 
$
2.67

 
$
2.81

FFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.02

 
$
0.96

 
$
3.00

 
$
3.03

Diluted (2)
$
0.93

 
$
0.89

 
$
2.75

 
$
2.78

AFFO attributable to Common Stockholders
 
 
 
 
 
 
 
Basic
$
1.02

 
$
1.00

 
$
3.07

 
$
3.17

Diluted (3)
$
0.92

 
$
0.90

 
$
2.77

 
$
2.85

(1) There is no noncontrolling interest outstanding for the three and nine months ended September 30, 2018.
(2) Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.
(3) Diluted per share calculations include a dilutive adjustment for convertible note interest expense.

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