CORR - CorEnergy Announces First Quarter 2019 Results
CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or the "Company") today announced financial results for the first quarter, ended March 31, 2019.
First Quarter Performance Summary
First quarter financial highlights are as follows:
| For the Three Months Ended |
| March 31, 2019 |
| Per Share |
| Total |
| Basic |
| Diluted |
| Net Income (Attributable to Common Stockholders)1 |
| $ |
| 1,552,313 |
| $ |
| 0.12 |
| $ |
| 0.12 |
| NAREIT Funds from Operations (NAREIT FFO)1 |
| $ |
| 7,063,434 |
| $ |
| 0.56 |
| $ |
| 0.56 |
| Funds From Operations (FFO)1 |
| $ |
| 7,215,227 |
| $ |
| 0.57 |
| $ |
| 0.57 |
| Adjusted Funds From Operations (AFFO)1 |
| $ |
| 13,036,877 |
| $ |
| 1.03 |
| $ |
| 0.96 |
| 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
- Declared common stock dividend of $0.75 per share ($3.00 annualized) for the first quarter 2019, in line with the previous 14 quarterly dividends
Portfolio Update
Grand Isle Gathering System: CorEnergy continues to work to overcome the refusal of the parent of the GIGS' tenant to furnish the Company with certain financial statement information. The tenant is required to provide this information under the terms of its lease and CorEnergy is required to file it with the SEC. The Company has taken legal steps to enforce the tenant's obligations under the lease and is engaged in dialogue with staff of the SEC to attempt to limit the impact of these matters on the Company's ability to use its SEC registration statements.
Pinedale Liquids Gathering System: Ultra Petroleum is forecasting a capital investment program between $320 and $350 million for 2019 and is currently operating three rigs focused on vertical well drilling. CorEnergy continues to receive participating rents for Ultra Petroleum's use of the Pinedale LGS.
Outlook
CorEnergy regularly assesses its ability to pay and grow its dividend to common stockholders above the current $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. CorEnergy believes that a number of actions can be taken to adequately offset the lost revenue from the sale of the Portland Terminal, which could include a combination of i) additional investments in revenue generating assets and / or ii) deleveraging of the Company's balance sheet through preferred equity and convertible debt repurchases, at attractive prices. There can be no assurance that any potential acquisition opportunities will result in consummated transactions.
Dividend Declaration
Common Stock: A first quarter 2019 dividend of $0.75 per share was declared for CorEnergy's common stock. The dividend is payable on May 31, 2019, to stockholders of record on May 17, 2019.
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 May 31, 2019, to stockholders of record on May 17, 2019.
As previously announced on April 24, 2019, due to the GIGS tenant's refusal to provide required financial statement information, the Company's ability to issue registered shares under the Dividend Reinvestment Plan is impacted. As a result, the first quarter 2019 dividend will be paid entirely in cash.
First Quarter Earnings Call
CorEnergy will host a conference call on Thursday, May 2, 2019, 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 June 2, 2019, by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 46787. 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 critical 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 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 other 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 (gain) loss, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), income tax (expense) benefit unrelated to securities investments, 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 |
| March 31, 2019 |
| December 31, 2018 |
| Assets |
| (Unaudited) |
| Leased property, net of accumulated depreciation of $91,821,871 and $87,154,095 |
| $ |
| 393,571,456 |
| $ |
| 398,214,355 |
| Property and equipment, net of accumulated depreciation of $16,812,692 and $15,969,346 |
| 109,028,665 |
| 109,881,552 |
| Financing notes and related accrued interest receivable, net of reserve of $600,000 and $600,000 |
| 1,309,542 |
| 1,300,000 |
| Note receivable |
| — |
| 5,000,000 |
| Cash and cash equivalents |
| 59,361,398 |
| 69,287,177 |
| Deferred rent receivable |
| 27,391,780 |
| 25,942,755 |
| Accounts and other receivables |
| 3,959,607 |
| 5,083,243 |
| Deferred costs, net of accumulated amortization of $1,456,855 and $1,290,236 |
| 2,671,824 |
| 2,838,443 |
| Prepaid expenses and other assets |
| 964,616 |
| 668,584 |
| Deferred tax asset, net |
| 4,854,612 |
| 4,948,203 |
| Goodwill |
| 1,718,868 |
| 1,718,868 |
| Total Assets |
| $ |
| 604,832,368 |
| $ |
| 624,883,180 |
| Liabilities and Equity |
| Secured credit facilities, net of debt issuance costs of $197,686 and $210,891 |
| $ |
| 36,392,314 |
| $ |
| 37,261,109 |
| Unsecured convertible senior notes, net of discount and debt issuance costs of $603,150 and $1,180,729 |
| 69,572,850 |
| 112,777,271 |
| Asset retirement obligation |
| 8,067,335 |
| 7,956,343 |
| Accounts payable and other accrued liabilities |
| 6,384,900 |
| 3,493,490 |
| Management fees payable |
| 1,761,466 |
| 1,831,613 |
| Income tax liability |
| 69,492 |
| — |
| Unearned revenue |
| 6,405,203 |
| 6,552,049 |
| Total Liabilities |
| $ |
| 128,653,560 |
| $ |
| 169,871,875 |
| Equity |
| Series A Cumulative Redeemable Preferred Stock 7.375%, $125,493,175 and $125,555,675 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,197 and 50,222 issued and outstanding at March 31, 2019 and December 31, 2018, respectively |
| $ |
| 125,493,175 |
| $ |
| 125,555,675 |
| Capital stock, non-convertible, $0.001 par value; 12,808,341 and 11,960,225 shares issued and outstanding at March 31, 2019 and December 31, 2018 (100,000,000 shares authorized) |
| 12,808 |
| 11,960 |
| Additional paid-in capital |
| 349,570,656 |
| 320,295,969 |
| Retained earnings |
| 1,102,169 |
| 9,147,701 |
| Total Equity |
| 476,178,808 |
| 455,011,305 |
| Total Liabilities and Equity |
| $ |
| 604,832,368 |
| $ |
| 624,883,180 |
| Consolidated Statements of Income (Unaudited) |
| For the Three Months Ended |
| March 31, 2019 |
| March 31, 2018 |
| Revenue |
| Lease revenue |
| $ |
| 16,717,710 |
| $ |
| 17,591,859 |
| Transportation and distribution revenue |
| 4,871,582 |
| 3,952,979 |
| Financing revenue |
| 33,540 |
| — |
| Total Revenue |
| 21,622,832 |
| 21,544,838 |
| Expenses |
| Transportation and distribution expenses |
| 1,503,143 |
| 1,572,896 |
| General and administrative |
| 2,870,407 |
| 2,727,057 |
| Depreciation, amortization and ARO accretion expense |
| 5,645,096 |
| 6,289,330 |
| Provision for loan losses |
| — |
| 500,000 |
| Total Expenses |
| 10,018,646 |
| 11,089,283 |
| Operating Income |
| $ |
| 11,604,186 |
| $ |
| 10,455,555 |
| Other Income (Expense) |
| Net distributions and other income |
| $ |
| 256,615 |
| $ |
| 3,951 |
| Net realized and unrealized gain on other equity securities |
| — |
| 13,966 |
| Interest expense |
| (2,507,294 |
| ) |
| (3,210,590 |
| ) |
| Loss on extinguishment of debt |
| (5,039,731 |
| ) |
| — |
| Total Other Expense |
| (7,290,410 |
| ) |
| (3,192,673 |
| ) |
| Income before income taxes |
| 4,313,776 |
| 7,262,882 |
| Taxes |
| Current tax expense (benefit) |
| 353,744 |
| (35,549 |
| ) |
| Deferred tax expense (benefit) |
| 93,591 |
| (409,277 |
| ) |
| Income tax expense (benefit), net |
| 447,335 |
| (444,826 |
| ) |
| Net Income attributable to CorEnergy Stockholders |
| 3,866,441 |
| 7,707,708 |
| Preferred dividend requirements |
| 2,314,128 |
| 2,396,875 |
| Net Income attributable to Common Stockholders |
| $ |
| 1,552,313 |
| $ |
| 5,310,833 |
| Earnings Per Common Share: |
| Basic |
| $ |
| 0.12 |
| $ |
| 0.45 |
| Diluted |
| $ |
| 0.12 |
| $ |
| 0.45 |
| Weighted Average Shares of Common Stock Outstanding: |
| Basic |
| 12,604,943 |
| 11,918,904 |
| Diluted |
| 12,604,943 |
| 11,918,904 |
| Dividends declared per share |
| $ |
| 0.750 |
| $ |
| 0.750 |
| Consolidated Statements of Cash Flows (Unaudited) |
| For the Three Months Ended |
| March 31, 2019 |
| March 31, 2018 |
| Operating Activities |
| Net Income |
| $ |
| 3,866,441 |
| $ |
| 7,707,708 |
| Adjustments to reconcile net income to net cash provided by operating activities: |
| Deferred income tax, net |
| 93,591 |
| (409,277 |
| ) |
| Depreciation, amortization and ARO accretion |
| 5,943,528 |
| 6,642,875 |
| Provision for loan losses |
| — |
| 500,000 |
| Loss on extinguishment of debt |
| 5,039,731 |
| — |
| Gain on sale of equipment |
| — |
| (3,724 |
| ) |
| Net realized and unrealized gain on other equity securities |
| — |
| (13,966 |
| ) |
| Changes in assets and liabilities: |
| Increase in deferred rent receivable |
| (1,449,025 |
| ) |
| (1,700,101 |
| ) |
| Decrease in accounts and other receivables |
| 1,123,636 |
| 802,961 |
| Increase in financing note accrued interest receivable |
| (9,542 |
| ) |
| — |
| Increase in prepaid expenses and other assets |
| (296,032 |
| ) |
| (49,264 |
| ) |
| Increase (decrease) in management fee payable |
| (70,147 |
| ) |
| 64,837 |
| Increase in accounts payable and other accrued liabilities |
| 2,891,410 |
| 2,102,656 |
| Increase (decrease) in current income tax liability |
| 69,492 |
| (35,549 |
| ) |
| Decrease in unearned revenue |
| (146,846 |
| ) |
| (1,862,534 |
| ) |
| Net cash provided by operating activities |
| $ |
| 17,056,237 |
| $ |
| 13,746,622 |
| Investing Activities |
| Purchases of property and equipment |
| (15,335 |
| ) |
| (47,883 |
| ) |
| Proceeds from sale of property and equipment |
| — |
| 11,499 |
| Principal payment on note receivable |
| 5,000,000 |
| — |
| Net cash provided by (used in) investing activities |
| $ |
| 4,984,665 |
| $ |
| (36,384 |
| ) |
| Financing Activities |
| Debt financing costs |
| — |
| (261,667 |
| ) |
| Repurchases of preferred stock |
| (60,550 |
| ) |
| — |
| Cash paid for extinguishment of convertible notes |
| (19,516,234 |
| ) |
| — |
| Dividends paid on Series A preferred stock |
| (2,313,780 |
| ) |
| (2,396,875 |
| ) |
| Dividends paid on common stock |
| (9,194,117 |
| ) |
| (8,626,668 |
| ) |
| Principal payments on secured credit facilities |
| (882,000 |
| ) |
| (882,000 |
| ) |
| Net cash used in financing activities |
| $ |
| (31,966,681 |
| ) |
| $ |
| (12,167,210 |
| ) |
| Net Change in Cash and Cash Equivalents |
| $ |
| (9,925,779 |
| ) |
| $ |
| 1,543,028 |
| Cash and Cash Equivalents at beginning of period |
| 69,287,177 |
| 15,787,069 |
| Cash and Cash Equivalents at end of period |
| $ |
| 59,361,398 |
| $ |
| 17,330,097 |
| Supplemental Disclosure of Cash Flow Information |
| Interest paid |
| $ |
| 1,116,371 |
| $ |
| 705,228 |
| Income taxes paid (net of refunds) |
| (220,701 |
| ) |
| — |
| Non-Cash Financing Activities |
| Change in accounts payable and accrued expenses related to debt financing costs |
| $ |
| — |
| $ |
| (252,694 |
| ) |
| Reinvestment of distributions by common stockholders in additional common shares |
| 403,831 |
| 310,204 |
| Common stock issued upon exchange of convertible notes |
| 28,869,509 |
| — |
| NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited) |
| For the Three Months Ended |
| March 31, 2019 |
| March 31, 2018 |
| Net Income attributable to CorEnergy Stockholders |
| $ |
| 3,866,441 |
| $ |
| 7,707,708 |
| Less: |
| Preferred Dividend Requirements |
| 2,314,128 |
| 2,396,875 |
| Net Income attributable to Common Stockholders |
| $ |
| 1,552,313 |
| $ |
| 5,310,833 |
| Add: |
| Depreciation |
| 5,511,121 |
| 6,138,419 |
| NAREIT funds from operations (NAREIT FFO) |
| $ |
| 7,063,434 |
| $ |
| 11,449,252 |
| Add: |
| Distributions received from investment securities |
| 256,615 |
| 3,951 |
| Less: |
| Net distributions and other income |
| 256,615 |
| 3,951 |
| Net realized and unrealized gain on other equity securities |
| — |
| 13,966 |
| Income tax (expense) benefit from investment securities |
| (151,793 |
| ) |
| 21,487 |
| Funds from operations adjusted for securities investments (FFO) |
| $ |
| 7,215,227 |
| $ |
| 11,413,799 |
| Add: |
| Loss on extinguishment of debt |
| 5,039,731 |
| — |
| Provision for loan losses, net of tax |
| — |
| 500,000 |
| Transaction costs |
| 53,970 |
| 32,281 |
| Amortization of debt issuance costs |
| 298,432 |
| 353,544 |
| Amortization of deferred lease costs |
| 22,983 |
| 22,983 |
| Accretion of asset retirement obligation |
| 110,992 |
| 127,928 |
| Less: |
| Income tax (expense) benefit |
| (295,542 |
| ) |
| 423,339 |
| Adjusted funds from operations (AFFO) |
| $ |
| 13,036,877 |
| $ |
| 12,027,196 |
| Weighted Average Shares of Common Stock Outstanding: |
| Basic |
| 12,604,943 |
| 11,918,904 |
| Diluted |
| 15,042,567 |
| 15,373,450 |
| NAREIT FFO attributable to Common Stockholders |
| Basic |
| $ |
| 0.56 |
| $ |
| 0.96 |
| Diluted (1) |
| $ |
| 0.56 |
| $ |
| 0.89 |
| FFO attributable to Common Stockholders |
| Basic |
| $ |
| 0.57 |
| $ |
| 0.96 |
| Diluted (1) |
| $ |
| 0.57 |
| $ |
| 0.89 |
| AFFO attributable to Common Stockholders |
| Basic |
| $ |
| 1.03 |
| $ |
| 1.01 |
| Diluted (2) |
| $ |
| 0.96 |
| $ |
| 0.91 |
| (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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20190501006039/en/
CorEnergy Infrastructure Trust, Inc.
Investor Relations
Lesley Schorgl, 877-699-CORR (2677)
info@corenergy.reit