Q1 2020 Earnings Call
The day, ladies and gentlemen, and welcome to the Brookfield infrastructure Partners first quarter 2020 conference call. At this time, all participants are gonna listen only mode. Later, we will conduct the question answer session and instructions will follow at that time, if anyone should require operator systems Cleese Crestar, then zero and your touch tone telephone as their.
<unk>. This call may be recorded I wouldn't I like to introduce your host for today's conference. The here <unk> you may begin.
Thank you operator, and yeah. Good morning, everyone. I Hope you were all like keeping well and thank you for joining us for Brookville infrastructure partners.
First.
Quarter earnings conference call for 2020 on to call. It with me today, Sam Folic, our Chief Executive Officer in Ben find our Chief operating officer.
Following our remarks, we look forward to taking your questions and comments at this time I'd like to remind you that in responding to questions and he's talking about our gross initiatives and our financial an operating performance. We may make forward looking statements.
Eight minutes are subjected known and unknown risks and future results may differ materially.
So I'll be kicking off the calls today with the review for operating results in a quick update on our balance sheet and funding plan. After my remarks bandwidth provide some commentary on impact a big corporate endemic and family wrapped up.
By providing an update on our recent strategic initiatives and providing outlook for the rest of the year.
So results for the quarter reflect organic growth in incremental earnings associated with their acid rotation strategy.
Per unit basis. After I saw was 77 cents, which is equivalent to 86 cents prior to our you unexplained which was in line with our prior year levels and to be clear. There is no change in our dividend you know we understand that some people may misinterpret these numbers differently.
So we just <unk>, we wait I clarified that fun to call today.
That's a folk gross west primarily driven by organic growth of 6% and earnings associated with $1.6 billion of capital deployed in the prior each during the past year.
These positive factors were partially offset by the sale for businesses.
Some impacts related to the <unk> situation into depreciation a foreign currencies.
Iris related impacts are primarily experience at our port and toll road operations affecting results by $10 million, while the lower Brazilian route reduce results by $17 million.
F.F. from our utility segment totaled the hundred and 46 million compared to 137 million into prior year.
Segment delivered organic growth of 8%, reflecting the robust nature of our contracted unregulated cash flows in this segment.
This increased reflects inflation in fixation and $310 million of capital Commission into our rate base over the past 12 months.
Results also benefited from the first full quarter contribution of far North American regulated natural gas transmission business acquired in October 2000 in 19.
These increases were partly offset by the sailor Colombian regulated electricity distribution operation and the lower Brazilian route converted to U.S. dollars, which lowered our results by $9 million.
Or transport segment delivered F. off 120 million down from 139 million into prior year.
Compared to the first quarter of 2019 results reflect the initial contribution from our North American rail operation as well as good pricing across our railing road networks.
These positive impacts were more than offset by the loss of earnings associated with the sailor for European ports business and an interest in our Chilean toll road operation.
When combined with the impact if a lower Brazilian route when converted to U.S. dollars. These factors collectively reduce results by $18 million.
Are north American in Australian container terminal operations were impacted by lower trade activity from China in the first quarter due to cope at 19.
Reducing volumes by 13% and F.L. by 5 million <unk> <unk> relative to 2000, and <unk> 19 levels.
The energy segment contributed F.F. 115 million compared to 107 million to pray a year.
Results increased by 12% on the same start basis, excluding the contribution from our gas storage operations, which as a result of <unk>.
Timing and whether or entire spreads and store it greater volumes in the first quarter or flashier.
Or north American residential infrastructure business benefited from the signing a 50000, new customers and the ongoing success of our sales to rental strategy in the U.S.
We close the acquisition of the federally regulated portion of our Western Canadian Midstream business in December 2019, with these operations fully contributing to results in the quarter.
[noise] from our data infrastructure segment Fo, there total 42 million and an increase if almost 50% relative to the prior year.
Are underlying business continues to perform well with F.F. from our French tower operation, increasing due to inflation indexation and new points of presence added to our network.
Results also benefited from the contribution for a newly acquired data transmission and distribution operations in New Zealand in the United Kingdom, and a data storage business in South America.
[noise], turning out to art balance sheet and liquidity position and starting off you know, it's worth highlighting that maintaining a disciplined and consistent approach the financing at both the corporate an asset level through the market cycles is the only way to be prepared for unexpected market downturn.
We implement prudent nonrecourse financings at our business, while maintaining a focus on liquidity and access to capital.
We also take an active approach to managing our debt maturity profile.
Throughout the extended period of strong credit markets over the past five years, we proactively refinanced <unk> across our portfolio to extend our maturity profile and to minimize exposure to capital market disruptions.
Excluding amortizations payments and ordinary course, working capital facility renewals.
We have only 10% of far debt maturing in the next three years.
<unk> maturity profile is very well <unk> and we're in the where in great shape as a consequence of.
[noise] are liquidity position is very strong as well alarming if not only to support our our operating businesses, but also to opportunistically pursue new investments.
We currently have approximately $4.3 billion of total liquidity, including 3.3 billion of that at the corporate level.
We completed two financing transactions in April, which I did approximately $1.3 billion to our resources that included a 400 million dollar bond issuance.
And the addition of an incremental 1 billion dollar star revolving credit facility that can be used to find new investment opportunities.
Before I turned to call over to Ben I wanted to spend a few minutes discussing the resilience your for our business.
There is a topic that we appreciate many investors are focused on during and following economic downturns.
I'll start off by saying that trying to predict future results is always a precarious thing to do especially during times that are truly unprecedented.
However, we do now have a few months if experience operating through this new environment, which we now can reflect on.
When we measured that resiliency, if our business, we begin with our utilities energy and data infrastructure operations, which contribute roughly about 70% to 75% if our annual F.L.
On our local currency basis, nearly all of these businesses continued to perform in line with budget.
<unk> the stability and sustainability of these results reflect the regulated and capacity base contractual framework of these operations.
While a few if our assets in these segments have moderate exposure to markets sensitive revenues impact. Our overall results is expected to be less than 2% annually.
Even in a scenario where cove it has a prolonged effect.
The only other variables that may affect results is the timing of commissioning <unk> backlog of secured growth due to construction slowdowns or stoppages.
That's an example, the pace of construction at our U.K. regulated distribution business floats significantly in April as a national construction shut down was implemented across the U.K. and home builders suspended operations.
While home construction, it's free commencing in may activity levels may remain depressed for the balance of the year due to social distancing protocol.
Gay impact on our 2020 results is expected to be less than 3%.
More important though.
Potential decrease in F., a <unk> with only reflected delay in the recognition of accounting revenue and not a permanent loss of cash flows or economic value. As this backlog will eventually be added to our rapists.
Approximately 30 per cent of our annual I. folk comes from our transport segment.
Which includes rail sports and toll roads.
This is the segment, where we have the most exposure to G.D.P. sensitive volumes.
[noise] are real assets would generate approximately 50% of the F.F. So in our transport segment.
Proven very resilient in this current environment and ran on budget in the first quarter.
So far in April railed volumes in aggregate are approximately 3% below planned levels.
Are rail networks carry predominantly basic both goods such as I in our agricultural and pulp and paper inputs and finished goods.
Are exposure to intermodal traffic, which has been more impacted by reduced trade flows is relatively low.
Art Board assets are predominantly container terminals.
We experience volume declines approximately 15% in the first quarter.
Are port volume started to rebound early in the second quarter is production from China came back on mine, but it's still running approximately 10 per cent blow plan today due to the general decline in economic activity.
Oh for all our court volumes have been relatively robust as our assets are predominantly in the U.K., Australia in California, where the goods. We move are critical to the basic functioning of these economies.
Are toll roads have been the most impacted from a volume perspective with traffic declines of approximately 40% cross our portfolio.
Dispositive here.
Positive here is that in most jurisdictions, where we operate.
Regulators have acknowledged.
The current conditions qualify as a force majeure event, which positions that's for the possibility of being kept hole on a value basis via via either direct compensation for extension of the duration of our concessions.
In conclusion, we believed that the reduction in near term F. a phone due to the economic impact of <unk>.
Temporary and that the long term run rate, earning capacity for overall business. It's for the most part on affected.
Furthermore, while our distribution payout ratio will likely exceed our target levels for the balance of the year. Our distributions remained remain covered by operating cash flows.
We also have ample liquidity unknown near term refinancing requirements of any consequence, providing us the flexibility to pursue new investments and so is that I. Thank you for your time this morning, and I'll turn the call over Tibet.
Thanks, Thanks to here and good morning, everyone Today'll provide a summary of R.T. operating priorities as we navigate through the current environment, but just before I talk about priorities I just wanted to highlight that our management team is how to experience operating through numerous periods of market dislocation.
And uncertainty in the past and while the distinguishing factors of this downturn were the suddenness and the extent of the economic contraction.
No. It is important to always be prepared for challenges and therefore, all of our businesses maintain robust and detailed business continuity plans.
And these plans have served as well as we've maintained 100% asset availability to date through this period.
R.T. areas of focus during the the current environment have been first the health and safety of our people second maintaining asset availability third monitoring counter parties and forth revising our business plans with a focus on maintaining cash flows and strong liquidity.
So in terms of health and safety, we focused on ensuring our employees are following appropriate social distancing and where possible working remotely.
Implemented a number of revise business processes to protect frontline employees with a strong focus on protective equipment, including masks gloves sanitizer and implementing additional controls to ensure that all interactions done in a safe manner.
Given the broad scope of our operations, we have had some incidents of coping <unk> covert 19 illness across the group, but the numbers had been very modest and we've been able to avoid any larger concentrated outbreaks a month amongst our operating teams.
You know in terms of asset availability as I mentioned before we've maintained 100% availability throughout this period.
We quickly mobilized in the January February timeframe to ensure that all of our businesses were formerly qualified as critical infrastructure in the jurisdictions in which we operate and we were granted this status across all assets.
This provides us with the right to maintain operations and labor mobility, even under severe lockdown scenarios.
We also implemented plans to access to assess are critical inventories of supplies and supply chains to ensure that we were mitigating red beyond just our own asset base.
Well, we've had no availability issues to date as be here mentioned a minute ago. We have had delays in certain growth projects due to construction restrictions, mostly at our last mile connections business in the U.K. and our fiber to the home network build out in France, but.
But I'm pleased to report that as a very early may construction activity in east jurisdictions has slowly began to methodically restart.
In terms of Counterparties, we had no issues across the group to date are counterparties largely consist of either strong corporate counterparties that remain financially healthy or our revenues are socialized across diversified rape bases or bases of clients, so receiving payments as <unk>.
In a major issue so far.
And then the last area of focus has been on revising plans for each of our company's to ensure that any impacts from the economic contraction or well understood.
[noise] in instances, where we have experienced some revenue declines we have reduced costs and revise the timing of certain capital projects, where possible to ensure that cashflows remains strong and they F.O. levels are maintained the greatest extent possible.
Yeah. The the last comment I'll make is we're very proud that our businesses have risen to the occasion in tough times. In addition to keeping operations up many of our companies have made important contributions to the local communities in which we operate.
We're making a concerted effort across or various offices and portfolio companies to donate funds time essential equipment and supplies to support communities and first responders.
For example, in North America, or Western Canadian Midstream business is contributing to a number of local causes including donating equipment, such as portable generators to indigenous communities to generate electricity.
In the age of in the Asia Pacific read region.
Our New Zealand data distribution business has provided mobile conductivity to an isolation center that was used to quarantine people, who returned to New Zealand from Asia.
We also removed data limits on home broadband, while reducing prices for data plans and provided charging stations that local hospitals to benefit frontline health workers.
And in emerging markets, such as India, and Brazil, our businesses have undertaken programs to distribute food and personal protective equipment and have donated funds to support public health initiatives and various community projects.
So with that thank you for your time this morning, and I'll now turn the call over to Sam.
Thank you Ben and good morning, everyone.
For my remarks today provide a brief update on some recent strategic initiatives falling which I'll finish up the cop are providing an outlook for the company.
During the quarter and police report that we successfully launched Brookville infrastructure Corporation or Bip C.
The special distribution of Bip C. shares took place a march 31st whereby we issued existing unitholders with one class a share a bit c. for every now and you know it's a bit they'll be.
We have subsequently seen strong support for Bip C. shares in the market with trading volumes over the first 30 days at over 50% of the public float.
The share price trading in fact slightly higher than the the L.P. unit price.
We're very pleased with the launch and the positive reception, thus far our intention is to fully support the growth of that Pepsi blow over time and are actively considering initiatives in this regard.
Our second major initiative has been to progress the closing of our large scale acquisition approximately 130000 telecom towers in India Primmer lines Jill.
[noise] reliance recently announced.
Strategic deal with Facebook, which we believe will significantly enhance the overall profile of our main counterparty.
The only significant outstanding approval remaining in order to close a transaction is from the department of Telecommunications, India and this is expected to be obtained in the coming weeks.
We expect to invest up to $500 million of equity in the business alongside or institutional partners.
Lastly, since March we've been actually evaluating a number of high quality publicly traded infrastructure businesses that have traded off along with the broader market.
While we were always analyzing the public markets for value opportunities. We've expanded our efforts. These last few months as a number of private transactions to decrease in light of the current environment.
Based in our analysis, we believe that certain companies are trading a substantial discount to their intrinsic value.
Today, we've invested a proxy $450 million with bip shares being about $220 million into the shares of a handful of companies and hope that some of these will lead to large scale transactions. If not we will monetizer steaks share price recovers and or an attractive return sectors, we know well.
I'll close up today's call by disgusting are outlook for the bounce a year.
Or outlook is guided by the current state of affairs, and the cautious approach most governments or taking towards opening up their economies.
We are nonetheless encouraged by reports from our colleagues who work in certain parts of Asia that Barack commence reopening procedures.
Whereby in those markets. Many business activities have returned to somewhat near normal and are doing this while adhering to social didn't see distancing protocols.
Our current view of global economic conditions is that the closure of non essential businesses will largely continued through the second quarter after which we will see a steady recovery the exact cadence bearing by region.
While the significant stimulus injected into the economy by governments will help speed up the recovery.
Respect the shape of the recovery to be more of a swish then that you are the.
Assuming no significant second wave of infections in the fall, we anticipate most sectors of regions will return Jim more normalized environment.
By the end of year or during the first half of 2021.
If that is not the case, we have contingency plans in place and are confident in our ability to manage our existing operations.
Also identifying investment opportunities.
Well, it's too early to comment on learning from the pandemic or conviction regarding the attractiveness and sustainability of infrastructure sector has been reinforced.
Is with considerable pride that we've been able to report you today that every operating business owned by Brooklyn infrastructure was deemed an essential service.
<unk> has been operating throughout this period.
Our business is very resilient. Therefore, we have the competence to actually look for potential opportunities to grow the portfolio undervalued basis.
We take a long term view when analyzing businesses and will not get caught up in the near term negativity.
As we have discussed in the past we tend to be more cautious when the economic environment is frothy and we look to invest in scale when capitalise scarce.
To that and we began investing in the capital markets aggressively in March, but a pullback somewhat in April as the markets quickly recovered.
We would describe our current investment posture as optimistically patient.
We believe that large scale value opportunity will rise over the next 12 months.
And we're reminded by our experience during the global financial crisis in 2009, and 2010, when the transformative Babcock and Brown investment we made did not present itself to us to almost nine months after Lehman bankruptcy.
We passed on many opportunities before the right one came along.
Our situation today is vastly better today than it was at the time, we execute the B.B.I. transaction or.
<unk> capitalization is approximately 15 times greater and we have a committed infrastructure fund to invest alongside that is almost 20 times larger.
And our sector and geographic expertise and scale is greater as well.
We have a season team focus on identifying transactions with a particular.
Area of interest around large scale value opportunities in the transport energy and utility sectors.
[noise] that's concludes our remarks for today's call. So I'll pass the the line back to operator and will we be please take a <unk>.
Thank you as a reminder to ask me questions <unk>, Chris Star Woman your telephone to try and question press the pound key.
One moment for questions.
Our first question comes from fairly and Red Board with T.D. Securities.
Of course either question.
Thanks, very much in good morning.
I Wonder if you could add a little bit kid that discussion on how the investment team is pacing itself I guess, if one or the view that the recovery might be rap and then one should act now and I'm sure. The pasted in bands has picked up Ah, but on the other hand, some businesses out there may not be position.
And to withstand a drawn out recovery in which case when she'd be very patient.
Hi, Sherilyn.
Yeah I think.
I guess my comments to would be that that there's there's always the that day and Nate.
Trade of yeah fear of missing out and I know there are some of that that's taken place and I think some of the exuberance in the last month in the in the market may have have been just that that sentiment where people feared they were missing out on the crisis.
Our view and and we've been through you know many crisis over the last 25 to 30 years well working.
You know.
Taught us that you know these things typically take a lot longer to play out and there's usually more shoes to drop and so well. It's possible. You know this time could be different and the recovery comes back fast and we Miss out you know, we just think it's more prudent and based on our.
Experience, we think will be rewarded for being patient and and seeing opportunities as they unfold over the coming quarters as opposed to trying to jump into the market right now.
Okay.
Then clearly there's been some concern about how well equipped countries like Brazil in India are to cope with the virus, maybe you can elaborate on what you're seeing on the ground.
[noise] Benjamin take this one or you want me to.
[noise], Yeah look I'm happy to to take it yeah shown so on the ground. You know we are seeing I I guess I'll deal with them separately, you know in India, they've probably most of the issues have been concentrated in and around the moon by area.
In that area is still relatively shut down but other areas of the country have already slowly started to reopen economic activity and as you know both India in Brazil are huge countries with large population. So it's it's tough to generalize across the entire country.
But there are pockets where from our understanding where the issues are very contained and then there are other pockets, where I don't think they've quite flattened occurred yet. So we're seeing both dynamics at a play out at the same time, which you know maybe is a bit similar to what we're seeing in North America in some parts of Europe as well and then.
Brazil see ops <unk>, it's a bit of the opposite you know I think what you'll read in the media is that Brazil hasn't quite flatten the curve yet we do know that in more in the south end of the country, it's probably flattened and they've been a bit more disciplined in the northern part of the country I don't think they're quite there yet on.
Flattening the curve, but economic activities at a slowly picking up I I guess, you know just anecdotally <unk>.
Especially in the last probably two weeks, we have seen pick up in activity across a number of businesses in India in in Brazil, So slowly, but surely we're seeing Ah you know some activity levels come back.
Great. That's my to thank you.
Thanks Charlotte.
[noise] like your next question comes from Robert Kwan with RBC capital markets. He they proceeded your question.
Making money.
Just on the public sturdy investments.
Just a few different things. She is there anything that you can talk about where you were seeing the best to tell you whether that be geography.
Or asset type and then you also mentioned that you pulled back somewhat so.
Do you do you still you know see some pockets of values so where.
Hi, Robert.
So I I hot the first say that.
Yeah, I I won't be giving you are our list of stocks or be too specific and I hope you understand that.
But.
<unk>, what I would say is that what's what's changed and.
Past month, and a half yeah from mid March two two today is that yeah. When the market really fell off we probably had a list 10 to 15 names and we were we were trying to decide which one is already focus on and we were probably had intentions of of diving into.
Too many of them and we did dive into a bunch right off the back.
You know that list has you know narrowed you know quite a bit as you know some of them very quickly recovered, but there still are a few that we think ER represent good value and air misunderstood in the market today.
And so that that that would be that change. That's happened is is the number of opportunities have shrunk a little bit.
As as far as a yeah regions you are.
You know our focus is mostly in north American and and Europe.
Those are the larger markets and there's some interesting names there.
Yeah, There's probably you know maybe you know one or two that were following.
In Asia Pacific, but.
I think that's as much as I can give you.
<unk> enough and then just on that have you made any initial approaches to the the boards or management teams for the security said you have accumulated.
Yeah, I don't think I I don't think I'd typically give that type of.
Commentary on on on transaction saw a a won't go there <unk>.
You mentioned that it's still too early to make some definitive comments around this downturn, but you know as you noted look it's not you haven't seen other cycles are global disruptions, but.
<unk>, just like turn environment cause any modification and you're thinking as to how you approach asset classes, whether that's returns or hurdle rates Nancy structures or even just looking at.
Or portfolio construction and distribution policy really kind of you know we get these types of events in in it.
It becomes a lot clearer, which assets are truly resilient versus the ones that bad habits.
Mmm.
Yeah. The I think that's interesting question and that's one that.
I think deserves a examination over a longer period of time so.
I think my <unk> and that kind of has that kind of alluded to in my remarks, it's a little early to draw to to make conclusions today, because I think we'll need to see how this all plays out I guess.
You know what I, what I would reader is somewhat what we wrote in a letter is that.
Yeah.
A lot of the things that we have been following.
You know have been very helpful and this particular crisis and and whether that you know, making sure you have you know.
Long dated maturity profiles.
I'm very manageable debt levels and liquidity those are obviously critical on any downturn I think that diversification.
You know has really helped us I think for some businesses that have just focused on if you were just focused and transportation today, you know you're pretty <unk> eh distressed. The fact that we've got a broad based business has been very helpful. Because it's always hard to know where.
You know where the stressful come.
And and I think the you know as far as.
Elements of this that we know that we will have to focus on in the future Underwritings. You know one is making sure that you know our forest Mizher clauses are bullet proof you know we think they're very good in our concession agreements, but will now find out how good they are.
And so I think that's something that everyone will be highly focused on.
And then I think yeah, we've always ascribe to hire return.
Threshold to patronage based businesses.
These are basically volume based assets like toll roads imports.
Because you know we've never predicted this type of scenario per se, but we've always known that they you know psychos do come I'm not sure everyone in our sector has done that.
But I think this will maybe cause a slight rereading of of toll roads and ports just because.
You know people you know will recognize that you know volumes can't go down.
<unk> commentary.
<unk>.
Thank you are next question comes from Rupert Mirror with National Bank. You May proceed with your question.
Good morning, everyone.
<unk>.
Sam you gave some comments on your outlook for the global macro environment, but looking specifically at Brazil, the rails trade it down.
Don't think we're seeing much inflation there yet what what's your internal view on the potential for recovery either reale with using up the impact to cope with 19 or or your view on the direction of the inflation in Brazil.
[noise] thanks for birds.
<unk>, we we we haven't changed our long term view of the country. You know, we still believe that the fundamentals.
You know remain very positive and yeah. We're we're you know as we've said a number of calls over the past a year you know we we're we're pleased with the reforms that'd been instituted by the finance Minister and you know we think the direction or taking is is very positive.
Yeah, it's it is unfortunate that.
You know the the political <unk> you know rhetoric has impacted you know the the reputation of the country a bit I think a lot of the.
I think a lot of the impact on the currency.
Has to do with.
The fact that it is a commodity export country and.
Or whether it's oil iron or different things agriculture.
And that many countries, including cat in Australia have seen their currencies drop down and and added onto that is it is the you know the Latin America.
Halo, So I I think it's her it's falling a bit more.
But you know in in local currency, our businesses are doing extremely well and yeah. We believe that you know as uncertainty lips over the coming corridors that you'll see <unk> and as you see oil prices go back up.
As you know the the current <unk> gets worked out.
You'll see yeah, <unk> as well as a number of other currencies improve relative the U.S. dollars I I carry comment on inflation, because I think that's a that's out of my.
My band with a sign off secondly, <unk> you mention you're looking to bring down costs in some areas to offset the impact of Kobe 19, you talk about how much are able to flex costs in your operations and coming out of this gives me any potential for permanent benefits from from.
Changes that then you may be making to the business.
Yeah look that's a good question.
I guess in terms of our ability.
To flex costs it's.
It it's pretty decent largely what we've done I'd say the strategic approach we've taken as to maintain capacity. So you know, we generally been furloughing certain employees in certain businesses, but maintaining the capacity.
For when activity returns to more normalize level. So it's been it's been meaningful today, but it's been within approach of keeping the ability to bring all the assets right back up to full potential.
When things rebound, so I'd I'd, just make that a strategic comment I'd say the second thing we'd done we have a number of you know asset car votes and costumed initiatives in businesses that we were executing in any event and if anything we've just sort of accelerated some of those programs and it's.
Forced our management teams to work hard and dig deep on those so I'd say, it's been a bit of if anything we've probably had a little bit of a very modest acceleration of some costs due to that we were going to undertake this calendar year in India early next year in any event.
Okay. So <unk> nothing.
That wasn't already in the plans as far as for a living costs from the the structure.
Yeah, I I wouldn't sanding highly material I mean, my only other anecdotal observation is I do think people have been leveraging video based meeting technology really well in the last couple of months and to the what will you know anecdotally. Many of our businesses are talking about you know reducing travel budgets going forward, but that's.
Just neither here nor there at this point, but it has been interesting to watch you know a large organization like ours seamlessly moved too much much deeper commitment to video based technology and actually have probably almost more face to face interaction then we would have six months ago.
Or a year ago to some degree so you know like I said more anecdotal than anything but I do think there will be some impact to cost structures around leveraging technology.
Thanks for the color.
Like your next question comes from read the question was Raymond James You May proceed with your question.
Come morning, My questions for Sam you've <unk> stayed away from airports because of perennially high evaluations.
I'm thinking maybe <unk> might be this this once in a life. What's the last time option for you guys to to get into that sector. One of your thoughts.
Hi, Frederick.
Well, it's yeah, I think that at the perceptive comment.
No. It has been challenging in the past to invest undervalued bases in in the airport sector.
And part of his because of the low returned thresholds that people put to those type of businesses.
Yeah, we.
In spite of of what's taken place, we still thinks that they are attractive assets.
There'll be some complexity in formulating ER views regarding you know the returned of air traffic and and the split between domestic and international.
Yeah, which could give us an opportunity to to use you know some of our expertise.
Two <unk>, so without being too long winded about it yes, I think you're right. We will look at the sector. If there is an opportunity to answer it on a value basis than you know we would seek to do so.
And and are there any options if you looked up apparently.
I can't comment on that.
Didn't think good but also what time was by alright, that's all I have thinking.
<unk>.
Thank you aren't next question comes from.
Robert Catalina with C.I.D.C. capital markets seen they proceeded to correct.
Good morning, everybody I was wondering if you have a little bit more detail of the.
I'm sure the timing of settling the poorest lizard claim on the toll roads.
And it seems more logical that any of the settlements might criminal form of extending the concession rather than.
Some type of other value utterance. Her can you just call it on my please.
Yeah, it's it's it's been here.
<unk>, it's always hard to guess the exact timing of these things I think some of them might happen relatively quickly once the world normalizes in some might or might take up to a year or more to work out with the regulators and I do think you're right that generally speaking the.
You know the the easiest way to settle these types of Rebalancings is to just adds duration to the concession contracts to keep the concessionaire revenue neutral, it's generally a little more unlikely that you'd get some cash payment or so I I think concession extensions is probably the way it will go and I think it'll it'll.
Range in duration, but probably within the next year and shortly after that we'll have it also.
So that suitable you've Ah.
Advertised started all your doesn't taken bolstered Capitol. So your return oven on Capitol in the original duration Oh, the consistent in the original terms. So those extended years would be highly accrue to.
Yeah, I I think that's correct and they would the the principal would be to fill in for the cashflows that you were missing during that period up I don't normally low that would be differences.
Currency following up on that subject the nature of your platform boys like you can't really Oh boy currency risk.
Because they're so international in scope, but.
<unk> weakness in the Brazilian Ray all those are giving you a cause to reconsider.
Maximum exposure levels to anyone currency or otherwise change your risk management approach.
Yeah, Hi.
Look I think yeah, we've always sought to create a balance diversified portfolio by region.
And by sector and you know, we haven't really changed our our policies in that regard you know, we we are sensitive to it.
You know we made investments recently in in Brazil that maybe took a little higher than we normally would be but that was because we saw you know incredible value and we still think those investment school the very creative for US you know, namely the the pipeline transaction and.
The spectra see transmission transactions.
And so yeah I'm sure once those get realized you know we will naturally you know be more balanced like we were in the past.
Sure Okay.
Yeah.
Take your next question comes from Devon dogs will be able capital markets can then proceeded question.
Alright, thank you could weren't guys.
Or in the morning.
Maybe the question on India look at work, who you know the slowed on number school. It just seems like a came at a really bad time, just given that.
It was a bit of a credit crisis before this all got started I just isn't instantly put your thoughts on what opportunities that you're saying, whether you've seen in an uptick opportunity. So.
<unk> the the opportunity sat in India.
Yes.
Yeah. So.
Today, you know our our our primary focus is just to close the Indian <unk> Telecom transaction.
You know, there's nothing that I would describe that's particularly advanced in Indiana on any other asset and to be honest you know.
There's not a lot of private activity. There there are a few processes that we are you know involved with but they will get extended due to just the challenges of you know completing physical due diligence, but yeah today I I would say in India there.
Is nothing that were particularly focused on.
Okay.
Maybe switching gears look a lot of your energy mystery master they're protected by.
Tinker pay agreement.
Just wondering how you're feeling about counterparty risk spring apart by now so.
Well, then the energy segment and in a utilities.
Yeah like I mentioned in my in my comments earlier, we're feeling pretty good about or Counterparties. At this point you know <unk> on the mid stream business. We largely have you know investment grade international players or very strong local competitors are you know in that business, we've seen everyone behave very <unk>.
<unk> and and and take pruden actions to make sure that they stay healthy through this period. So at this point you know we haven't seen any issues to date.
Broadly in the utilities. We also haven't had any large collection issues I I know there has been a bit of a theme across various jurisdictions around allowing people to defer payments of utility bills, but we haven't seen any impact in our businesses and in some instances we are seeing.
Governments are going to step in and help you know provide support in those situations, but like I said, we're not actively engaged in any of that at this time. So no issues noted noted today.
Okay. That's helpful. Thank you.
Like your next question comes from Andrew Chluski with.
Since we she May proceed with your question [noise].
Thank you good morning, probably the first question to point of clarification on a 450 million that you've invested I think the language and the press release was.
Shares of a handful of companies clarification or was it just shares or have you taken 19 holdings in depositions of companies.
The the vast majority of it is in in shares there might be a modest amount of debt, but it is primarily shares.
Okay. Appreciate that and then I think the color was also and just the the <unk> see or that you plan on supporting the equity and there's there's maybe the clay book to look out what <unk> Grenoble is doing with terror form power.
As as a potential use at the Pepsi vehicle on the future.
I I think but we yeah, one of the attractiveness for us of setting up the F.C. was yeah, having that flexibility that you know should an opportunity arose you know to to do a yeah.
A merger and acquisition utilizing shares we now had a a security where we could affect a robo or for the company that's being acquired so so yes. It is available.
You know whether or not those opportunities will rise that can can comment on it don't know, but but absolutely. If if if it helps do a transaction and it makes it more palatable then we'd be prepared to use that that flexibility.
And then maybe just as a follow up on me clearly from a marketing standpoint, there's been receptivity look a bit.
How big do you think the market size is for it to see structure.
Since your current L.P. structure at the top of the house.
And just to clarify Andrew are you asking.
How how big using the demand is for it or how much capacity, we have issue more Pepsi I wasn't quite sure.
Oh, it's more <unk>, it's more the investor interest in that if you took the L.P. audiences x. is to see structure audience. You know two after three Alex.
Yeah, So <unk>.
We just to be clear, we'd be speculating because I don't really know the answer but you know based on the inbound and and number of conversations that beers had I would suspect it's several x. yes.
That's great. Thank you.
<unk> thing.
Like your next question comes from a suit said.
We think we're medically they've proceeded new question.
Thanks, Good morning.
One on transport in one on data and construct <unk>. Thanks for all the details on on transport in a by here I think corbett impact for the quarter.
Pools, and poor you quantify $10 million and Brazil, we all are reduced by 17 million any thoughts on broadly quantifying <unk> in may and direction Lee or any other color and then secondly regulators have acknowledged this as a ford familiar.
Worked event is that in all jurisdictions or any specific ones.
[noise] highest seat [noise]. Good morning, it's up to here I'll I'll start and maybe Ben can jump in on the second question, but.
Relating <unk> impact it it's still.
<unk>, we did give a bit of a as you as you mentioned a bit of color.
In the letter and in my remarks as to what we're seeing so far in q. to at least and so that's you know.
You know <unk> traffic volumes in October road business.
You know going down by about 40% taught <unk>, our port operations being impacted volume wise by 10% to 15%.
And then our railed business somewhere in the range of five to 10 per cent, albeit it's been a it was better than that in April as far as Q3 in Q. for look at it all depends on how.
It goes as Sam noted in his remarks with respect to openings of the economies.
But so should the the biggest impact C.I., assuming things open up a little bit.
You know the biggest impact we will see is probably in cute too with moderate recoveries happening.
In Q3, and Q4, but it's still a bit early to to to make assumptions on.
Yeah, and then just just maybe [noise] on the you know the force mature I would say yeah, we we own toll roads in India, Brazil, Peru in Chile, and the the majority of them are in Brazil, India in Brazil, I'd have publicly acknowledged the forced measure and in Peru in Chile, we've.
You know, it's clear in the contracts and in certain notices that we've exchange with the regulator. So I'd say <unk>, we haven't noticed any jurisdiction, where we don't think it applies.
And then in light of recent surgeon the data infrastructure. How are you seeing the competitive tensions in this area playing out any particular geography stand out as if the global dynamically ships in this segment.
For data in general Yep.
I I mean look I guess I would just.
I I don't know that we're noticing any stand out regional dynamics other than you know we do have a business in South America, that's growing and there does seem to still be a need for data capacity, maybe maybe Ben I can just referred to you know what we're hearing from the big cloud.
Providers and and the their need for more capacity.
Yeah, I I think.
<unk> sans highlighting we continue to hear from our clients you know an increasing demand, especially in South America and even you know for example in our towers business in Europe. We continue to have a Emma knows want to build new points of presence with us and new towers. So.
I I think if anything you know we identified data infrastructure a number of years ago as a potential you know sector to focus on and if anything I think it's emerging today as and infrastructure asset class with all the characteristics you'd expect and as only become more important as a result of this.
<unk>.
If I could sneak one up quick and on on valuation you mentioned some companies are trading well below intrinsic value could you, perhaps compared these valuations are relative to probably don't turn.
And perhaps dog generally about the <unk> or the reasonable it's been still way white.
Just conceptually.
I'm, sorry, I guess, the San <unk> look at it it's hard to compare to you know previous cyclists I mean, the only.
No major pullback you know on a broad scale with back in the G.S.C.
And you know, we initially saw pullbacks of similar magnitude.
Except this time the recovery was much quicker and more abroad.
I would say you know the the you know some the the the businesses that we're looking at you know have had their.
Valuations, you know cut more than half and so that's what's creating the opportunity.
But as much more isn't it.
Oh, that's helpful thinks them.
Thank you on this question comes from Rob Cope with Scotiabank, we proceeded of course.
Yeah, just a follow up when you're looking at your financing strategy move in accord with some of the Monetizations <unk> pushed off a you'll how are you thinking about bridging nightcap and could see or no additional between the <unk>.
Hi, Rob.
Yeah, we.
I I just make too quick comments in that first N.B. hears remarks, you mentioned that we are arranged a bowls facility that that effectively.
Bridges the asset sales.
For us.
And you know <unk> will utilize that and you know as far as the resumption of asset sales you know <unk>. We expect that you know either in the latter half of this year or next year you know they will resume so we're not expecting there.
To be a lengthy delay and and and I guess.
Part of what gives us the coffins to say that is you know.
You know, what we've noticed with our investor base on the institutional site. If people are just getting on with business. The attractiveness of the sector debating you know putting aside some of the transferred assets.
Yeah, it's only been highlighted by what's gone on and that the amount of capital up. There is is massive interest rates are lower so we know evaluations will hold up well and we've already seen a resumption of activity in the renewable power and data infrastructure sectors.
And we expect that you know the energy and transport sectors won't be far behind it so.
<unk>. This is a a an R.V. at this stage a.
A delay and resumption of activities you know should be should continue or should resume.
In the fall or early next year.
Appreciated the color that's it for me thank you.
No problem.
Question comes from you by doing with industrialized seem they proceeded to question.
Oh, one quick question for me <unk>, you mentioned counterparty risk as into a major issue where you support today I'm. Just wondering if you can comment on what are the issues that where you are the most today given the current environment.
[noise] I I'd say a few areas of issues. You know we've had we we have a big backlog or a backlog of construction projects in many of our utilities businesses and in some of the jurisdictions, where those are located you know construction activity was mandated to either.
Slowed down or come to a help for a period of time, we're starting to see activity resume as I mentioned in my comments.
So that's been one of the impacts I think be here touched on the impact on our transport sector in terms of some of the volume dynamics.
But apart from that a you know we'd been monitoring issues around counterparties liquidity and the health and safety of our people very closely and we haven't had any major issues are assets have been pretty resilient, yeah, maybe I'll just add to that.
I think on a you know individual asset micro level, we don't see you know any major issues, you know where where the biggest issues residing in this.
This is always the case irrespective of where we are now it's just more heightened.
Government policy or regulation.
As a unintended consequences and so you know lots of governments are responding to the epidemic with with policies. Some that are well thought out some that are not well thought out and Frank <unk>. That's the biggest risk for any company out there in the world, including ourselves, but as long as.
Sensible decisions are made then you know we're confident that we'll work through this.
Hope that's helpful.
Okay operating do you think is that all the calls are all the questions.
Yes, I'm answering any questions at this.
Okay well. Thank you. Thank you operator, and thank you everyone for joining the call. This morning, and we really really appreciate your ongoing support and we wish you and your family continued health during the challenging time.
[noise], [noise], I'm pretty ladies and gentlemen.
Participating in today's conference is concludes today's program email disconnect everyone have a great that.