Q3 2022 Brookfield Infrastructure Partners LP Earnings Call

The conference will begin shortly to raise your hand during Q&A you can dial star one one.

[music].

Hello, and thank you for standing by.

Welcome to the Brookfield infrastructure Partners Q3, 2022 results conference call and webcast.

At this time all participants are in a listen only mode.

After the speaker presentation, there will be a question and answer session.

To ask a question. During this session you will need to press star one one on your telephone.

It is now my pleasure to introduce Chief Financial Officer, David <unk>.

Thank you Andrew and good morning, everyone welcome to Brookfield infrastructure Partners' third quarter 2022 earnings conference call.

As introduced my name is David Kratz, and I'm, the Chief financial Officer of Brookfield infrastructure.

I'm also joined today by our Chief Executive Officer, Sam Pollock.

I'll begin with a discussion of our third quarter financial and operating results as well as touch on our recent capital markets activity and balance sheet strength.

I'll, then turn the call over to Sam who will provide an update on our strategic initiatives and concluding remarks.

Following our commentary this morning will be joined by Ben Vaughan, Our Chief operating officer for our question and answer period at.

At this time I'd like to remind you that in our remarks today, we will make forward looking statements. These statements are subject to known and unknown risks and future results may differ materially.

Further information on known risk factors I would encourage you to review our annual report on form 20-F, which is available on our website.

Brookfield infrastructure delivered another strong quarter with funds from operations or <unk> per unit of <unk> 68.

15% increase compared to the same period last year.

Our favorable results were driven by organic growth of 10% and the contribution of nearly $2 billion of capital deployed over the past 12 months.

Taking a closer look at our operating results by segment.

<unk> from our utilities business were 8% above the prior year at $196 million.

The base business benefited from inflation indexation, and the commissioning of approximately $500 million of capital into the rate base during the last year.

Results also benefited from the contribution of two Australian utility acquisitions completed earlier this year.

Positive contributions were partially offset by the impact of increased borrowing cost at our Brazilian utilities and the fact that the prior year included the final contribution from our district energy operations.

Within our segment, we continue to build out platforms, and our north American and European residential infrastructure business.

In North America, we completed a tuck in acquisition of Quebec largest rental water heater provider with 280000 customers under contract.

This investment expands our geographic footprint and will serve as a base for expansion into eastern Canada.

It also provides a platform to expand into new products and sales channels within the region.

During the quarter, we also advance our growth plans at our North American sub metering business with an agreement to expand operations into the Brookfield managed residential portfolio and take over the metering of over 45 multifamily buildings across 15 U S States.

This strategy of leveraging the broader Brookfield ecosystem has successfully accelerated organic growth for us in the past specifically at our district energy platform and more recently in our indoor wireless systems business.

And our European residential infrastructure business, we're advancing the rollout of the heat pump rental product launched last quarter.

<unk> offering customers a financing solution to reduce the upfront cost is led to approximately 400 units sold in the first four months alone while exceeding our expectations. We are now focusing on installation efforts as we continue to build up our rental backlog.

Moving to our transport segment.

<unk> was $203 million for the quarter an increase.

These are 12% compared to the prior year.

<unk> benefited from strong organic growth driven by increased rates that were in line with inflation and stronger volumes.

And our diversified terminal volumes were up 7% compared with the prior year driven by our U S. LNG export terminal that commissioned fixed commercial liquefaction train earlier in the year.

Volumes at our rail operations were up 2% over the prior year following strong performance in the U S and in Brazil.

The rates are cross our rail networks were up 9% highlighted by our Brazilian rail operation, which increased tariffs by 20% on average.

Across our global toll road portfolio traffic levels increased 3% compared to the prior year, while tariffs are now 10% higher than this time last year.

Prior year results included contributions from businesses that were sold including our U S container terminal in the second quarter in our Chilean toll road operation in 2021.

Australian export terminal recently announced that had agreed on access pricing with all of the existing users for a 10 year period to be applied retroactively from July one 2021.

Rate reflects a 29% increase to the previous framework with all users subject to a 100% take or pay volume and annual price escalators for inflation.

This outcome provides significant cash flow certainty, while preserving a strong contractual protection associated with this critical infrastructure.

Moving to our midstream segment, we generated <unk> of $172 million, which.

Which is a 67% increase over the prior year.

This result was primarily due to the contribution from our diversified Canadian midstream operation, which only partially contributed in the comparable period in.

Base business level results continued to benefit from increased producer activity and strong market sensitive revenue.

I am pleased to report that we remain on track with the ramp up of our Heartland petrochemical complex.

October our propane dehydrogenation plant, which processes propane into polymer grade propylene PGP commenced production.

Having completed commissioning of the backend of the complex earlier. This year. This staff completes the integrated startup and will begin ramping up production gradually over the balance of the year.

Finally, our highly contracted data business continues to perform well in the current environment with <unk>, increasing to $60 million for the quarter.

Underlying growth from additional points of presence incremental megawatts commissioned an inflationary price escalators were partially offset by the impact of foreign exchange during the quarter.

The strong operational and financial performance I, just outlined it's highly supportive of our investment grade profile and access to capital.

Central banks intensify their hawkish policy stance and commit to reduce inflation to target levels through future rate hikes, we continue to proactively access the capital markets to extend near term maturities.

Our three most notable financings completed recently totaled $1 7 billion.

They termed out 2023, and 2024 asset level maturities at costs that are in line with that of the maturing debt.

Our proactive financing strategy has positioned us well heading into 2023 is less than 2% of our asset level debt matures over the next 12 months.

Our corporate balance sheet remains well capitalized with no corporate maturities until 2024.

A high proportion of fixed rate debt in our capital structure has largely insulated us from rising rates. This year and we continue to maintain an active currency hedging strategy to protect our cash flows and investment value.

During the quarter over 80% of our <unk> was denominated in dollars or hedged to the U S dollar and that program remains in place for the next 24 months.

In terms of corporate liquidity, we ended the quarter with $2 $3 billion that will increase to nearly 3 billion. Following the completion of three secured asset sales announced earlier this year.

These sales were in addition to the sale of our U S container terminal that closed earlier this year for approximately $350 million.

Of the three secured sales in New Zealand Telecom tower portfolio sale closed yesterday, our Brazilian electricity transmission lines are expected to close later this month and the Indian toll roads are on track to close by the end of the year.

In addition, several sale processes are underway that combined are expected to generate a further one $5 billion of net proceeds to the partnership.

I would like to thank you all for your time this morning, and I'll now pass the call over to Sam.

Thank you David and good morning, everyone.

As you just heard our business generated strong financial results during the quarter and we believe we will continue to perform well in all business environments.

We've adhered to our financial strategy with a capital structure comprised of long term debt at fixed rates limiting the impact rising interest rates had on our business.

Also a significant portion of our revenue frameworks have embedded inflation indexation.

Which allows us to expand our margins during periods of higher inflation.

These factors combined with our substantial capital backlog should allow us to continue to grow our <unk> targeted levels for the foreseeable future.

In fact, our capital backlog has been significantly expanded through our recently announced partnership with Intel Corporation.

Invested of $30 billion semiconductor foundry in Arizona.

First of all we'll be providing approximately $15 billion over the construction period for a 49% interest in the facility.

Most of our capital commitment has been a source of non recourse debt with our base interest rate exposure fully hedged concurrent resigning.

Hercules approximately $2 billion equity investment, which will include approximately $500 million are bit is back end weighted closer to the operational phase of the project.

This investment is structured to achieve an attractive risk adjusted return.

We draw parallels to other data investments such as Hyperscale data centers that are generally contracted on a long term basis with high creditworthy, Counterparties, where we do not assume technological risk.

In this instance, we view Intel did need creditworthy and market leading partner.

The transaction is expected to close by the end of 2022 as an example at the large scale capital required to support the onshoring of critical supply chains.

This macroeconomic trend to globalize.

Find with other trends to digitalize and decarbonize or quantify the three DS.

They are expected to create significant investment opportunities going forward.

Our successful capital deployment this year positions us well heading into 2023.

We had effectively secured a cap deployment objectives for next year underscoring our ability to remain disciplined and prioritize the pursuit of opportunistic transactions.

During our 13 year listed history.

We have made several opportunistic deep value investments in Marquis regulator contracted assets.

And to conclude the privatization of Babcock <unk> Brown infrastructure in 2010, and the acquisition of two Brazilian utilities during a period of political turmoil turmoil in 2016.

These investments have provide useful unitholders with some of the strongest returns realized to date and our direct result of our contrarian approach investing as well as our access to flexible in large scale capital.

We believe our competitive advantages will continue to allow us to make deep value acquisitions during periods of market dislocation like recurrent experiencing.

Elevated inflation levels and rising over lending rates will remain the primary near term macroeconomic factors impacting the global economy.

The current tone for most central banks is that interest rates will continue to rise until rates of inflation and fully abated to their target levels.

While lower economic growth and higher interest rates will be unpopular given the recent events in the U K, most governments will differ and central banks to achieve their inflation objectives.

Consequently, we believe the investment themes for the balance of 2022 and into 2023 will be centered around operating margin resilience and financial strength.

This market environment should therefore favor companies that have strong balance sheets and access to capital as well as business models. They are immune to inflationary pressures like ours.

That concludes my remarks for today and I will now pass it back over to the operator to open the line for questions.

Thank you.

As a reminder to ask a question you will need to press star one on your telephone.

Again to ask a question. Please press star one one on your telephone.

Moment please.

And our first question comes from the line of Cherilyn Radbourne with TD Securities.

Thank you very much and good morning.

My first question is when you get a downturn in the public markets like this one in your experience is the typical lag before that impacts the private market and results and value investing opportunity and apart from transportation assets, which clearly have more volume sensitivity.

Are there any other areas, where you think you might see opportunities emerge.

Okay.

Hi, Cherilyn thanks for your questions.

In regards to the lag.

I think in.

Okay.

In our experience it usually takes.

A number of quarters before we see the impact of.

Lower liquidity.

Impacting companies that that have poor balance sheets, and and who didn't plan ahead.

So.

I think we're probably still.

A number a couple of quarters away before those companies really.

The effects and need to.

Look for capital.

As far as valuations.

That typically when people are motivated sellers, that's when you might see some impact on values and in those sectors I would say just as a caveat.

The infrastructure assets as a whole tend to be pretty resilient and so I think we likely won't see for.

For the most part significant declines in the value of infrastructure assets that you might see in other sectors like private equity. So that's that would be one thing.

And I think to your second question about where.

And where we might see.

Yes, some distress and you you, obviously flagged more GDP sensitive sectors, which is a fair comment.

I think.

I wouldn't necessarily draw.

Any lines towards sectors or.

Our regions, but mostly towards individuals companies, who as I mentioned earlier.

<unk>.

Had a very weak.

Weak balance sheets.

Where they've taken on too much debt have near term maturities.

And the market has it does a good job of.

Assigning those companies and punishing them.

And I think that's probably the place to look.

And they will they're always a few.

That surface every every cycle.

Okay. That's very helpful. And then maybe just quickly do you have any comments on the recent election outcome in Brazil, and the impact on your own appetite and the appetite.

Institutional capital more generally to participate in that country.

Sure ill take that one.

Maybe Ben might add a few comments.

He lived down there for a number of years, but.

I think.

Obviously, we watch the <unk>.

<unk> very closely.

I think the.

And look this is evolving day by day, but our first impressions are generally positive in the sense that.

The transitions as Peter said it will go relatively smoothly, even though there.

There are some.

Protest going on.

Also in there.

Hi.

Reaffirmed with respect for the Constitution.

Yes.

Yes, he has positioned himself as the leader of.

A strong opposition in Congress.

I think most people may have seen a couple of weeks ago.

Congress.

Generally voted in.

More sensor right.

Legislatures, and so I think that will be a good counterbalance to.

The new government debt.

<unk>.

Headed by Lula and <unk>.

The other thing that we take as a positive is that.

Sousa has nominated.

Yeah, well known.

Centrist politician augment as leader of the transition and so I think that to send the right signal and we expect that the ministers that get appointed should be reflective of.

Our balanced.

Cabinet.

And I think the other thing as I mentioned Dolphin Narrows Chief of staff is already started the process.

Transitioning.

The government so all the things we might've worried about with just noise around the transition period.

<unk> is going to take place I think all of the.

Maine.

<unk>.

Are now planning for change, but I think the big thing also is that.

Any concerns we might have had about a big shift to the left I don't think thats going to take place.

And the last thing if I might just mention is I think were actually relatively positive on the outlook for Brazil.

<unk>.

In the near near term at least.

And part of that because Brazil.

Actually got ahead of a lot of interest.

Inflation issues and move rates up quickly.

Already we're starting to see that.

It feels like they have got inflation under better control.

Lot of other places.

In fact may be starting to subside a bit.

And.

And as a result I think.

There could be stability in their interest rate and FX rate.

For the foreseeable future.

So all in all were positive I think that leads to a good investment environment.

We see lots of.

Potential activity.

With renewed.

Private stations, particularly in the transmission sector in the coming year.

So I think it will attract a lot of capital and so that's both good for us from a perspective of dip.

<unk> capital, but to the extent that we recycling capital I think there'll be lots of interest in the country.

So apologize for the long winded answer but generally.

Yes.

We're mostly positive on situations.

That was great that was all for me. Thank you.

Thanks Shirley.

Thank you.

And our next question comes from the line of Robert Kwan with RBC capital markets.

Hey, good morning.

Kind of coming back to your letter and spirit.

Highlighting the success you've had with the contrarian approach Tbi and Brazil, just wondering if you can compare that.

Dislocation Youre seeing now with the past you had mentioned balance sheet leverage Sam but I am just wondering.

Can you compare the carve out potential that you'd see at this point and then.

Know that you don't want to get too much into the sectors.

But maybe take it the other side other than in freight as you highlighted are there factors that you just don't think you're going to see a lot of opportunities in this environment.

Hi, Robert.

Okay.

Maybe Ed.

Along with the.

Your last question on is there any sectors that.

We don't see any.

Any opportunity.

Yes.

And then just your answer is no I think there should be deployment opportunities.

Across all the three d's that we flagged.

And.

What makes it very interesting for US is the fact.

That.

The capital required for all three of those trends.

Is massive.

And we're in an environment, where capital is scarce so.

I think.

All the places that we're hunting and see is are the main area for us to focus.

There should be opportunities for us to to invest in.

In relation to.

<unk> value.

It's still a little early to make any comparisons to other points in time, because we're obviously at the relatively early stages of this call.

Correction.

Lack of a better expression.

And so this could go on.

Much longer than everyone today expects and I think just maybe.

Everyone expected I think there is.

Lots of different views on whether this will be.

A short period of.

A tightening or whether or not it could be.

Higher rates for longer and so we'll have to see how this plays out if rates stayed higher for longer and and the recession as Jason discussed.

This could be a very attractive time for us and obviously the one with the one area where.

Yes.

Things could get a lot worse because of geopolitical issues is Europe and so clearly that's a market that we are spending a lot of time evaluating North America at the moment feels a little more immune to some of the factors.

Got it.

And then can you compare your current deal pipeline.

Versus maybe where you were earlier this year or is there more on the front burner or is this commentary really just flagging your past success and if this continues to play out as you mentioned, maybe a couple of quarters or so that you're going to be really well positioned if the opportunities come up.

Well our pipeline is always pretty.

Deep Robert.

We have.

A large group of professionals.

Around the world.

Evaluating opportunities and receiving lots of inbounds.

And so we're never short of opportunities I would say what we are always trying to do is to high grade them in and pursue those that we think are the most attractive.

And take into account.

Current market conditions so.

Our pipeline is deep I think but we also are.

Prepared to be low patient given the given the amount of capital we've deployed and the fact that we had.

A number of transactions closing, providing lots of growth of the business.

For the next little while.

We're looking for some.

Some very interesting large transactions that could really move the needle and so.

We probably are just.

I think being mindful of that opportunity.

Okay. That's great. Thank you very much.

Thank you.

Yes.

And our next question comes from the line of Robert Hope with Scotiabank.

Hi, good morning, everyone.

First question is on the asset monetization pipeline of $1 5 billion.

And your part of your remarks, you did mention that in a couple of quarters you may see some softness in asset pricing just wanted to.

That has creeped into your <unk>.

<unk> process, and whether or not you've had to alter your euro.

Monetization plan not necessarily just for the one five.

Crouch behind that.

Hi, Robert.

Rob.

Look I think the.

Yes.

One of them I guess part of my comments Sharon was yes.

We do operate in a sector that.

It's very attractive for.

All of the investment attributes that we described for many years the resilience.

Victor ability.

And the fact that these assets tend to weather.

Environments like this so.

For the most part.

We know Theres, a lot of dry powder out there and so.

Investors in the sector will continue to invest.

Yes, I think.

Businesses, where that is portable.

We will be.

Much less impacted.

By the current situations than some businesses that might be carve outs.

So to the extent that you are delivering settlement business and then they are stepping into your capital structure for the most part we don't expect to see too much in the way of.

Declines in values.

And so with that in mind, probably.

Our focus on asset sales will be to sell companies, where we can.

Deliver.

Balance sheets that are portable.

Obviously as a result, we shouldnt expect any any decline.

And values.

And.

As things unfold as we see the direction of interest rates and as we see them start coming down then I think.

The extent that we have businesses in carve outs or things like that.

People are putting their own capital structures, we might look at those businesses, but the most part I think to answer your question selling businesses with portable that would be something we would look to do.

Thank you for that and then maybe a shorter term question during the quarter. It looks like you had another strong quarter of volume growth on your more GDP sensitive businesses.

Are you starting to see any softness there or if the outlook for volumes still quite good at this point.

Hey, Rob it's David I can start with vascular frida to layer on incremental.

Look I think if you look across our GDP sensitive businesses, which predominantly R&R transport segment I would say, we've seen pretty robust performance throughout the portfolio roads have been strong in all regions. We operate a rail networks have done well in the current environment with growth in Australia, Brazil, and the U S.

I would say on the diversified terminals from that's where are you seeing a bit of a bit of a mixed bag I would say our U S. LNG facility is doing extremely well our container terminal in Australia are doing well, but the one asset that has a bit of softness so far has been our U K port in PD ports. However, the one thing I would caveat is that largely.

This business is highly contracted and as a landlord port owns a lot of long term leases Conservancy right. So it's not as volume sensitive at some of the others that we would own so I'd say, that's the only place where we have seen volumes down.

And single digit, but not not significantly, but that's where we've seen a bit of softness so far as a result of.

What's going on in the economy there.

Okay, great. Thank you.

Thank you.

And our next question comes from the line of Rob <unk> with CIBC.

Hey, good morning, everyone. You've answered most of my questions, but I am curious as to how your macro view that you've discussed at length here.

Specifically the availability of capital.

Might've might impact your.

Approach to the distribution policy specifically.

No distribution growth given the fact that.

Notwithstanding the macro environment, you have set yourselves up for.

Pretty strong <unk> per unit.

Growth outlook here.

Yes, Hi, Robert.

So.

Im not entirely sure.

The question I think the.

I think what Youre trying to ask US is and correct me if I'm wrong.

Will.

Liquidity in the market impact.

The.

Decision that the board ultimately takes on growth in our dividend given that on the surface. We have very strong <unk> growth and we dial that back because of.

The conditions that exist in the market I think that's your question.

Just a quick question.

Yes so.

And I would say.

So the business itself has lots of liquidity so.

I don't I think generally the board takes a longer term view.

I think one of the things they will look at us.

The capital allocation opportunities that we have within the business, namely some of the organic growth.

In front of us as well as.

New investments in and it's possible.

Those could weigh on.

How how much of a dividend.

Increase that we have.

But look I think.

Yes, we have we have a range.

Fully confident that the board will be somewhere within that range and.

In any event.

We should.

That be able to comfortably reduce our <unk>.

Payout ratio at a minimum with these strong results.

<unk>.

I think we're well positioned.

From a unit holder perspective, either with yes.

Both strong.

Dividend growth as well as.

Improving our payout ratio, which we have been doing for the last number of years.

Okay. That's helpful and then.

Maybe you can provide just a little bit more color on the north not north American slip metering business.

What.

What partnering with the Brookfield real estate business can mean for the growth rate there.

Okay.

Love that business, but I think <unk>.

Talk about it.

Given the chance talk here, yes.

I guess, what we're excited about for that sub metering business. It really partnering up with Brookfield really allows us to enter the U S market and accelerate our growth.

In the U S market. So we made a couple of.

Tuck under acquisitions in the business in the U S and then partnering up.

With our real estate business, where it makes sense to just further accelerate that growth just adds.

Really a growth wedge and access to buildings that need our services.

That.

Otherwise, we would have to approach it a different way. So I would just say at a high level. It really just helps sort of turbocharge the.

The growth profile of the business in the U S market.

And right now we have a good franchise in Canada, and we're relatively smaller than the U S and see a tremendous growth opportunity. So that's that's really where we see.

Initial.

Growth booster for that business in that market.

Okay. Thank you very much.

Thank you.

And our next question comes from the line of Andrew Kuske with Credit Suisse.

Thanks, Good morning.

I guess the question is targeted at Sam and it's really about just the partnerships.

A consistent theme on the Investor days.

A couple of months ago now.

On this call.

Could you maybe just give us a sense of how you think this helps to expand the business on going into buying sort of bounce that sort of J D.

Then also on the disposition of assets in the future.

Hi, Andrew.

Sorry, when you say partnerships you mean.

Joining up with.

Either or.

Lps or other institutional investors and buying assets is that what you're referring to.

It's more more brought them that its within the context of what are we look at Intel or the Deutsche deal most recently, where.

You've engaged in a different kind of partnership when you would do in the past.

Okay.

Fair enough.

I would say.

Partnering with strategics and so maybe.

I will go down.

This pass throughs and if you wanted to add.

Another question too.

Free but.

Yes.

Strategics has always been.

A key part of our.

Playbook.

Because at the end of the day those tend to be.

Situations, where we can do a bilateral transaction and really structure a deal.

That.

Yes, it meets their objectives at the same time.

Ken.

To give us.

Better risk adjusted returns because often we can trade certain things that they want and often that is.

Various controls are operating.

Decision, making and in return for that they may be prepared to give us. Some downside protection. So we have done that whether that was with our transaction with Vale.

Five years ago with reliance industries in India.

These are all bilateral transactions, where we were able to come up with really large scale solutions that help them and gave us really good deals.

And I would say the deal we did with <unk>.

Petrobras when we bought NCS was another example of a carve out and.

Where we restructured the.

The beginnings of.

But new industry in Brazil, and that's that's been one of our best transactions effort. So I would say.

Yes.

We've always done it and we think it's.

It could be some of our best transaction. So we'll continue to look for those situations and in fact on the back of what we've recently done with Intel.

Sure.

It's allowed us.

It's because it's so prominent it's opened many doors for us around the world and.

I'm hopeful that it will lead to a number of other big transactions.

That's helpful and then maybe if I could just follow on.

Those kinds of strategic transactions.

Their operational expertise and industry knowledge gives you probably better downside risk.

But I guess the one question is.

At the top of the house for Brookfield could you spread yourselves keep them by having too many balls in the air.

Across too many business groups.

Yes.

Youll have to help me on that one a little bit Andrew when you say at the top desk too many balls in the air I guess to make it I guess.

If you just think about how many businesses are running right now.

It's quite different kind of wasn't at inception.

You've made some scaled the business quite dramatically, but do you have any worries about being spread too thinly across all the groups.

Well no look.

I think we have scaled up.

The orange.

<unk> as a whole.

To meet the growth in the business so.

And you.

You've known us for 20 years, Andrew So.

No.

Probably talked to maybe five of us.

Three years ago, and that covered all of the investment team and today its 500 <unk>.

And the whole organization is.

<unk> 2000 people, so and Thats, just said to you that the top of the house.

So we have we've grown our business to be able to.

Yes deploy capital in scale, but also deal with the complexities.

Operating in different businesses and different geographies, so I feel very comfortable with our capabilities and in fact.

I think what's exciting.

For anyone who is invested across a brookfield ecosystem is.

I think we have an unrivaled unparalleled business.

Other than maybe one or two others around the world. So.

So no I feel confident in our ability to to continue what we're doing.

Okay. That's great appreciate the color. Thank you.

Thank you.

And our next question comes from the line of Nausea, but are you doing.

With industrial lines.

Hi, good morning.

Just wanted to start off with the capital recycling I think you had sort of a timeline in mind.

Few months ago about one to $1 5 billion.

We also closed just wondering if the timeline has changed level.

Okay.

Hi.

No.

Our expectation is that.

In the fourth quarter we.

We should have.

And transactions.

Okay.

Yes.

Signed or at least in the right direction and so.

Next quarter, hopefully we can provide more.

Clarity on where we ended up.

Okay. Okay, that's great.

I'm just.

Back to the topic of partnerships I think you noted that.

You might look to persistence.

<unk> projects in Canada.

Are there any.

Call it partnerships or synergies with some of the Brookfield renewables recent investments.

And in that market.

That's something you might be looking at.

Yes so.

And then you can jump in here as well.

We referred to I think some of the.

Poor space for that.

So our view is the industry jargon, but.

But basically.

Area around the facilities in Alberta.

We can inject carbon.

Relation to IPL.

Yes.

Yes, I think the short answer is.

As the technology gets advanced and if we're lucky to have.

Brookfield renewable investing.

Significantly in those new technologies that we will be able to leverage that.

That knowledge and expertise to.

Apply to our existing businesses. So we would definitely look to stay.

Stay close to them.

Make those investments and hopefully.

Learn from them.

<unk> to add to that.

Yes.

What you said, it's relatively early days on a lot of these strategies, but to secure rights like the ones our businesses just position us well.

Like Sam said, the renewable business has a number of initial.

Initiatives on this front and over the years, hopefully, we'll be able to partner up with some ways in and commercialize these initiatives.

Okay. That's helpful. Thank you and just maybe a cleanup question I think you mentioned that in the Australian export terminal business there were some.

Chocolate payments that were agreed upon going back almost a year, where those in Q3 results.

Can you quantify that.

David here.

The retroactive payments were agreed upon after the quarter so they're not in our Q3 results. The only thing our Q3 results included that.

Elevated rate for the quarter, which we knew of at a time, so but other than that the retro payment for backdated part of them will be in our coupons.

Okay.

Is it too preliminary to maybe quantify what that could be.

I think the company has put out guidance at the total back to that payment was around is between 50 and $60 million Australian dollars.

And we own about half of the business. So on a net tippett basis I think it's between 15.

$15 million to $20 million total.

Okay.

Very helpful. Thank you.

Thank you.

And our next question comes from the line of Devin Dodge with BMO capital markets.

Thanks. Good morning. So just wanted a couple of quick questions on the connections business in the U K. So maybe just to start with I believe connections were up in the quarter, but are you able to give us a sense.

If you're starting to see or you expect to see a bit of softening.

Structuring activities that may slow those connection sales.

Yes.

I mean at this point, we're seeing no.

Slowdown the business does.

Fairly normal variations in the pace of both sales and connections, but at this point, we're seeing no broad based slowdown.

And.

So there's no trend that we're noting.

And the homebuilders continue to build out their their portfolios in the country. So we monitor it closely but at this point we're not.

Noting any trend.

In any particular direction on that front.

Okay, Okay, and then again sticking with.

B U K just can you remind us.

How the rate adjustments to homeowners work and any kind of restrictions on rate resets that for R&D and then on the connections revenues.

Are these negotiated with other utilities are construction companies on a project by project basis that could give you.

Flexibility to adjust.

Just those to compensate you for higher cost of capital and just any thoughts you can share there.

Sure. So it's Ben again, I would say first of all to answer. Your second question first we absolutely can adjust the economics of R. R.

Our offering to the homebuilders.

Stan.

Any economic impact that we see.

So we can be flexible within that and then.

Once those are secured usually our economics are locked in and deflation protected over time.

And so.

At this point.

We're not really while we track the regulation very closely I would think of it more as it could set a max rate for us, but generally speaking.

We are.

We can reprice our product over time in order to accommodate any variations in either supply cost delivery cost for financing costs generally over time in the business. So I hope that answers your question, but at this point.

There is no.

Huge exposure to not being able to reprice.

Okay. No. That's good color. Thank you for that.

Thank you.

And our next question comes from the line of Frederic Bastien with.

Raymond James.

Hi, Good morning, only one question for me your contrarian approach to investing.

Leads me to believe that Europe would rank pretty high on your priority list right now.

Especially with the geopolitical uncertainty and the related energy.

Currency crisis, do you see opportunities to accelerate euro capital deployment in the region or Tomorrow Tomorrow Barking up the wrong tree.

Hi, Frederic.

Well look I think.

<unk>.

Youre correct that.

There's lots of factors, which would suggest that.

Opportunities.

Couldnt should arise in Europe .

We have yes.

Over the last number of years scaled up our.

Alright.

<unk> capabilities in that market and last year in fact I think.

Almost half maybe slightly less than half the capital excuse me that we deployed went into that market. So.

We have already been seeing lots of opportunities.

And I think there could be.

Lots more in front of us but.

The only caveat being.

That as.

As I mentioned at the outset.

Yes.

<unk> tends to be company specific more often than not.

And so even though there could be.

Yes.

More regional distressed.

In Europe .

The large scale situations that we look for where distress occur might just be a company somewhere else and because they they might have.

Managed care, if theres properly so.

I would just give you that cautionary thing just because.

One region is where theres more province doesn't necessarily mean that's worthy.

Opportunity will arise.

Okay. That's helpful. Thank you.

Okay. Thanks, Brett.

Thank you.

Showing no further questions so with that I'll hand, the call back over to CEO , Sam Pollock for any closing remarks.

Okay. Thank you operator, and thank you to everyone who joined the call. This morning.

We appreciate your support and we'd like to wish you all happy holidays, I know, it's a little bit early for that but.

We won't be talking for another two months so.

Happy Thanksgiving and for Americans and happy.

Holidays in the upcoming season.

Thank you very much.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.

Yeah.

The conference will begin shortly to raise your hand during Q&A you can dial one one.

[music].