Q4 2022 Brookfield Infrastructure Partners LP Earnings Call

[music].

Yeah.

Good day, and thank you for standing by.

Welcome to the Brookfield infrastructure Partners Q4 results Conference call 2022 results conference call and webcast at.

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

After the speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone you will then hear an automated message advising your hand has been raised to withdraw your question. Please press star one again please.

Please be advised that today's conference is being recorded it is now my pleasure to introduce <unk> Chief Financial Officer, David <unk>.

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

As introduced my name is David craft and I'm, the Chief Financial Officer of Brookfield infrastructure Partners. I'm also joined today by our Chief Executive Officer, Sam Pollock.

I'll begin with a discussion of our fourth quarter financial and operating results as well as touch on our balance sheet strength and robust liquidity position.

I'll, then turn the call over to Sam who will reiterate the merits of owning infrastructure investments throughout market cycles and provide outlook for the year ahead.

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

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

For further information on known risk factors I would encourage you to review our annual report on form 20-F, which is available on our web site.

With that I'll now move onto discussion of our record results.

22 was another successful year for Brookfield infrastructure.

The essential nature of our assets showcase their attractiveness by continuing to generate predictable and growing cash flows.

Funds from operations or SFO for the year was $2 71 per unit, representing a 12% increase over the prior year.

We ended 2022 with our highest quarterly <unk> to date of <unk> 72 per unit, which exceeded the prior year by 11% and resulted in a payout ratio for the fourth quarter of 64%.

We're entering the new year in a solid position to expand the company organically and through acquisition driven by the significant momentum in a number of our operating businesses.

This momentum is further supported by our long term debt maturity profile and significant liquidity.

Taking into account the strong results for the year and a favorable outlook for the business. The board of directors have proposed a quarterly distribution increase of 6% to $1 53 per unit on an annualized basis.

This marks the 14th consecutive year of distribution increases.

I'll now go through the key drivers behind our strong financial and operating results for the year.

<unk> totaled $2 1 billion, reflecting a 20% increase compared to 2021.

Results benefited from organic growth for the year of 10% capturing elevated inflation in the countries, where we operate and volume growth across the majority of our critical infrastructure networks.

During the year, we commissioned over $1 billion of new capital projects that are now contributing to earnings as well as deployed a further $1 billion into new acquisitions that favorably impacted results.

Starting with the utility segment, we generated <unk> $739 million, an increase of 5% over the prior year.

This growth reflects an average inflation indexation of 8% that positively impacted almost our entire asset base and the contribution associated with $485 million of capital commissioned into our rate base.

Results also improved from a contribution of two Australian utility acquisitions completed in the first half of the year.

Partially offsetting these results were the impact of higher higher borrowing cost at our Brazilian utility as well as the sale of our North American District energy platform completed during 2021.

Our UK regulated distribution operation recorded another strong quarter of sales activity ending the year with a total of 339000 connection sales and a record order book of $1 5 million connections.

This was the company's best year of sales and was 5% higher than our record set last year.

Performance was solid across all utility offerings with notable outperformance and the sale of water connections, which increased by over 40% relative to the prior year.

In Australia, our regulated utility business recently secured an agreement to build greenfield electrical infrastructure to support to support our blue chip customers construction of three new Hyperscale data centers.

Project will help connect new utility scale renewable power generation and highlights the attractiveness of building Greenfield utility infrastructure to support Australia transition to net zero.

We're continuing to grow our global residential infrastructure platform that.

That has a presence in five countries and offers a range of heating cooling and energy storage solutions.

Most notably in Australia, our smart metering business signed a contract with one of the largest energy retailers to deploy up to 1 million smart meters over the next 10 years.

This opportunity will require total capital expenditures of over $600 million Australian and is additive to the contracted growth profile, we acquired with the business.

Across the residential platform, we continue to see exciting opportunities to launch new product offerings and help provide homeowners with decarbonization solutions a trend that will be further accelerated with the integration of the recently completed acquisition of Homeserve.

Moving to our transport segment, <unk> was $794 million, an increase of 13% compared to the prior year.

Results, primarily benefited from inflationary tariff increases across all our businesses.

Higher volumes supported by strong economic activity surrounding our networks and the commissioning of approximately $400 million in capital expansion projects during the year.

Our rail networks realized an average annual rate increase of 6% and benefited from strong demand for bulk goods and commodities that underpin the global economy are.

Our global toll road portfolio annual traffic levels, and tariffs increased 4% and 10% respectively compared to the prior year.

And finally at our diversified terminals operations rates have been strong in volumes for the year were up 8% compared to the prior year. This was driven primarily by robust demand for U S. LNG exports through our terminal as well as the commissioning of the fixed liquefaction train earlier in the year.

Within our midstream segment <unk> for the year was $743 million compared to $492 million in the prior year.

The step change is primarily a result of the acquisition of inter pipeline that we completed in the second half of last year.

Alts were further aided by elevated commodity prices, which led to increased utilization and higher market sensitive revenues across our base businesses.

Our North American gas storage business had its best fourth quarter on record as we captured the benefit of higher natural gas prices, along the U S West coast stemming from curtailed gas supply and volatile winter weather conditions.

The reliable energy supply provided by our gas storage infrastructure is playing a critical role in the shift toward intermittent energy sources that need to be matched to elevated demand usage during periods of extreme temperatures.

And in our pipeline the conventional system saw a 6% increase in volumes compared to the fourth quarter of last year and reached record levels. Since 2018, we continue to progress the ramp up of the Heartland petrochemical complex as the PD H unit achieved initial production of polymer grade propylene.

Leveraging our experience with large startup activities production of propylene will increase in a staged manner over the coming months, we expect to reliably achieve high levels of integrated polypropylene production by mid 2023 with full run rate contribution to financial results by the second half of this year.

Finally, our data segment generated <unk> of $239 million, which was consistent with the prior year.

Underlying our underlying data businesses performed well as they continue to benefit from increasing customer utilization and network densification requirements.

This year's growth was driven by additional points of presence and inflationary tariff escalators across our portfolio.

These positive effects were partially offset by the impact of foreign exchange on our euro and Indian rupee denominated cash flows.

In November our UK wireless infrastructure, operator completed the purchase of a portfolio of approximately 1100 towers from a strategic investor who sold as part of competition approval requirements. The transaction required approximately $770 million of equity of which funded $20 million. The acquisition is expected to incur.

<unk> EBITDA by over 30% and we will double the existing tower portfolio in the UK to solidify our position as the largest pure play tower company in the region.

This excellent operational finish to the year combined with the strength of our financial position.

US optimism as we enter 2023.

Our corporate balance sheet remains well capitalized as reflected in our investment grade credit profile.

During the quarter, we further de risked our maturity profile by raising $700 million in the Canadian debt capital markets. The.

The issuance had an average term of seven years and proceeds were used to refinance existing debt.

With respect to our asset level nonrecourse borrowings, we proactively refinanced several near term debt maturities. This includes refinancing their inter pipeline and our U K Port operation. We also completed the initial debt funding associated with the U S semiconductor joint venture.

As a result less than 2% of our borrowing base is maturing over the next 12 months.

This combined with a largely fixed rate balance sheet that has an average term to maturity of seven years provides us with tremendous financial flexibility.

Finally, we ended the year with corporate liquidity of $3 4 billion.

During the fourth quarter, we completed the sale of two previously announced transactions as part of our capital recycling program.

With the closing of the Telecom tower portfolio in New Zealand and the first tranche of our recently constructed electricity transmission lines in Brazil, we raised nearly $400 million net to bip.

Our liquidity.

Quiddity position will be further enhanced by the proceeds from the sale of our Indian toll road portfolio and our 50% owned freehold landlord for in Victoria, Australia.

After the previous sale did not receive regulatory approval, we signed a binding agreement to sell the port to a reconstituted consortium of for $1 2 billion Australian.

Which was a 30 times EBITDA multiple.

Closing of these transactions is anticipated to occur in the first half of 2023 with net proceeds to bip of approximately $260 million.

Finally, we are progressing several advanced stage sale processes, which and we recently launched the next round of asset sales that we.

We expect will garner significant interest considering the current economic environment.

Together these processes should generate over $2 billion of net proceeds for the partnership this year.

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

Thank you David and good morning, everyone.

I'm going to begin my comments today with a few words on why infrastructure assets are an attractive choice for investors during this economic environment.

And I'll follow that with a summary of our strategic initiatives and conclude with an outlook for our business.

This past year, the global macroeconomic environment was characterized by elevated levels of inflation and corresponding interest rate increases that created market uncertainty and volatility.

Although inflation appears to be cresting in most countries.

It is possible that certain structural dynamics group hard to abate such as the effect of de globalization energy security in a tight skilled labor supply.

This may result in continued near term market volatility and downward pressure on corporate earnings with cyclical exposure exposure.

Yes.

Investments in infrastructure assets, such as utilities pipelines ports in telecom towers are essential for the function of the economy and society.

While not agnostic to the macro environment, they typically perform well through all parts of the market cycle, and notably outperformed during economic trough.

This ability to generate steady long term returns is driven by several key characteristics.

First they are highly contracted and regulated revenue.

Generally long duration, and therefore provide sustainable cash flow predictability.

Second is there embedded inflation, indexation, which expands or at least maintain margins during periods of elevated inflation and.

And third is our ability to grow during all economic cycles do their essential nature, and ROE and promoting economic growth.

Combined these attributes make the asset class and the investment choice in all market conditions.

Now there are many views on what lies ahead for the economy.

The optimist or glass half full market participant could argue that inflation has peaked that will come back within the targeted range by the end of the year, implying a fiscal policy today has been effective.

Or it could be in the skeptic or glass half empty investor cap, which might be of the view that tight labor market and continued wage pressures will make inflation tougher to abate in 2023 and that central banks will continue to raise interest rates higher than currently projected.

Now, we lean towards a more optimistic view of the year ahead.

But we expect market volatility to persist until the direction of interest rates is more settled.

More poorly Brookfield infrastructure is a highly contracted inflation protected and well finance infrastructure company <unk>.

Should perform well in either scenario.

In terms of our strategic initiatives, we had a successful year for capital deployment that build upon 2020 one's record deployment.

Over this two year period, we invested over $5 billion in new assets.

During 2022, we secured $2 9 billion of investments that are now closed and will begin contributing to results right.

Right away.

We also entered into a partnership to construct a state of the art semiconductor foundry in the U S.

This innovative transaction has added approximately $4 billion to our capital backlog and pioneered a new investment structure to deploy our large scale and flexible capital.

With the recent closings of Homeserve in DSG, which which are part of that $2 9 billion.

And the ramp up of the Heartland facility over the next several quarters and elevated inflation levels.

Visibility into our cash flow growth has rarely been stronger.

This growth should be sustainable over the longer term given our large capital backlog of organic projects and our proven ability to grow the business through accretive new investments.

Favorable sector trends, which had been the catalyst for our recent acquisition activity.

Continued to support our investment pipeline.

In addition to evaluating several corporate carve outs.

Large component of our deal pipeline is comprised of public to private opportunities.

As we stayed in the past infrastructure Super cycle is creating long term investment opportunities that will acquire trillions of dollars.

This is generating large scale opportunities for well capitalized players that can invest in growing operating platforms.

Or be a partner of choice for governments are corporate entities that have less access to the capital markets.

That concludes my remarks for today.

And I'll now pass it back to the operator to open the line.

Thank you.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again.

Please standby, while we compile the Q&A roster.

And our first question comes from the line of Sharon Radburn with TD Securities.

Thanks, very much and good morning.

To start with a question on the M&A pipeline.

In terms of the corporate carve out and take private opportunities currently in that pipeline, maybe you could give us a bit of color on both by sector and by geography and comment on whether it be year to date market rally has made any of the take private less attractive.

If you were able to establish toehold positions at lower prices.

Hi, Sharon I'll take that question.

So as you can appreciate our I'll probably be somewhat vague in my answer to that to those questions.

But.

What I can say is that.

There are there are situations, where we have taken modest toehold.

So I can confirm that that is part of our strategy two <unk>.

To mitigate costs and to give ourselves a competitive advantage.

But.

As far as.

The balance between the two I would say.

It's equally balanced.

There are.

A number of.

Company's strategics, who who don't have the same access to the capital markets have seen their share prices drop and as a result in order to raise capital to continue to grow their businesses.

Looking to private investors.

Two either.

By a whole businesses or to <unk>.

Invest.

And our partnership basis on.

Certain elements of their business so that is definitely.

A source of opportunities for us.

And similarly the.

Despite the market rally, which you mentioned that took place in January .

The market rally wasn't even across all companies or sectors, and so theres still remains a number of situations, which we think remains.

Priced at an interesting level.

And.

There is still a discrepancy between.

Where those valuations lie and where we think they.

Would sit from a private market perspective.

So we continue to progress those situations as far as sectors and geographies.

Yes.

They're fairly well balanced between North America and in Europe , I'd say.

That's where the largest percentage lie.

And.

Sector wise.

I think we have opportunities across all the sectors that we pursue so it isn't really concentrated per se in one sector.

That's fair.

Very helpful. Thank you.

And then David this one's probably for you.

On the record Capex backlog, which is always nice to see maybe you can help us better understand the duration of the backlog and how much of it relates to the Intel partnership.

And since you've already deployed about one third of the expense.

Outlay.

Sure I'm happy to.

To answer that for you. So in terms of our backlog you highlighted obviously Intel was the big contribution or addition to it in the fourth quarter.

A $14 billion capital project, so our share of that.

Capex should be about three 7% 363 7 billion that we've added to our backlog in Q4, our Charlotte So that's on a net basis.

The spend to date figure that we referenced in our materials of $1 1 billion that's at 100%.

Our share of that is roughly 250. So we're not we're not near the same completion percentage that you may have inferred, we're probably closer to somewhere in the 5% to 10% completion on construction. So it's still pretty early days on that.

Construction project that is likely to span several years, so our backlog.

Still remains over that next three year period that we plan on completing and commissioning I'd say, that's the biggest large scale projects. We have in the backlog the rest are smaller type.

<unk>.

Additions like we have a b U K.

At <unk>, our cash some of the installations, so much smaller shorter duration projects that we've replenished quarterly with new sales as well so that's.

That's kind of a bit of color on the composition as well.

Okay.

<unk> invested $250 million to date.

And over the next three years, it's 500 million images.

Okay.

Take care.

The near to medium term outlook for it.

Yes, and just for everyone's without the $500 million of the equity component.

This $3 5 billion, so there'll be additional capital obviously.

Thank you that's all from me.

Thank you.

One moment please.

Yes.

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

Hey, good morning.

Yes, just wondering as you think about funding and so you've got the self funded and.

And the strategy around the organic plan, but in terms of highlighting the $2 billion potential asset sales for this year, how does that size that.

What youre seeing.

The acquisition front and I guess, the other avenue of financing when you look at the deals in front of you.

Is there a reasonable opportunity to use a share exchange as a viable financing.

Product.

Hi, Robert.

Ill.

I'll take that one.

So.

We get this question a lot about.

How we side.

The amount of capital that we look to recycle during the year.

And I would say.

A lot of it has to do with just the natural.

The maturity of our.

Investments.

We typically look to buy businesses.

Grow and.

And de risk them over a seven to seven to 10 year timeframe and then at that point in time.

To monetize them and start the process all over again.

We're at a stage in our evolution now that we have been.

Growing the business.

For 15 years, where we have a steady stream of business isn't.

On average we have.

Businesses that would generate every year for us probably forever now.

$2 billion to $3 billion annually.

<unk>.

Proceeds from from sale and.

So it's a rough guesstimate to billions probably at the bottom end of that number it could be higher.

And.

Yes.

And so we.

We just.

<unk> to market the ones, we think are.

The most de risked will generate the proper value in and obviously take into account whats.

But the market is looking for the most so we do.

Do a bit of.

The high grading for whatever we think is appropriate. So there is a lot of thought that goes into that.

But we feel really good about the assets, we bring that we'll get.

Good value.

As far as your your question about <unk>.

Other levers that we have available that that is something that.

Yes, we take a lot of pride in I think what makes US unique is the fact that.

We are able to invest alongside lots of institutional investors, which gives us a lot more firepower.

We do have the ability to use shares in transactions like we did with.

IPL and <unk>.

We've proven that those are.

Well received and people, particularly in the Canadian market, who know us well.

In fact seek them out.

And then we have other levers that we can pull on just being part of the Brookdale complex.

So.

Long story short.

Depending on the amount of transactions in front of us.

<unk>.

Depending on if there is a.

A really large transaction that we want to execute we will look at all of these different components and drawing them as needed to to get a transaction done so.

There is no there is no one right answer.

But we have the whole collection of alternatives in front of us and using shares definitely is something that.

And if we think the shareholders want to stay invested.

Have the currency to do that with them.

Got it. Thank you I appreciate that color if I can just finished just on.

Some color from you on the rationale for why you decided to increase the distribution at 6% there organic growth from 'twenty, two as United was 10% and that epic obviously, even higher and then you had the investor day with the forecast for 12% to 15% ethnic Coker unit growth into 2023.

So I guess.

What was some of that.

The reasons for selecting that 50% kind of below the growth rate it goes to other numbers.

Okay.

Obviously, we had a good discussion at the board.

And we're.

Blessed to be.

Dealing from a position of strength with less liquidity and.

Great outlook for four <unk> and a great year behind us.

Other factors, we take into account are the amount of capital that we're reinvesting back into the business to grow it and as.

As we looked at.

Our business in the amount of.

Capital backlog and the potential for tuck in acquisitions, we felt that it was better to retain some of our capital for that capital allocation purpose.

And maybe not go as high as we probably could have.

With the slightly higher distribution. So it was really just balancing a number of capital allocation decisions.

There is no right answer, but we felt that <unk> was still a very attractive.

Number four people in this market and would be well received.

Great I appreciate it thank you very much.

Thank you.

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

Okay.

Hi, Good morning, guys. Just wondering if you could expand on the recent agreement you secured Doug Bill electrical infrastructure in Austria.

It's quite interesting.

You mentioned, the Greenfield project will help support <unk>.

Scale client so could you provide a bit more color on that and maybe perhaps the location of those data centers.

Yes, I guess.

In terms of the contracted Australia I guess this is was a wind to.

To deploy smart meters in Australia and.

Yeah.

I think no I think you've got to that argument.

So the odds of AMETEK I'll, let my apologies, okay. So what we were talking about.

The rollout of smart meters.

Yes, so the off net contract.

One that we referenced in the materials. This quarter was basically one of the large hyper scaler wants to build a meaningful sized asset in our footprint and they came to us to build the transmission access for that and when we do that with these on a bilateral basis with these clients it's actually.

It's a really attractive structure, where it's very low risk on our part so we basically.

<unk>.

Dave is a counterparty basically assumes the cost risk on the project and we build it through our stage gate process and we're entitled through the contract bilaterally to a full return on and return of our capital. So it's sort of mimics the rate regulated rate base construct.

Even though it's a bilateral agreements so very attractive project.

And the counterparty was willing to engage with us on that basis because of the need to get this done in a timely fashion. So hopefully one of many projects in the future like this that will engage in not only to build out to support big load like like this hyperscale in the region, but also as we've discussed with the asset renewables in the region as well.

Similar.

Okay. That's useful thanks, and I apologize if I wasn't clear with my question, but.

Smoothing.

Yes.

To Europe .

Just wondering if youre seeing are contemplating opportunities to expand your tower portfolio to other European countries are.

Is your plate full right now with the transactions you just completed in Germany.

Smaller than you did in UK.

So maybe I'll tackle that one.

<unk>.

So there is.

Two ways.

Expanding our portfolio one has to go into new countries and the other is to.

Do tuck ins within an existing country.

Recently, we did an add on to our existing UK.

Tower business, which was almost double the size of it.

We have our business in France, which.

Given its scale probably.

We're limited to doing.

More organic growth and inorganic growth.

And in Germany, obviously.

We've got a large scale business and again probably limited to.

Organic growth inorganic growth there is.

We do have a business in our Super core fund, which is not in pit and the Scandinavian countries.

So we have a presence there.

And.

I'd say, we don't have too much white space left.

Because a lot of the other.

Countries.

There has been M&A activity and a lot of them are held in more consolidated businesses like vantage and <unk> and others and so it's unlikely they would sell so.

I think the opportunity to two.

To expand is limited it's not to say that's not possible at some point in the future, but I think.

Most of the growth going forward is likely.

Organic.

Okay, Great. That's super helpful. Thanks, all possible. Thank you.

Thank you.

Please.

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

Good morning, everyone.

Circle back on the asset divestitures can you, maybe just add a little bit of color of what the environment is right now where we are in these processes.

Are we in price discovery and have we seen any change in the expected valuations of these divestments.

Hi, Robert.

Sure.

Yes, I would say.

Well I'd make a couple of comments first we have transactions at all phases of the.

Of a.

Transaction.

So some that are more advanced in some of that early stage.

So.

We are active participants.

On both the buy side sell side, so I'd say our views on.

Valuation state of the market are probably pretty pretty good.

The.

I think the.

I think my comments generally would be on valuations for the most part.

<unk> bin.

Steady.

And Havent changed.

Meaningfully over the last year.

A year or so with even with rising rates or there are some businesses that too.

To extent that people use higher leverage to to buy them, they're probably the most impacted because obviously that the cost of debt has gone up.

But many of our infrastructure assets are not financed at high levels and so the impact of Leverages as more.

Just.

Yeah.

Probably.

The biggest thing that.

Changed in the market over the last year has just been.

The number of participants is probably a little less than what would have been and thats really not so much from.

A infrastructure manager or strategic perspective, because I think those groups have.

A lot of.

Dry powder and are still pretty active but we have seen some pension funds and sovereign wealth funds pulled back a bit with.

Some of the drop in equity prices.

And that impacting.

They're waiting in their portfolio so the.

Denominator effect that people referred to is probably was prevalent maybe in the latter half of last year now.

Having said all of that I think as the new year as startup we've definitely seen a change in tone.

So I think.

While maybe not to the levels seen at the beginning of last year, there's definitely.

More activity in the market.

And.

What is.

What is different I think.

With infrastructure than some of the other asset classes.

Is.

Yes.

Because the credit markets.

Are much more important for our private equity interest in <unk>.

And real estate Theres definitely was a decline in activities in those sectors, but we did not see that to the extent extent and infrastructure infrastructure is still highly sought after and particularly in periods of volatility. It's an area that people want to invest in so.

Long story short.

Valuations.

Are still good.

Everyone has different views of value. So I think our views of what we think assets are worth are very reasonable and so they have not changed much there might be other people had elevated views of value, but for us it hasn't changed much and the market is still very.

Very strong and supportive for infrastructure as a whole.

Great I appreciate that a fulsome answer.

Maybe going back to your 2022, Investor day, and the outlook for 12% to 15% of assets per unit growth just taking a look at the environment and taking a look at the headwinds and tailwind.

What are you seeing in terms of kind of pushing it one way or another and it does seem like the commodity exposed businesses, maybe a little bit.

Continue to be quite strong there.

Hey, Robert said, David here, I can I can start and feel free to jump in.

Look when we at our Investor Day, obviously, we we had similar insight where we are today in the market I would say the market Hasnt changed all that much to your point the commodity environment remains strong and that's that's a tailwind for not only our midstream businesses, but a lot of our transportation networks that halt or transport.

<unk> commodities, so I would say the transport and the midstream sectors continue to perform well to start the year and Thats that will fuel again part of that outlook. The other element is obviously, the fact that we committed to and have now already deployed the $2 billion.

New investments in Homeserve, and <unk> that will fully contribute.

Our results.

So those would be I'd say the prevailing tailwind.

We're certainly informed and informing us in giving that guidance and I would say.

We still feel the same outlook as appropriate.

Excellent. Thank you.

Thank you.

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

Hey, good morning, I'm wondering if you could give some indication of how the markets.

I received the <unk>.

Semiconductor joint venture and what other industries might.

Most suited to similar structure.

Yeah.

Hi, Rob it's Anthony here.

<unk>.

So.

Let me start just by the reaction I think.

In.

In mind.

I hate to say many years at Brookfield.

A long time.

We haven't seen.

As much interest in a single transaction as I've seen in that transaction.

Clearly it was.

Seen as innovative scale was large and.

And the fact that.

It was related to a very.

No.

Topical and critical industry.

Also provided lots of.

A lot of interest towards it.

So.

Whether it's government other sectors and obviously all of our competitors investment banks everyone's been studying to see how they can apply to other.

Semiconductor.

Facilities or companies or other sectors. So suffice to say, it's definitely being studied and I think.

I would be shocked if.

In some different way shape or form it wasn't replicated.

Again multiple times four for other sectors and then obviously, we would look to do that ourselves.

As far as I think.

Where it's most applicable.

It's applicable for.

You need to have a couple of ingredients you need to have large dollars.

You need to have.

A long life asset.

That you are supporting and you need a strong counterparty.

Or.

Some sort of.

The.

Strong commercial framework to support.

The low cost of capital that makes.

The transaction interesting for both ourselves and for.

For the use of the capital so.

That could be.

Battery manufacturers.

I think other semiconductor facilities.

And I think.

Already a lot of.

Energy.

Businesses.

Use the structure.

Yes.

We're referencing.

The middle East transactions, whether it's.

At knock or Saudi Aramco use similar type of arrangements.

To finance their businesses. So I think we will see a lot more of it.

And it's something obviously.

Given that we feel we are at the forefront.

<unk>.

Of a raging capital from alternative private sources.

And packaging it together for investors we think.

We should be hopefully doing a lot more.

Okay. That's very helpful. And then just one more here is sort of getting into the weeds on heartlands, but.

Maybe you can elaborate on the process the startup process, there, how it's tracking versus expectations.

There has been any need for major rework or component replacements.

Yes, Rob it's Ben here.

I'll take that one.

Yes, so maybe just to go back.

Through the commissioning goals, we've had for Heartland overtime. So the first phase was to commission the central utilities hub and that was done.

A while ago to make sure we had the power and steam to run the plant.

The second phase was to achieve full production of the polypropylene side of the plant so making the pp pellets.

And getting that up to full production and so that has happened and that's that's behind us.

The third phase was really.

Getting the front end of the plant running so the PGP ended the plant, where we convert the propane to PGP and that is now.

Up running and heading towards full production. So that's now largely behind us.

As we.

Went through phases, two and three of that startup. We also started up the full sales and marketing function. So we established relationship with customers.

And we got all of our products approved.

By them. So we now have over 100 customer relationships and we have inventory in the system to ensure that we can service those clients. So that's also behind us. So now we're in the final phase which is to just get the.

<unk> will ramp up of the full integrated facility up to full capacity and I think as Sam mentioned in his in his opening remarks, we expect that to happen in the coming quarters here. So and then in terms of I'll call. It surprises.

<unk> is a large complex.

And fourth size I would say there was nothing material no material surprise.

The normal course, I would describe it is optimizing and few odd minor teething pains as we started the plant up but nothing nothing major in the context of a startup with them.

Okay.

When I was looking for thank you.

Okay.

Thank you.

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

Thanks, Good morning.

Ah.

<unk> points over the last couple of years, you were highlighting opportunities with ocean carriers.

Either partnering or are carving out some assets are you still optimistic about opportunities in that sector. It just seems like there could be maybe a bit more and motivation from these companies just given the rapid pullback of freight rates.

Hi, Devin Thats interesting question.

<unk>.

The.

During COVID-19.

There was an unusual dynamic where.

Charter rates went to all time highs.

<unk>.

The shipping companies.

Good.

Okay.

The amount of capital that would have historically taken them 10, or 20 years to make so that they really.

Change the nature of their businesses.

And they were at grass aggressive buyers of assets and frankly, probably didnt need our help on two main things.

That dynamic has changed things have gone back to normal.

I still think that many of them are.

Well capitalized.

And so.

I can't say that the the level of activity that we have with them today is extremely robust it's probably.

Just a normal conversational level I think there's still things we can do with them.

But.

When we look at and I know I've said this many times in the past.

Our main.

Strategy is to follow capital flows in to go towards.

<unk> that need money.

And today, I wouldnt put them necessarily in that category.

There's other groups that have huge amounts of capital needs and and.

Indeed, our capital more than than they do but.

But that changes quickly.

We continued to nurture those relationships.

Okay. Thanks that makes sense.

And maybe just.

On a modeling question here for David but.

Hedged currency rates in 2023.

Is it much much different than what we saw in 2022.

Hey, Devin now looking into 2023 I think the guidance we gave at Investor Day was one 2% below current levels. So nothing significant.

That's primarily as you look at the currencies, we have exposure to on the on the GBP.

We don't see that as significant.

Okay. Thanks, I'll turn it over.

Thank you.

And our next question comes from the line of Nausea, <unk> with industrial Alliance.

Hi, Good morning, just wanted to start off on the <unk>.

<unk> for 2023, I think in the past you've talked about.

Log getting.

<unk> adjustments in your tariffs.

And then your existing business to flow through our results can you maybe give a bit more detail about.

What is built into the guidance for this year in terms of the <unk>.

<unk>.

Hey, Raj I can start with that one it's David look.

I think as we as we mentioned inflation still continues to run.

Above targeted levels and pretty much all of the regions, we operate so well.

We will still continue to be.

A tailwind for our business into 2023.

I think we're in a position to predict where that number will land for the year obviously.

But that being said I think to your point there are businesses, most notably our some of our UK and Australia and regulated utilities that do lag into the.

The local inflation level, so RPI would be the one in the UK and that's usually on a 12 month lag so we're getting inflation.

The 4% range in 2022 that it should continue to elevate as it as it looks back over the last the trailing 12 month period, because I think inflation in the region today is above 10%. So those will be some of the businesses, where you'll continue to see that tailwind, whereas others more predominantly in our transport and in our data businesses are usually add as at a point in <unk>.

Throughout the year and don't have much of a lag to them. So I'd say, that's pretty much the outlook for inflation that we have as of today.

Okay Thats helpful.

I wanted to maybe.

Give your thoughts on capital recycling I think in the past you've targeted.

2% to 4% in the investment spread.

From asset sales to new acquisitions.

There have also been periods, where you've been able to take advantage of market dislocations and beat.

That spread or realize a higher.

A higher spread do you see the potential to do that again today do you think we're in that market environment again today.

And obviously, it's Sam here.

That's a very difficult question to answer.

We.

Uh huh.

We're always strive to look we're always trying to.

<unk>.

Hunt out and focus on.

The highest.

Return opportunities that meet our risk.

Tolerance.

And.

It's hard to predict what might come along I would say that.

In today's environment.

We feel that yes.

Yes, we have a.

A good opportunity to invest.

Invest for better value than in other points in the cycle, just because there are fewer market participants and.

Particularly with some of the.

Institutional investors on the sidelines for the time being which may not last long, but for the short while it just means that.

People with large pools of capital like ourselves.

Our rare and there.

Theres a few transactions at that.

Higher level that we can may be.

And negotiate on a bilateral basis so.

So yes, we are trying.

Can't make any promises.

Okay.

No problem. Thanks, Thanks for that maybe just a quick final question for Ben.

<unk> been able to achieve.

A lot of positive things feel a lot of developments.

The residential construction business I'm, just wondering if you can give us.

But any color on some of the key initiatives and the integration plan for Homeserve for this year.

Okay.

Yes sure.

So on the demand side de carbonization businesses of the residential infrastructure businesses. We're now focusing them regionally. So we basically have a great platform in Europe , we have one focused in the United States and one now in Canada.

And we have established and focused management teams dedicated to each of those regions.

There are a number of businesses some that gather effectively leads and some of that service. Those leads so the key strategic priorities. When you really look through it is just to find the opportunities to make sure that.

All of the leads that were gathering to the greatest extent are being serviced by us.

And to the extent they are not making sure we have very effective dealer networks in place, where we can service our clients and the real goal over time is to build a rate base of attractive long term contracts. So we're trying to convert sales to long term rental and build a rate base.

So there.

Like I said there are several companies all of them that do different things and we're just going to sort of integrate that slow over the coming years to make sure. We're building our rate base over time.

So if thats helpful.

Yes, thank you very much.

Thank you.

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

Credit Suisse.

Thanks, Good morning, I guess, the first question is for David and you mentioned a little bit of.

What Brookfield has done from a debt market perspective.

Do you think about the upcoming maturities and just the functionality of the debt markets and I ask the question in part because when we look at the term structure and we've seen some higher quality credits.

Longer term debt at pretty attractive spreads in the market, but how do you think about the upcoming maturities and this year than next year.

Yes happy to.

Give you some color Andrew I think first and foremost I think we feel like we are in excellent position for the maturities that we have in the next 24 months I think the team here has been focused for the last probably 12 months on taking care of a lot of those and we've talked about some of those in our materials for the last year in terms of pushing out maturities to give us that financial flexibility well rates.

Elevated.

No I think.

The benefit of Sam alluded to for the infrastructure sectors that debt capital markets have remained open throughout the year and that is specifically related to investment grade markets, where we financed the vast majority of our businesses over 90% of them. So.

At the asset level, we've had robust access to capital at the corporate level, we've demonstrated that as well. So I think we feel very well positioned I think if you look at our maturity profile in the 2023, as we said less than 2% our actual maturities. The others are normal amortization that we all have covered with operating cash flow. So I think 2023 is large.

<unk> taken care of there's a few in 2024 that were progressing now and to your point spreads and activity in the capital markets.

It's pretty positive and we will look to take care of those in the first half of this year as we in due course, so I think we feel we feel good at these levels and they're still very accretive to our to our underwriting of these businesses in terms of the returns we target so.

I think we're well positioned.

I appreciate the color and then maybe the flipside of it theres, others that maybe got too far over their skis.

Are you seeing any kind of interesting dislocations that are either market specific or industry specific veteran thematic will be interesting to you.

Okay.

Hi, Andrew.

So.

<unk>.

So the short answer is obviously.

<unk> on our screens, where we we spent a lot of time focusing is.

The company's debt.

Either.

Have balance sheets that that.

With maybe not the right amount of liquidity or just a lot of near term maturities.

And even more so companies to have that as well big capital commitments.

So yes that is that's a big part of our screen as far as.

Yes.

The level of.

Distress.

Think we're seeing anything like what we would have seen back in the financial crisis.

Nowhere near that level of <unk>.

<unk> is the infrastructure sector is still pretty well.

To most people.

But for some public companies, it's created opportunities.

And I think for other companies, probably where it creates.

Situations for US is it's required some companies to either.

<unk> slowed down or shut off their growth initiatives in order to manage there.

Their financial position and obviously, they feel thats destructive to their business the value of their businesses until they want to find ways to.

To get those going again and that creates the ability for us to come up with.

Unique partnerships or are buying certain assets that help them.

Get their businesses running again, so so that's kind of the theme of how we approach it but but yes. We have our filter is open and looking for people, where we can help solve their financial situations.

Okay I appreciate the color. Thank you.

Thank you Alexander.

Thank you.

I'll now turn the call back over to CEO , Sam Pollock for any closing remarks.

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

Hope your new year is off to a great start ours has been and we appreciate your support and look forward to talk to you again next quarter.

Yes.

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

[music].

[music].

[music].

Good day, and thank you for standing by and welcome to the Brookfield Infrastructure Partners Q4 results Conference call 2022 results conference call and webcast at.

At this time all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session.

I ask a question. During this session you will need to press star one on your telephone you will then hear an automated message advising your hand has been raised to withdraw your question. Please press star one one again please.

Please be advised that today's conference is being recorded.

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

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

As introduced my name is David craft and I'm, the Chief Financial Officer of Brookfield infrastructure Partners. I'm also joined today by our Chief Executive Officer, Sam Pollock.

I'll begin with a discussion of our fourth quarter financial and operating results as well as touch on our balance sheet strength and robust liquidity position.

I'll, then turn the call over to Sam who will reiterate the merits of owning infrastructure investments throughout market cycles and provide the outlook for the year ahead.

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

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

For 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.

With that I'll now move on to a discussion of our record results.

22 was another successful year for Brookfield infrastructure.

Essential nature of our assets showcase their attractiveness by continuing to generate predictable and growing cash flows.

Funds from operations or <unk> for the year was $2 71 per unit, representing a 12% increase over the prior year.

We ended 2022 with our highest quarterly <unk> to date of <unk> 72 per unit, which exceeded the prior year by 11% and resulted in a payout ratio for the fourth quarter up 64%.

We're entering the new year in a solid position to expand the company organically and through acquisition driven by the significant momentum in a number of our operating businesses.

This momentum is further supported by our long term debt maturity profile and significant liquidity.

Taking into account the strong results for the year and a favorable outlook for the business. The board of directors have proposed a quarterly distribution increase of 6% to $1 53 per unit on an annualized basis.

This marks the 14th consecutive year of distribution increases.

I'll now go through the key drivers behind our strong financial and operating results for the year.

<unk> totaled $2 1 billion, reflecting a 20% increase compared to 2021.

Results benefited from organic growth for the year of 10% capturing elevated inflation in the countries, where we operate and volume growth across the majority of our critical infrastructure networks.

During the year, we commissioned over $1 billion of new capital projects that are now contributing to earnings as well as deployed a further $1 billion into new acquisitions that favorably impacted results.

Starting with the utility segment, we generated <unk> $739 million, an increase of 5% over the prior year.

This growth reflects an average inflation indexation of 8% that positively impacted almost our entire asset base and the contribution associated with $485 million of capital commissioned into our rate base.

Results also improved from the contribution of two Australian utility acquisitions completed in the first half of the year.

Partially offsetting these results were the impact of higher borrowing costs at our Brazilian utility as well as the sale of our North American District energy platform completed during 2021.

Our U K regulated distribution operation recorded another strong quarter of sales activity ending the year with a total of 339000 connection sales and a record order book of $1 5 million connections.

This was the company's best year of sales and was 5% higher than our record set last year.

<unk> was solid across all utility offerings with notable outperformance and the sale of water connections, which increased by over 40% relative to the prior year.

In Australia, our regulated utility business recently secured an agreement to build greenfield electrical infrastructure to support to support our blue chip customers construction of three new Hyperscale data center.

This will help connect new utility scale renewable power generation and highlights the attractiveness of building Greenfield utility infrastructure to support Australia transition to net zero.

We're continuing to grow our global residential infrastructure platform.

It has a presence in five countries and offers a range of heating cooling and energy storage solutions most.

Most notably in Australia are smart metering business signed a contract with one of the largest energy retailers to deploy up to 1 million smart meters over the next 10 years.

This opportunity will require total capital expenditures of over $600 million Australian and is additive to the contracted growth profile, we acquired with the business.

Across the residential platform, we continue to see exciting opportunities to launch new product offerings and help provide homeowners with decarbonization solutions a trend that will be further accelerated with the integration of the recently completed acquisition of Homeserve.

Moving to our transport segment, <unk> was $794 million, an increase of 13% compared to the prior year.

Results, primarily benefited from inflationary tariff increases across all our businesses.

Higher volumes supported by strong economic activity surrounding our networks and the commissioning of approximately $400 million in capital expansion projects during the year.

Our rail networks realized an average annual rate increase of 6% and benefited from strong demand for bulk goods and commodities that underpin the global economy our.

Our global toll road portfolio annual traffic levels, and tariffs increased 4% and 10% respectively compared to the prior year.

And finally at our diversified terminals operations rates have been strong in volumes for the year were up 8% compared to the prior year. This was driven primarily by robust demand for U S. LNG export through our terminal as well as the commissioning of the fixed liquefaction train earlier in the year.

Within our midstream segment <unk> for the year was $743 million compared to $492 million in the prior year.

The step change is primarily a result of the acquisition of inter pipeline that we completed in the second half of last year.

For further aided by elevated commodity prices, which led to increased utilization and higher market sensitive revenues across our base businesses.

Our North American gas storage business had its best fourth quarter on record as we captured the benefit of higher natural gas prices, along the U S West coast stemming from curtailed gas supply and volatile winter weather conditions.

The reliable energy supply provided by our gas storage infrastructure is playing a critical role in the shift toward intermittent energy sources that need to be matched to elevated demand usage during periods of extreme temperatures.

Okay.

And in our pipeline the conventional system saw a 6% increase in volumes compared to the fourth quarter of last year and reached record levels. Since 2018, we continue to progress the ramp up of the Heartland petrochemical complex as the PD H unit achieved initial production of polymer grade propylene.

Leveraging our experience with large startup activities production of propylene will increase in a staged manner over the coming months, we expect to reliably achieve high levels of integrated polypropylene production by mid 2023 with full run rate contribution to financial results by the second half of this year.

Finally, our data segment generated <unk> of $239 million, which was consistent with the prior year.

Underlying our underlying data businesses performed well as they continue to benefit from increasing customer utilization and network densification requirements.

This year's growth was driven by additional points of presence and the inflationary tariff escalators across our portfolio.

These positive effects were partially offset by the impact of foreign exchange on our euro and Indian rupee denominated cash flows.

In November our UK wireless infrastructure, operator completed the purchase of a portfolio of approximately 1100 towers from a strategic investor who sold as part of competition approval requirements. The transaction required approximately $770 million of equity of which get funded $20 million the acquisition.

It is expected to increase EBITDA by over 30% and will double the existing tower portfolio in the UK to solidify our position as the largest pure play tower company in the region.

This excellent operational finish to the year combined with the strength of our financial position.

Gives us optimism as we enter 2023, our corporate balance sheet remains well capitalized as reflected in our investment grade credit profile.

During the quarter, we further de risked our maturity profile by raising $700 million in the Canadian debt capital markets.

<unk> had an average term of seven years and proceeds were used to refinance existing debt.

With respect to our asset level nonrecourse borrowings, we proactively refinanced several near term debt maturities. This includes refinancing to enter our pipeline and our U K port operation.

We also completed the initial debt funding associated with the U S semiconductor joint venture.

As a result of less than 2% of our borrowing base is maturing over the next 12 months.

This combined with a largely fixed rate balance sheet that has an average term to maturity of seven years provides us with tremendous financial flexibility.

Finally, we ended the year with corporate liquidity of $3 4 billion.

During the fourth quarter, we completed the sale of two previously announced transactions as part of our capital recycling program with the closing of the Telecom tower portfolio in New Zealand and the first tranche of our recently constructed electricity transmission lines in Brazil, we raised nearly $400 million net Tibet.

Our liquidity position will be further enhanced by the proceeds from the sale of our Indian toll road portfolio and our 50% owned freehold landlord for in Victoria, Australia.

After the previous Hell did not receive regulatory approval, we signed a binding agreement to sell the part to a reconstituted consortium of for $1 2 billion Australian.

Which was a 30 times EBITDA multiple.

Closing of these transactions are anticipated to occur in the first half of 2023 with net proceeds to <unk> of approximately $260 million.

Finally, we are progressing several advanced stage sale processes, which and we recently launched the next round of asset sales that we.

We expect will garner significant interest considering the current economic environment together these processes should generate over $2 billion of net proceeds for the partnership this year.

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

Thank you.

Thank you David and good morning, everyone.

I'm going to begin my comments today with a few words on why infrastructure assets are an attractive choice for investors during this economic environment and.

And then I will follow that with a summary of our strategic initiatives and conclude with an outlook for our business.

This past year, the global macroeconomic environment was characterized by elevated levels of inflation and corresponding interest rate increases that created market uncertainty and volatility.

Although inflation appears to be cresting in most countries it.

It is possible that certain structural dynamics group hard to abate such as the effect of the globalization energy security in a tight skilled labor supply.

This may result in continued near term market volatility and downward pressure on corporate earnings with cyclical exposure exposure.

Investments in infrastructure assets, such as utilities pipelines ports in telecom towers are essential for the function of the economy and society.

While not agna agnostic to the macro environment, they typically perform well through all parts of the market cycle, and notably outperformed during economic trough.

<unk> ability to generate steady long term returns is driven by several key characteristics.

First they are highly contracted or regulated revenues.

Generally long duration, and therefore provide sustainable cash flow predictability.

Second is there embedded inflation, indexation, which expands or at least maintain margins during periods of elevated inflation at.

And third is our ability to grow during all economic cycles do their essential nature and role in promoting economic growth.

Combined these attributes make the asset class an appealing investment choice in all market conditions.

Now there are many views on what lies ahead for the economy.

The optimist or glass half full market participant could argue that inflation has peaked it will come back within the targeted range by the end of the year, implying a fiscal policy today has been effective.

Or you could be in the skeptic or glass half empty investor cap, which might be of the view that tight labor market and continued wage pressures will make inflation tougher to abate in 2023 and that central banks will continue to raise interest rates higher than currently projected.

Now, we lean towards a more optimistic view of the year ahead.

But we expect market volatility to persist until the direction of interest rates is more settled.

More poorly Brookfield infrastructure is a highly contracted inflation protected and well finance infrastructure company <unk>.

<unk> performed well in either scenario.

In terms of our strategic initiatives, we had a successful year for capital deployment that build upon 2020 one's record.

Climate.

Over this two year period, we invested over $5 billion in new assets during.

During 2022, we secured $2 9 billion of investments that are now closed and will begin contributing to results right.

Right away.

We also entered into a partnership to construct the state of the art semiconductor foundry in the U S.

This innovative transaction has added approximately $4 billion to our capital backlog and pioneered a new investment structure to deploy our large scale and flexible capital.

With the recent closings of Homeserve in DSG, which which are part of that $2 9 billion.

And the ramp up of the Heartland facility over the next several quarters and elevated displacement levels.

Visibility into our cash flow growth has rarely been stronger.

This growth should be sustainable over the longer term given our large capital backlog of organic projects and our proven ability to grow the business through accretive new investments.

Favorable sector trends, which had been the catalyst for our recent acquisition activity.

To support our investment pipeline.

In addition to evaluating several corporate carve outs, a large component of our deal pipeline is comprised of public to private opportunities.

As we stayed in the past infrastructure Super cycle is creating long term investment opportunities that will require trillions of dollars.

This is generating large scale opportunities for well capitalized players that can invest in growing operating platforms.

Or be a partner of choice for governments are corporate entities that have less access to the capital markets.

That concludes my remarks for today.

And I'll now pass it back to the operator to open the line. Thank.

As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one one again please.

Please standby, while we compile the Q&A roster.

And our first question comes from the line of Sharon Radburn with TD Securities.

Thanks, very much and good morning.

To start with a question on the M&A pipeline in terms of the corporate carve out and take private opportunities currently in that pipeline, maybe you could give us a bit of color on both by sector and by geography and comment on whether it be year to date market rally has made any of the take private lessons.

Yes.

If you were able to establish toehold positions at lower prices.

Hi, Sharon I'll take that question.

So as you can appreciate our I'll probably be somewhat vague in my answer to that to those questions.

But.

What I can say is that.

Yes. There are there are situations, where we have taken modest totaled so I can confirm that that is part of our strategy to.

To mitigate costs and to give ourselves a competitive advantage.

But.

Yes.

Far as.

The balance between the two I would say.

It's equally balanced.

There are.

A number of.

Company's strategics, who who don't have the same access to the capital markets have seen their share prices drop and as a result in order to raise capital to continue to grow their businesses.

Looking to private investors.

Either.

By a whole businesses or two.

Invest.

And our partnership basis on.

Certain elements of their business so that is definitely.

A source of opportunities for us.

And similarly.

Despite the market rally, which you mentioned that took place in January .

The market rally wasn't even across all companies or sectors, and so theres still remains a number of situations, which we think remain.

Priced at an interesting level and and there is still a discrepancy between.

Where those valuations lie and where we think they.

Would sit from a private market perspective.

So we continue to progress those situations as far as sectors and geographies.

Yes.

They're fairly well balanced between North America and in Europe , I'd say.

Thats, where the largest percentage lie.

Sector wise.

I think we have opportunities across all the sectors that we pursue so it isn't really concentrated per se in one sector.

Okay.

Very helpful. Thank you.

And then David this one probably for you.

On a record Capex backlog, which is always nice to see maybe you could help us better understand the duration of the backlog and how much of it relates to the Intel partnership where it appears that you've already deployed about one third of the expected outlay.

Sure happy to.

To answer that for you. So in terms of our backlog you highlighted obviously Intel was the big contribution. Our addition to it in the fourth quarter and that's a $14 billion capital project, So our share of that.

Capex will be about three 7% 363 7 billion that we've added to our backlog in Q4, our Charlotte So that's on a net basis.

The spend to date figure that we referenced in our materials of $1 1 billion that's at 100%.

Our share of that roughly 250, so we're not we're not near the same completion percentage that you may have inferred, we're probably closer to somewhere in the 5% to 10% completion on construction. So it's still pretty early days on that.

Instruction project is likely to span several years, so our backlog.

Still remains over that next three year period that we plan on completing and commissioning I'd say, that's the biggest large scale project. We have in the backlog the rest are smaller type.

Rollout.

<unk> like we have it be U K and then our cash some of the installations. So much smaller shorter duration projects that we've replenished quarterly with new sales as well so.

That's kind of at a bit of color on the composition as well.

I see okay for you you have invested $250 million to date.

And over the next three years, it's 500 million, which is where I was getting clearer figure, but that's kind of the near to medium term outlook for it.

Yes, and just for everyone to go to $500 million of the equity component.

This $3 5 billion, so there'll be additional capital obviously.

Okay.

That's all for me.

Thank you.

Please.

Yes.

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

Hey, good morning.

Yes, I'm just wondering as you think about funding.

<unk> got the self funded.

Strategy around the organic plan, but.

In terms of highlighting the $2 billion potential asset sales for this year, how does that size that.

What youre seeing on the acquisition front and I guess, the other avenue of financing when you look at the deals in front of you.

Is there a reasonable opportunity to use a share exchange.

LIBOR financing.

Sure.

Our operator Sandra.

I'll take that one.

Okay.

So.

We get this question a lot about.

Yes, how we side.

The amount of capital that we look to recycle during the year.

And I would say.

A lot of it has to do with just the natural.

The maturity of our.

Investments we.

Typically look to buy businesses.

Grow and.

And derisk them over a seven to seven to 10 year timeframe and then at that point in time.

Look to monetize them and start the process all over again.

We're at a stage in our evolution now that we've been.

Growing the business.

For 15 years, where we have a steady stream of businesses and.

On average we have.

<unk> that would generate every year for us probably forever now.

$2 billion to $3 billion annually.

<unk>.

Proceeds from from sale.

And so.

It's a rough guesstimate 2 billion is probably at the bottom end of that number it could be higher.

And.

Yes.

And so we.

We just.

<unk> to market the ones, we think are the.

Most derisk will generate the proper value in and obviously take into account what.

But the market is looking for the most so we do.

Do a bit of.

Yeah, Hi, grading for whatever we think is appropriate.

There's a lot of thought that goes into that.

But we feel really good about the assets, we're bringing that we'll get.

Good value.

As far as your your question about <unk>.

Other levers that we have available that is something that.

Yes, we take a lot of pride in I think what makes US unique is the fact that.

We are able to invest alongside lots of institutional investors, which gives us a lot more firepower.

Yes, we do have the ability to use shares in transactions like we did with.

IPL and.

We've proven that those are.

Well received and people, particularly in the Canadian market, who know us well.

In fact seek them out.

And then we have other levers that we can pull on just being part of the Brookdale complex.

So.

Long story short.

Yes, depending on the amount of transactions in front of us.

<unk>.

Depending on if there's a.

A really large transaction that we want to execute we will look at all these different components and draw them as needed to to get a transaction done so.

No there is no one right answer.

But we have the whole collection of alternatives in front of us and using shares definitely is something that.

We think the shareholders want to stay invested.

Had the the currency to do that with them.

Got it. Thanks, Thanks, Larry I appreciate that color if I can just finish just on.

Some color from you on the rationale for why you decided to increase the distribution at 6% organic growth in 'twenty, two as United was 10% and that Africa was even higher and then you had the investor day with a forecast for 12% to 15% asking coker unit growth into 2023.

Okay.

What was some of that.

The reasons for selecting a 6% kind of below the growth rate it goes to other numbers.

Okay.

Obviously, we had a good discussion at the board.

And.

We're.

Blessed to be.

Dealing from a position of strength with less liquidity.

<unk>.

Great outlook for four <unk> and a great year behind us.

Other factors, we take into account are the amount of capital that we're reinvesting back into the business to grow it and as.

As we looked at.

Our business in the amount of.

Capital backlog and the potential for tuck in acquisitions, we felt that it was better to retain some of our capital for that capital allocation purpose.

And maybe not go as high as we probably could have.

With the slightly higher distributions, so theres really just balancing a number of capital allocation decisions.

There is no right answer, but we felt that <unk> was still a very attractive.

Number for people in this market and would be well received.

Great I appreciate it thank you very much.

Thank you.

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

Hi, Good morning, guys. I was just wondering if you could expand on the recent agreement you secured Doug Bill electrical infrastructure in Austria.

It's quite interesting.

You mentioned, the Greenfield project will help support <unk>.

Scale client so could you provide a bit more color on that and maybe perhaps the location of those data centers.

Yes, I guess.

In terms of the contracted Australia I guess this is was a wind to deploy smart meters in Australia and.

Alright, Thank you back into the <unk>.

Oh my apologies, okay, so youre talking about the.

The rollout of smart meters.

Yes, so the off net contract.

One that we referenced in the materials. This quarter was basically one of the large hyperscale or what.

Wants to build a meaningful sized asset in our footprint and they came to us to build the transmission access for that and when we do that with these on a bilateral basis with these clients it's actually.

It's a really attractive structure, where it's very low risk on our part so we basically.

Dave is a counterparty basically assumes the cost risk on the project and we build it through our stage gate process and were entitled through the contract bilaterally to a full return on and return of our capital. So it's sort of mimics the rate regulated rate base construct.

Even though I'd say its a bilateral agreements so very attractive project.

And the counterparty was willing to engage with us on that basis because of the need to get this done in a timely fashion. So hopefully one of many projects in the future like this that will engage in not only to build out to support big load like like this hyperscale in the region, but also as we've discussed with the asset renewables in the region as well.

Be similar.

Okay. That's useful thanks, and I apologize if I wasn't clear with my question.

Moving.

Yes.

To Europe .

Just wondering if youre seeing are contemplating opportunities to expand your tower portfolio to other European countries are.

Is is your plate full right now with the transactions you just completed in Germany, and the smaller one you did in the UK.

So let me I'll tackle that one.

<unk>.

So there is.

Two ways.

Expanding our portfolio one has to go into new countries and the other is too.

Do tuck ins within an existing country.

Recently, we did an add on to our existing UK.

Tower business.

Which was almost double the size of it.

We have our business in France, which.

Given its scale probably.

We're limited to doing.

More organic growth than inorganic growth.

And then Germany, obviously.

We've got a large scale business and again probably limited to.

Organic growth versus inorganic growth there is.

We do have a business in our Super core fund, which is not in pit and the Scandinavian countries.

So we have a presence there.

And.

Yes, I'd say, we don't have too much white space.

Left.

Because a lot of the other.

Countries.

There has been M&A activity and a lot of them are held in more consolidated businesses like vantage and <unk> and others and so it's unlikely they would sell so.

I think the opportunity too.

To expand is limited it's not to say that's not possible at some point in the future, but I think.

Most of the growth going forward is likely.

Organic.

Okay, Great that's super.

Very helpful. Thanks, all possible. Thank you.

Thank you.

Please.

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

Good morning, everyone.

Want to circle back on the asset divestitures.

Maybe just add a little bit of color of what the environment is right now where we are in these processes are we in price discovery and have we seen kind of any change in the expected valuations of these divestments.

Hi, Robert.

<unk>.

Yes, I would say.

Well I'd make a couple of comments first we have transactions at all phases of the.

<unk>.

Of a transaction.

So some that are more advanced in some of that early stage.

So yes.

Where we are active participants.

On both the buy side sell side, so I'd say our views on.

Valuation state of the market are probably pretty pretty good.

The.

I think the.

I think my comments generally would be on valuations for the most part.

David.

<unk>.

And Havent changed.

Meaningfully over the last.

Year, or so with even with rising rates or there are some businesses that to extent that people use higher leverage to to buy them, they're probably the most impacted because obviously that cost of debt has gone up.

But many of our infrastructure assets are not finance at high levels and so the impact of Leverages is more modest.

Probably.

The biggest thing that.

Changed in the market over the last year has just been.

The number of participants is probably a little less than what would have been and thats really not so much from.

A infrastructure manager or strategic perspective, because I think those groups have.

A lot of <unk>.

Dry powder and are still pretty active but we have seen some pension funds and sovereign wealth funds pulled back a bit with.

Some of the drop in equity prices.

And that impacting.

They're waiting in their portfolio so the.

Denominator effect that people referred to is probably was prevalent maybe in the latter half of last year now.

Having said all of that I think as the new year as startup we've definitely seen a change in tone.

So I think.

While maybe not to the levels, we would've seen at the beginning of last year. This definitely.

More activity in the market.

And.

What is.

What's different I think.

With infrastructure than some of the other asset classes.

Is.

Yes.

Because the credit markets.

Are much more important for our private equity interest in <unk>.

In real estate, just definitely was a decline in activities in those sectors, but we did not see that to the extent extent and infrastructure infrastructure is still highly sought after and particularly in periods of volatility. It's an area that people want to invest in so.

Long story short.

Valuations.

Are still good.

Everyone has different views of value so I think our views.

But we think assets are worth are very reasonable and so they have not changed much there may be other people had.

<unk> views of value, but for us it hasnt changed much and the market is still very <unk>.

Very strong and supportive for infrastructure as a whole.

Great I appreciate that a fulsome answer.

Maybe going back to your 2022 Investor day, and the outlook for 12 months to 15% in assets per unit growth just taking a look at the environment in <unk>.

Taking a look at the headwinds and tailwind what are you seeing in terms of kind of pushing it one way or another and it does seem like the commodity exposed businesses.

A little bit.

To be quite strong there.

Hey, Rob it's David here I can I can start and feel free to jump in.

Look when we at our Investor Day, obviously, we we had similar insight where we are today in the market I would say the market Hasnt changed all that much to your point the commodity environment remains strong and Thats a tailwind for not only our midstream businesses, but a lot of our transportation networks that hall.

Transport bulk commodities, so I would say the transport and the midstream sectors continue to perform well to start the year and Thats that will fuel again part of that outlook. The other element is obviously, the fact that we committed to and have now already deployed the $2 billion.

New investments in Homeserve, and <unk> that will fully contribute to.

To our results.

So those would be I'd say the prevailing tailwind that we're that we're certainly informed informing us in giving that guidance and I would say.

<unk>.

We still feel the same outlook as appropriate.

Excellent. Thank you.

Okay.

Thank you.

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

Hey, good morning, I'm wondering if you could give some indication of how the markets are.

We received the.

Semiconductor joint venture and what other industries Mike.

See most suited to similar structure.

Hi, Rob.

<unk>.

So.

Let me start just by the reaction I think.

In.

In mind.

I hate to say many years at Brookfield.

A long time.

We haven't seen.

As much interest in a single transaction as I've seen in that transaction.

Clearly it was.

Seen as innovative the scale was large and.

And the fact that.

It was related to a very.

Ill.

Topical and critical industry.

Also provided lots of.

A lot of interest towards it.

So.

Whether it's government other sectors and obviously all of our competitors investment banks everyone's been studying to see how they can apply to other.

Semiconductor.

Facilities or companies or other sectors. So suffice to say, it's definitely being studied and I think.

I would be shocked if.

In some different way shape or form it wasn't replicated.

Again multiple times four for other sectors, and obviously, we would look to do that ourselves.

As far as I think.

Where it's most applicable.

It's applicable for.

Do you need to have a couple of ingredients you need to have large dollars.

You need to have.

A long life asset.

That you are supporting and you need a strong counterparty.

Or.

Some sort of.

The strong.

Strong commercial framework to support.

The low cost of capital that makes.

The transaction intra.

Interesting for both ourselves and for.

For the use of the capital so that could be yes.

Battery manufacturers.

I think other semiconductor facilities.

And I think.

Already a lot of.

Energy.

Businesses.

If you use the structure.

Yes.

We're referencing a lot of the middle east transactions, whether it's.

At knock or Saudi Aramco use similar type of arrangements.

To finance their businesses. So I think we will see a lot more of it.

And it's something obviously.

Given that we feel we are at the forefront.

Of.

Of a raging capital from alternative private sources.

And packaging it together for investors we think.

We should be hopefully doing a lot more.

Okay, that's fair.

Helpful. And then just one more here is sort of getting into the weeds on.

But.

Maybe you can elaborate on the process the startup process, there, how it's tracking versus expectations.

If theres been any need for major rework or component replacements.

Yes, Rob it's Ben here I'll take that one.

Yes, so maybe just to go back.

Through the commissioning goals, we've had for Heartland overtime. So the first phase was to commission the central utilities hub and that was done.

Quite a while ago to make sure we had the power and steam to run the plant.

The second phase was to achieve full production of the polypropylene side of the plant so making the pp pellets.

And getting that up to full production and so that has happened and that's that's behind us.

Third phase was really.

Getting the front end of the plant running so the PGP ended the plant, where we convert the propane to PGP and that is now up running and heading towards full production.

That's now largely behind us.

As we.

Went through phases, two and three of that startup. We also started up the full sales and marketing function. So we established relationship with customers and we got all of our products approved.

By them. So we now have over 100 customer relationships and we have.

Inventory in the system to ensure that we can service those clients. So that's also behind us. So now we're in the final phase which is to just get the.

Methodical ramp up of the full integrated facility up to full capacity and I think as Sam mentioned in his opening remarks, we expect that to happen in the coming quarters here. So and then in terms of I'll call. It surprises.

Heartland is a large complex and fourth size I would say there was nothing material no material surprise.

The normal course, I would describe it is optimizing and few odd minor teething pains as we started the plant up but nothing nothing major in the context of a start up like this.

Okay.

Hi, everyone I was looking for thank you.

Okay.

Thank you.

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

Thanks, Good morning.

No.

<unk> points over the last couple of years, you were highlighting opportunities with ocean carriers.

Either partnering or are carving out some assets are you still optimistic about opportunities in that sector. It just seems like there could be maybe a bit more and motivation from these companies just given the rapid pullback of freight rates.

Hi, Devin that's interesting question.

Yes.

The.

During COVID-19.

There was an unusual dynamic where.

Charter rates went to all time highs and.

The shipping companies.

Aid.

Okay.

The amount of capital that would have historically taken them 10, or 20 years to make so that they really.

Change the nature of their businesses.

And they were at grass aggressive buyers of assets and frankly, probably didnt need our help on two main things.

That dynamic has changed things have gone back to normal.

I still think that many of them are.

Well capitalized.

And so.

I can't say that the the level of activity that we have with them today is extremely robust it's probably.

Just a normal conversational level I think there's still things we can do with them.

But.

When we look at and I know I've said this many times in the past.

Our main.

Strategy is to follow the capital flows in to go towards.

<unk> that need money.

And today, I wouldnt put them necessarily in that category.

There's other groups that have huge amounts of capital needs and indeed.

Indeed, our capital more than than they do but.

But that changes quickly and.

We continued to nurture those relationships.

Okay. Thanks.

Yes.

And maybe just.

On a modeling question here for David but.

Hedged currency rates in 2023.

Is it much much different than what we saw in 2022.

Hey, Devin now looking into 2023 I think the guidance we gave at Investor Day was one 2% below current levels. So nothing significant.

Primarily as you look at the currencies, we have exposure to on the on the GBP. So no we do.

Don't see that as significant.

Okay. Thanks, I'll turn it over.

Thank you.

And our next question comes from the line of Nausea, <unk> with industrial Alliance.

Hi, Good morning, just wanted to start off on the <unk>.

Guidance for 2023, I think in the past you've talked about.

Log getting inflation adjustments in your tariffs.

Existing business.

<unk> results can you maybe give a bit more detail about.

What is built into the guidance for this year in terms of the <unk>.

<unk>.

Hey, Jack can start with that one it's David look.

I think as we as we mentioned inflation still continues to run.

Above targeted levels and pretty much all of the regions, we operate so well.

We will still continue to be.

Tailwind for our business into 2023.

I think we're in a position to predict where that number will land for the year obviously.

But that being said I think to your point there are businesses, most notably our some of our UK and Australia and regulated utilities that do lag into the.

The local inflation level, so RPI would be the one in the UK and that's usually on a 12 month lag so we're getting inflation.

The 4% range in 2022 that it should continue to elevate as it as it looks back over the last the trailing 12 month period, because I think inflation in the region today is above 10%. So those will be some of the businesses, where you'll continue to see that tailwind, whereas others more predominantly in our transport and in our data businesses are usually add as at a point in <unk>.

Throughout the year and don't have much of a lag to them. So I'd say, that's pretty much the outlook for inflation that we have as of today.

Okay Thats helpful.

I wanted to maybe.

Okay. So your thoughts on capital recycling I think in the past you've targeted.

Total, 4% reinvestment spread.

From asset sales to new acquisitions.

There have also been periods, where you have been able to take advantage of market dislocation and that spread that will realize a higher.

A higher spread do you see the potential to do that again today and do you think we're in that market environment again today.

And as you Sam here.

Okay.

Yes, I think thats, a very difficult question to answer.

We.

We're always strive to look were always trying to.

<unk>.

Hunt out and focus on.

The highest.

Return opportunities that meet our risk.

Tolerance.

And.

It's hard to predict what might come along I would say that.

In today's environment.

We feel that yes.

Yes, we have a.

A good opportunity to.

<unk> for better value than other points in the cycle, just because there are fewer market participants and.

Particularly with some of the institutional.

Investors on the sidelines for the time being which may not last long, but for the short while it just means that.

People with large pools of capital like ourselves.

Our rare and we there's a few transactions at that higher level that we can maybe.

And negotiate on a bilateral basis so.

So yes, we are trying.

Can't make any promises.

Okay.

No problem. Thanks, Thanks for that maybe just a quick final question for Ben.

Yes.

<unk> been able to achieve.

A lot of positive things you can see a lot of development.

Residential construction business I'm, just wondering if you can give us.

But any color on some of the key initiatives the integration plan for Homeserve for this year.

Okay.

Yes sure.

On the demand side de carbonization businesses of the residential infrastructure businesses. We're now focusing them regionally. So we basically have a great platform in Europe , we have one focused in the United States and one now in Canada and.

And we have established and focused management teams dedicated to each of those regions.

There are a number of businesses some that gather effectively leads and some of that service. Those leads so the key strategic priorities. When you really look through it is just to find the opportunities to make sure that.

All of the leads that were gathering to the greatest extent are being serviced by us.

And to the extent they are not making sure we have very effective dealer networks in place, where we can service our clients and the real goal over time is to build a rate base of attractive long term contracts. So we're trying to convert sales to long term rental and build our rate base.

So there.

Like I said there are several.

Companies all of them that do different things and we're just going to sort of integrate that slow over the coming years to make sure. We're building our rate base over time.

So hope that's helpful.

Yes, 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 first question is for David.

You mentioned a little bit of.

What Brookfield has done from a debt market perspective.

How do you think about the upcoming maturities and just the functionality of the debt markets and I ask the question in part because when we look at the term structure and we've seen some higher quality credits place.

Place longer term debt at pretty attractive spreads in the market, but how do you think about the upcoming maturities. This year and then next year.

Yeah happy to give you some color Andrew I think first and foremost I think we feel like we are in excellent position for the maturities that we have in the next 24 months I think the team has been focused for the last probably 12 months on taking care of a lot of those and we've talked about some of those in our materials for the last year in terms of pushing out maturities to.

Give us that financial flexibility well rates remain elevated.

I think.

The benefit of Sam alluded to for the infrastructure sectors that debt capital markets have remained open throughout the year and that is specifically related to investment grade markets, where we financed the vast majority of our business is over 90% of them. So at the asset level, we've had robust access to capital at the corporate level, we've demonstrated that as well.

So I think we feel very well positioned I think if you look at our maturity profile in the 2023, as we said less than 2% our actual maturities. The others are normal amortization that we all have covered with operating cash flow. So I think 2023 is largely taken care of there's a few in 2024 that were progressing now and to your point spreads.

And activity in the capital markets.

It's pretty positive and we will look to take care of those in the first half of this year as we in due course, so I think we feel we feel good at these levels.

Still very accretive to our to our underwriting of these businesses in terms of the returns we target so.

I think we're well positioned.

I appreciate the color and then maybe the flip side of it.

There's others that maybe got too far over their skis.

Are you seeing any kind of interesting dislocations that are either market specific or industry specific better thematic really interesting to you.

Yeah.

Hi, Andrew.

So.

<unk>.

So short answer is yes, obviously.

That's on our screens, where we we spent a lot of time focusing is.

Company's debt.

Either.

Have balance sheets that that.

With maybe not the right amount of liquidity or just a lot of near term maturities.

And even more so companies to have that as well big capital commitments.

So yes that is that's a big part of our screen as far as.

Yes.

At that.

The level of.

Distress I don't think were seeing anything like what we would've seen back in the financial crisis, there is nowhere near that level of angst.

Anxiety as the infrastructure sector is still pretty well.

Open to most people.

But for some public companies, it's created opportunities.

And I think for other companies, probably where it creates.

Situations for us as it's required some companies to either.

<unk> slowed down or shut off their growth initiatives in order to manage there.

Their financial position and obviously, they feel that's destructive to their business the value of their businesses and so they want to find ways to.

To get those going again and that creates the ability for us to come up with.

Unique partnerships or are buying certain assets that help them.

Get their businesses running again, so so thats kind of the theme of how we approach it but but yes. We have our filter is open and looking for people, where we can help solve their financial situations.

Okay I appreciate the color. Thank you.

Thank you very much Andrew.

Thank you.

Now I'll turn the call back over to CEO , Sam Pollock for any closing remarks.

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

I hope your new year is off to a great start ours has been and.

We appreciate your support and look forward to talk to you again next quarter. Thank you.

Yes.

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