Q3 2024 Brookfield Infrastructure Corp Earnings Call

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Operator: Good day, and welcome to the Brookfield Infrastructure Partners Q3 2024 Results Conference Call and Webcast. I would now like to hand the conference over to your speaker, Mr. David Krant, Chief Financial Officer. Please go ahead, sir.

Speaker Change: Good day and welcome to the Brookfield Infrastructure Partners Q3 2020 4 results conference call on webcast.

At this time, all participants are an illicit only move.

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

To ask a question during the session, you will meet the press star 1-1 on your telephone.

You will then hear an automated message advising your hand is raised. So withdraw your question, press star one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. David Crant, chief financial officer. Please go ahead, sir.

David Krant: Thank you, Cherie, good morning, everyone. Welcome to Brookfield Infrastructure Partners' Q3 2024 Earnings Conference Call. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure. I'm joined today by our Chief Executive Officer, Sam Pollock, and also with us today is Dave Joynt, a Managing Partner and Head of Transport Investing across our business for the Q&A portion of the call. I'll begin the call today with a summary of our Q3 2024 results, followed by a discussion of our capital markets activity and strong financial position. I'll turn the call over to Sam, who will provide an update on our strategic initiatives before concluding with an outlook for the business. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements.

David Crant: Thank you, Sherry and good morning everyone. Welcome to Brookfield Infrastructure Partners 3rd quarter, 2024, earnings conference call. As introduced, my name is David Cranson, and the Chief Financial Officer of Brookfield Infrastructure.

I'm joined today by our Chief Executive Officer, Sam Pollock, and also with us today's Dave Joint, a managing partner and head of transport investing across our business for the Q&A portion of the call.

I'll begin the call today with a summary of our third quarter 2024 results, followed by a discussion of our capital markets activity and strong financial position.

Speaker Change: I'll then turn the call over to Sam, who will provide an update on our strategic initiatives before concluding with an outlook for the business.

Speaker Change: At 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 latest annual report on Form 20-S, which is available on our website.

David Krant: 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 latest annual report on Form 20-F, which is available on our website. Brookfield Infrastructure is pleased to report strong financial operating results while advancing many of our strategic initiatives this quarter. Our focus was on advancing our record capital backlog, delivering on our capital recycling objectives, which Sam will speak to next, and executing our capital markets strategy. Beginning with our financial operating results, we generated funds from operations or FFO of $599 million during Q3, which is 7% above the comparable period. We experienced strong contributions from new investments completed last year and the initial contribution from three accretive tuck-in acquisitions that closed this year.

Speaker Change: Brookhill Infrastructure is pleased to report strong financial and operating results while advancing many of our strategic initiatives this quarter.

Speaker Change: Our focus was on advancing our record capital backlog, delivering on our capital recycling objectives, which Sam will speak to next, and executing our capital market strategy.

Bye.

Speaker Change: Beginning with our financial operating results, we generated funds from operations, or FFO, of $599 million during the third quarter, which is 7% above the comparable period.

Speaker Change: We experienced strong contributions from new investments completed last year and the initial contribution from three accretive Tuckton acquisitions that closed this year.

David Krant: We also benefited from organic growth at the midpoint of our target range, capturing annual rate increases from inflation, stronger transportation volumes, and the commissioning of over $1 billion from our capital backlog. Results were partially offset by the impact of higher borrowing costs and foreign exchange, most notably the depreciation of the Brazilian real this period. Taking a closer look at our results by segment, our Utilities segment generated FFO of $188 million, an increase of 9% on a comparable basis. In total, the amount was higher last year as we sold our interest in our Australian regulated utility business and completed a recapitalization at our Brazilian regulated transmission business in Q1. Organic growth for the segment was driven by the continued benefit of inflation indexation and the commissioning of approximately $450 million of capital into our rate base over the last 12 months.

Speaker Change: We also benefited from organic growth at the midpoint of our target range, capturing annual rate increases from inflation, stronger transportation volumes, and the commissioning of over $1 billion from our capital backlog.

Speaker Change: Results are partially offset by the impact of higher borrowing costs and foreign exchange, most notably the depreciation of the Brazilian Reai this period.

Speaker Change: Taking a closer look at our results by segment, our utility segment generated FFO of $188 million, an increase of 9% on a comparable basis.

Speaker Change: In total, the amount was higher last year as we sold our interest in an Australian regulated utility business and completed a recapitalization at our Brazilian regulated transmission business in the first quarter.

Speaker Change: Organic growth for the segment was driven by the continued benefit of inflation indexation and the commissioning of approximately $450 million of capital into our rate base over the last 12 months.

David Krant: Moving to our transport segment, FFO was $308 million, representing a 50% increase over the same period in the prior year. The increase is primarily attributable to the acquisition of our global intermodal logistics operation that closed last year and an incremental 10% stake in our Brazilian integrated rail and port logistics operation that was completed earlier this year. The remaining businesses performed well, with strong volumes across our networks and average rate increases of 7% across our rail networks and 5% across our toll road portfolio. Our midstream segment generated FFO of $147 million, compared to $163 million in the same period last year. The decline is primarily attributable to capital recycling activities completed last year at our US gas pipeline and higher interest costs across the portfolio from new financing initiatives.

Speaker Change: Thank you.

Speaker Change: Moving to our transport segment, FFO was $308 million, representing a 50% increase over the same period in the prior year.

Speaker Change: The increase is primarily attributable to the acquisition of our global intermodal logistics operation that closed last year and an incremental 10% stake in our Brazilian integrated rail and port logistics operation that was completed earlier this year.

Speaker Change: The remaining businesses performed well. The strong volumes across our networks and average rate increases of 7% across our rail networks and 5% across our toll road portfolio.

Speaker Change: Our midstream segment generated FFO of $147 million compared to $163 million in the same period last year.

Speaker Change: The decline is primarily attributable to capital recycling activities completed last year at our U.S. gas pipeline and higher interest costs across the portfolio from new financing initiatives.

David Krant: The underlying businesses are performing well in the current environment, following continued demand for long-term services across our critical midstream assets, particularly at our North American gas storage business. Lastly, FFO from our data segment was $85 million, representing a 29% increase over the same period last year. This increase is attributable to strong underlying performance and several new investments completed over the last 12 months. The most impactful this quarter was the tuck-in acquisition of a portfolio of retail colocation data centers completed earlier this year. Our global data center platform continues to execute its development plans to drive growth, with an additional 70 MW commissioned during the quarter, bringing our total installed capacity to over 900 MW.

Speaker Change: The underlying businesses are performing well in the current environment, following continued demand for long-term services across our critical midstream assets, particularly at our North American gas storage business.

Speaker Change: Lastly, FFO from our data segment was $85 million, representing a 29% increase over the same period last year.

Speaker Change: This increase is attributable to strong underlying performance and several new investments completed over the last 12 months.

Speaker Change: The most impactful this quarter was the tuck and acquisition of a portfolio of retail co-location data centers completed earlier this year.

Speaker Change: Our global data center platform continues to execute its development plan to drive growth, with an additional 70 megawatts commissioned during the quarter, bringing our total installed capacity to over 900 megawatts.

David Krant: In July, our European hyperscale data center platform successfully commissioned 10 MW in Milan and is progressing on the build-out of an additional 80 MW of capacity to be delivered next year across a number of key European markets. In the US, we commissioned 50 MW of capacity on scope, schedule, and budget, and leasing activity remains very strong. Stepping back and looking at our operations as a whole, we are excited about the $8 billion backlog of organic growth projects embedded within our business. Our existing platform spans many of the sectors directly benefiting from the tailwinds created by artificial intelligence and associated power demand, including our natural gas and midstream infrastructure to our data center, fiber, and telecom platforms. We have seen this translate into a 20% increase in our backlog in the last 12 months while providing very attractive project-level returns at or above our target range.

Speaker Change: In July, our European hyperscale data center platform successfully commissioned 10 megawatts in Milan and is progressing on the build-out of an additional 80 megawatts of capacity to be delivered next year across a number of key European markets.

Speaker Change: In the U.S., we commissioned 50 megawatts of capacity on scope, schedule, and budget, and leasing activity remains very strong.

Speaker Change: Stepping back and looking at our operations as a whole, we are excited about the $8 billion backlog of organic growth projects embedded within our business.

Speaker Change: Our existing platform spans many of the sectors directly benefiting from the tailwinds created by artificial intelligence and associated power demand, including our natural gas and midstream infrastructure to our data center, fiber, and telecom platforms.

Speaker Change: We have seen this translate into a 20% increase in our backlog in the last 12 months while providing very attractive project level returns at or above our target range.

David Krant: We additionally have a shadow backlog of over $4 billion in incremental organic growth opportunities that represent projects we are advancing but has not yet reached final investment decision. Now, before turning it over to Sam, I’d like to spend a few minutes providing an update on some of our recent capital markets activity. We completed $3 billion of non-recourse financings during the quarter, with the goal of efficiently financing our business, extending maturities, and reducing our cost of capital. To highlight a few examples, first, at our North American hyperscale data center platform, we continue to access capital markets as the first AAA-rated data center ABS issuer, raising $370 million in the quarter. The business has raised $1.1 billion of total proceeds this year that enable us to continue to build out our backlog of hyperscale data centers at attractive pricing.

Speaker Change: We additionally have a shadow backlog of over $4 billion in incremental organic growth opportunities that represent projects we are advancing but have not yet reached final investment decision.

Speaker Change: Now, before turning it over to Sam, I would like to spend a few minutes providing an update on some of our recent capital markets activity.

Speaker Change: We completed $3 billion of non-recourse financings during the quarter, with the goal of efficiently financing our business, extending maturities, and reducing our cost of capital.

Speaker Change: To highlight a few examples, first at our North American Hyperscale Data Center platform, we continue to access capital markets as the first AAA-rated data center ABS issuer, raising $370 million in the quarter.

Speaker Change: The business has raised $1.1 billion of total proceeds this year that enable us to continue to build out our backlog of hyperscale data centers at attractive pricing.

David Krant: At our US retail colocation data center business, we completed an inaugural $900 million ABS issuance in early October, with proceeds used to partially repay our acquisition financing. The financing helped term out nearly half of our acquisition bridge for six years and reduces the company's annual interest expense by approximately $20 million. The last example I will highlight is at our Western Canadian natural gas gathering and processing operation, where we successfully completed a repricing of an $800 million term loan that reduced credit spreads by 25 basis points. This transaction was the second repricing this year, which allowed us to reduce the cost of the loan by a total of 75 basis points, resulting in $6 million of annual interest savings for the company.

Speaker Change: At our U.S. retail co-location data center business, we completed an inaugural $900 million ABS issuance in early October, with proceeds used to partially repay our acquisition financing.

Speaker Change: The financing helps term out nearly half of our acquisition bridge for six years and reduces the company's annual interest expense by approximately $20 million.

Speaker Change: And the last example I will highlight is at our Western Canadian National Gathering and Processing operation, where we successfully completed a repricing of an $800 million term loan that reduced credit spreads by 25 basis points.

Speaker Change: This transaction was the second repricing this year, which allowed us to reduce the cost of the loan by a total of 75 basis points.

Speaker Change: resulting in $6 million of annual interest savings for the company.

David Krant: We continue to maintain a conservatively capitalized balance sheet with no corporate maturities until 2027 and only 1% of our asset level debt maturing over the next 12 months. We ended the quarter with $4.6 billion of total liquidity, which includes $1.6 billion at the corporate level and over $1.4 billion of cash across our businesses, which positions us well to pursue both our organic and inorganic growth opportunities. That concludes my remarks for the morning, I'll now pass the call over to Sam.

Speaker Change: We continue to maintain a conservatively capitalized balance sheet with no corporate maturities until 2027 and only 1% of our asset level debt maturing over the next 12 months.

Speaker Change: We ended the quarter with $4.6 billion of total liquidity, which includes $1.6 billion at the corporate level and over $1.4 billion of cash across our businesses, which positions us well to pursue both our organic and inorganic growth opportunities.

Speaker Change: That concludes my remarks for the morning, and I'll now pass the call over to Sam.

Sam Pollock: Thank you, David, and good morning, everyone. For my remarks today, I'll provide an update on our transaction activity and conclude with a business outlook. Now, beginning with new investments, pleased to report that we closed the acquisition of 76,000 Indian telecom tower sites in mid-September. We are now the largest telecom tower operator in India and the second largest globally, with over 250,000 tower sites. This acquisition increases our tenancies from the country's second and third largest mobile network operators while offering significant operating synergies. The scaled benefits of the combined platform were all achieved at a value-based entry point of below six times EBITDA. Our total equity commitment was approximately $140 million, and we expect the business to generate a strong going-in FFO yield.

Sam Pollock: Thank you, David, and good morning, everyone.

Sam Pollock: For my remarks today, I'll provide an update on our transaction activity and conclude with a business outlook.

Sam Pollock: Now, beginning with new investments, please report that we closed the acquisition of 76,000 Indian telecom tower sites in mid-September.

Sam Pollock: We are now the largest telecom tower operator in India and the second largest globally with over 250,000 tower sites.

Speaker Change: This acquisition increases our tendencies from the country's second and third largest mobile network operators while offering significant operating synergies.

Speaker Change: The scale and benefits of the combined platform were all achieved at a value-based entry point of below six times EBITDA.

Speaker Change: Our total equity commitment was approximately $140 million and we expect the business to generate a strong going in FFO yield.

Sam Pollock: Concurrent with the acquisition, we completed a rebranding of the business to a name called Altius, which brings together three acquisitions we've made in Indian telecommunication space. Now, during the quarter, we secured approximately $600 million of capital recycling proceeds for a total of approximately $2 billion for the year. As a result, we have successfully achieved our capital recycling target. Most recently, we agreed on terms to sell our Mexican Regulated Natural Gas Transmission Business for net proceeds of approximately $125 million for BIP, crystallizing an IRR of around 22% and a multiple capital of about 2.2 times. The sale is expected to close in Q1 2025. We also completed the recapitalization of our North American Gas Storage Platform, raising $1.25 billion that enabled a $305 million distribution net to BIP in advance of a sales process.

Speaker Change: Concurrent with the acquisition, we completed a rebranding of the business to a name called Altius, which brings together the three acquisitions we've made in Indian telecommunications space.

Speaker Change: Now, during the quarter, we secured approximately $600 million of capital recycling proceeds for a total of approximately $2 billion for the year.

Speaker Change: As a result, we have successfully achieved our capital recycling target.

Speaker Change: Most recently, we agreed on terms to sell our Mexican-regulated natural gas transmission business for net proceeds of approximately $125 million for BIP, crystallizing an IRR of around 22 percent and a multiple capital of about 2.2 times.

Speaker Change: The sale is expected to close in the first quarter of 2025.

Speaker Change: We also completed the recapitalization of our North American Gas Storage Platform, raising $1.25 billion that enabled a $305 million distribution net to BIP in advance of the sales process.

Sam Pollock: This financing alone returned more capital than we initially invested and increased the investment's realized multiple capital to approximately 2.5 times. This is an extremely attractive result given we still own a business that generates approximately $330 million in annual EBITDA. In terms of our business outlook, the economic backdrop for infrastructure investing has improved significantly, broadly speaking, with short-term interest rates moving lower, inflationary pressures easing, and liquidity steadily returning to institutional investors. These developments bode well for our business strategy, and we are confident they will create an even more favorable landscape for both asset sales and new investments. Now, starting first with asset sales, we are seeing elevated demand for high-quality infrastructure assets. In the next two years, we expect to generate $5 to $6 billion of proceeds from capital recycling initiatives to crystallize the value we've created within our mature and de-risked companies.

Speaker Change: This financing alone returned more capital than we had initially invested and increased the investment's realized multiple capital to approximately 2.5 times.

Speaker Change: This is an extremely attractive result given we still own a business that generates approximately $330 million in annual EBITDA.

Speaker Change: In terms of our business outlook, the economic backdrop for infrastructure investing has improved significantly, broadly speaking, with short-term interest rates moving lower

Speaker Change: inflationary pressures easing, and liquidity steadily returning to institutional investors.

Speaker Change: Thank you.

Speaker Change: These developments bode well for a business strategy.

Speaker Change: We are confident they will create an even more favorable landscape for both asset sales and new investments.

Speaker Change: Now, starting first with acid cells.

Speaker Change: We are seeing elevated demand for high quality infrastructure assets.

Speaker Change: In the next two years, we expect to generate $5 to $6 billion of proceeds from capital recycling initiatives to crystallize the value we've created within our mature and de-risked companies.

Sam Pollock: These asset sales are expected to generate returns well above our targets. From a deployment perspective, the outlook for our business is strong. Our growth profile continues to accelerate, focused around the decarbonization and digitalization investment themes. We're also seeing more opportunities for value creation within our existing business and our new investments pipeline, which is as big as it's been in two years. It continues to grow. With our unparalleled access to scale capital, we expect to put significant capital to work as we seek to expand our partner of choice reputation. Now, this year has been notable for the number of elections, including a very significant one yesterday in the United States.

Speaker Change: These asset sales are expected to generate returns well above our targets.

Speaker Change: From a deployment perspective, the outlook for our business is strong.

Speaker Change: Our growth profile continues to accelerate, focused around the decarbonization and digitalization investment themes.

Speaker Change: Thank you.

Speaker Change: We're also seeing more opportunities for value creation within our existing business and our new investments pipeline, which is as big as it's been in two years, and it continues to grow.

Speaker Change: With our unparalleled access to scaled capital, we expect to put significant capital to work as we seek to expand our partner of choice reputation.

Speaker Change: Now, this year has been notable for the number of elections, including a very significant one yesterday in the United States.

Sam Pollock: While election outcomes can result in policy changes, we believe that we are largely insulated from volatility due to the quality of the countries we invest in and our focus in areas of the economy that garner broad political support. We often characterize BIP as the investment for all seasons and cycles because independent of these election outcomes or economic cycles or the direction of interest rates, Brookfield Infrastructure provides investors an attractive mix of downside protection and upside growth potential that outpaces many of our pure play sector peers. We believe this is more relevant today than it's ever been. Our business is resilient due to the high degree of long-term contracted and regulated cash flow with significant protection from inflation. The business is also more diversified than at any point in our history.

Speaker Change: While election outcomes can result in policy changes,

Speaker Change: We believe that we are largely insulated from volatility due to the quality of the countries we invest in and our focus in areas of the economy that garner broad political support.

Speaker Change: We often characterize BIP as the investment for all seasons and cycles, because independent of these election outcomes or economic cycles or the direction of interest rates, Brickville infrastructure provides investors an attractive mix of downside protection and upside growth potential that outpaces many of our pure play sector peers.

Speaker Change: We believe this is more relevant today than it's ever been.

Speaker Change: Our business is resilient due to the high degree of long-term contracted and regulated cash flow with significant protection from inflation.

Speaker Change: The business is also more diversified than at any point during our history.

Sam Pollock: This combination gives us the confidence to believe that our portfolio can meaningfully increase cash flows in the years ahead. That now concludes my remarks. I'll pass it over to Sherry to open the line for questions.

Speaker Change: This combination gives us the confidence to believe that our portfolio can immediately increase cash flows in the years ahead.

Speaker Change: That now concludes my remarks, so I'll pass it over to Sherry to open the line for questions.

Operator: 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, press star one one again. One moment while we compile the Q&A roster. Our first question will come from the line of Cherilyn Radbourne with TD Cowen. Your line is open.

Sherry: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, press star 11 again. One moment while we compile the Q&A roster.

Sherry: And our first question will come from the line of Cherilyn Radbourne with TD Cowan. Your line is open.

Cherilyn Radbourne: Thanks very much and good morning. First question is on data and AI broadly. On the BAM call earlier this week, excuse me, there was some discussion about using the unique nuclear capability within the Brookfield ecosystem to advance the collective opportunity to support AI. Now, I assume that SMRs are not contemplated in your current backlog, but I'm curious whether that's becoming a feature of your discussions with the large hyperscalers.

Cherilyn Radbourne: Thanks very much and good morning.

Cherilyn Radbourne: First question is on data and AI broadly.

Cherilyn Radbourne: On the BAM call earlier this week, there was some discussion about using the unique nuclear capability within the Brookfield ecosystem to advance the collective opportunity to support AI.

Cherilyn Radbourne: Now, I assume that SMRs are not contemplated in your current backlog, but I'm curious whether that's becoming a feature of your discussions with the large hyperscalers.

Sam Pollock: Hi, Sherrilyn. Thanks for your question. Yeah, maybe to put a fine point to it, I think everyone recognizes that SMRs and nuclear energy are going to play an important role in the long term. I think in the short term, it's not really part of any solutions that we're talking about. At the moment, the focus is still largely on renewable options as well as, I'd say, natural gas potential in various parts of the US and Canada in particular.

Speaker Change: Thanks for your question.

Speaker Change: Yeah, maybe to...

Speaker Change: You know SMRs and nuclear energy are going to play an important

Speaker Change: role in the long-term, but I think in the short-term it's not really part of any...

Cherilyn Radbourne: solutions that we're talking about. At the moment, you know, the focus is still, you know, largely on renewable options as well as, I'd say, natural gas potential in various parts of the U.S.

Cherilyn Radbourne: and Cannes in particular.

Cherilyn Radbourne: Okay, that makes sense. Switching to the residential decarbonization business, it looks like you made some nice strides in the UK and Europe during the quarter. I'm curious if there are good synergies available to managing the North American and European businesses together or are the residential markets in each geography at different stages with respect to decarbonization, such that it would make sense to think of the two geographies as separate businesses, each with attractive attributes in their own right?

Speaker Change: Okay. That makes sense.

Speaker Change: And then switching to the residential decarbonization business.

Speaker Change: It looks like you made some nice drives in the UK and Europe during the quarter.

Cherilyn Radbourne: And I'm curious if there are good synergies available to managing the North American and European businesses together.

Cherilyn Radbourne: or the residential markets in each geography different phases with respect to decarbonization, such that it would make sense to think of the two geographies as separate, separate businesses each with, you know, attractive attributes in their own right.

Sam Pollock: Okay. Well, maybe I'll take that question and then one of the Daves may want to jump in if they have anything to add. I guess, for the most part, our philosophy is we're believers in decentralization. As a result, we tend to allow each region to operate on its own and make decisions that make sense for its particular market. Even just in Europe, our businesses largely run autonomously, whether it's in France, the UK, Germany, or Spain for that matter. We have operations in each of those countries. In North America here, the Canadian business runs separately from the US business. What we do though is we have a lot of communication between the various groups, where we look for best practices. We try to share technology.

Speaker Change: Okay. Well, maybe I'll take that question and then...

Speaker Change: One or two days might want to jump in if they have anything to add, but.

Speaker Change: I guess...

Speaker Change: For the most part, our philosophy is, we're believers in decentralization and as a result, we tend to allow each region to operate on its own and make decisions that make sense for its particular market.

Speaker Change: And so, you know, whether even just in Europe, our businesses largely run autonomously, you know, whether it's in France, the UK, or Germany, or Spain for that matter, we have operations in each of those countries.

Speaker Change: And in North America here, the Canadian business runs separately from the U.S. business.

Cherilyn Radbourne: What we do do, though, is we have a lot of communication between the various groups.

Cherilyn Radbourne: where we look for best practices, we try to share technology.

Sam Pollock: Obviously things that work well in one market, we try to export those ideas and systems to another market. I'd say that Brookfield tends to be the glue to ensure that best practices are moved across each of the regions. We have accountability at the local level with CEOs in each of the countries.

Cherilyn Radbourne: regions, but we have accountability at the local level with CEOs in each of the countries.

Cherilyn Radbourne: That's all for me. Thank you.

Sam Pollock: Okay. Thanks, Cherilyn.

Speaker Change: That's all from me. Thank you. Okay. Thank you, Sherilyn. Thank you. One moment for our next question.

Operator: Thank you. One moment for our next question. That will come from the line of Maurice Choy with RBC Capital Markets. Your line is open.

Speaker Change: And that will come from the line of Maurice Choi with RBC Capital Markets. Your line is open.

Maurice Choy: Thank you, and good morning, everyone. Maybe if I could start with a comment you made earlier about the number of elections this year and how election outcomes can result in policy changes. We obviously have quite a number of these elections done, including yesterday. Thoughts on what outcomes and potential policy shifts across all the countries you look at, not just the US, that may act as a tailwind or a headwind for your assets?

Maurice Choi: Thank you and good morning everyone. Maybe if I could start with a comment you made earlier about the number of elections this year and how election outcomes can result in policy changes.

Maurice Choi: So, we obviously have quite a number of these elections done, including yesterday. Thoughts on what outcomes and potential policy shifts across all the countries you look at, not just the U.S., that may act as a tailwind or headwind for your assets?

Sam Pollock: Well, we operate in a lot of countries, so I maybe won't to go into each one. Maybe just touching on the UK and the US, where there's been changes. In some of the countries like India, there hasn't really been a change. We can touch on Brazil, I guess, as well, but maybe just more broadly speaking. I think the trends that are driving our business, as we talked about, are primarily decarbonization and digitalization. As it relates to digitalization, I don't think there's any difference in views or eagerness to deploy capital across those elements of the economy in any new government. I'd say this is a focus for the Republicans as well as it was for the Democrats. It's a focus for Labour as it was for the Conservatives in the UK, and it's a big focus down in Brazil as well.

Speaker Change: Well, we operate in a lot of countries, so I maybe won't go into each one, but maybe just touching on...

Speaker Change: you know, the UK and the US, you know, where there's been changes. So in some of the other countries, like India, there hasn't really been a change.

Speaker Change: We can touch on Brazil I guess as well, but maybe just more broadly speaking, you know, I think the trends that are driving our business, you know, as we talked about, are primarily decarbonization and digitalization.

Speaker Change: As it relates to digitalization, I don't think there's any difference in...

Speaker Change: views or eagerness to deploy capital across those elements of the economy in any new government. I'd say this is a focus.

Speaker Change: For the Republicans, as well as it was for the Democrats, it's a focus for Labour, as it was for the Conservatives in the UK.

Speaker Change: and it's a big focus down in Brazil as well. So obviously that trend doesn't change. You know, there's probably a bit more nuances as relates to decarbonization.

Sam Pollock: Obviously that trend doesn't change. There is probably a bit more nuances as it relates to decarbonization. I would probably leave it to our renewables colleagues to touch on it in greater detail. What they would tell you is that even though the tone may not be quite as strong across various parties, the reality on the ground is that most of the decisions aren't being made at the corporate level or at the state level, and those things won't change with new governments. I think the only other comment I would make, in general, I guess just what you should take from that is we don't see any meaningful change in the direction of those macro trends, which we think are as strong as ever in each of those countries.

Speaker Change: Um...

Speaker Change: I'd probably leave it to our Renewables colleagues to touch on it in greater detail, but what they would tell you is that even though the tone may not be quite as strong across various

Speaker Change: parties, the reality on the ground is that most of the decisions aren't being made at the corporate level or at the state level and those things won't change with new governments.

Cherilyn Radbourne: Um...

Cherilyn Radbourne: I think the only other comment I'd make, so in general, I guess, just what you should take from that is, you know, we don't see any meaningful change in the direction of those macro trends, which we think are as strong as ever in each of those countries.

Sam Pollock: I think the only thing that you might see now is in some countries like the UK, I think they will have a big focus on growth and will take steps to try to get the economy moving again. In the US, I guess we'll have to wait and see some of the decisions that'll be made, but given that the economy is running pretty strong right now, there's probably not going to be as much of a stimulus impact in the near term.

Cherilyn Radbourne: I think the only thing that you might see now is, in some countries like the UK, I think they will have a big focus on growth and will take steps to try to get the economy moving again.

Cherilyn Radbourne: In the U.S., you know, I guess we'll have to wait and see some of the decisions that we've made. But there may, given that the economy is running pretty strong right now, there's probably not going to be as much of a stimulus impact in the near term.

Maurice Choy: Thanks for the color, and maybe very much related to that in terms of asking where you see the best risk-adjusted returns when you approach acquisitions. Obviously recognizing that the current environment can be both a buyer's market and a seller's market, depending on where you're shopping.

Speaker Change: And so the color and maybe very much related to that in terms of asking where you see the best risk adjusted return to when you approach acquisitions, obviously recognizing that the current environment, there can be both a buyer's market and a seller's market depending on where you're shopping.

Sam Pollock: Yeah. Look, I think the place where we see the most capital being deployed and our business, as I've probably said many times on this call and at investor meetings, very much follows the flow of capital. The greatest investment going on outside of China, which we don't really invest in right now, is in the US. We see huge amounts of dollars going to all parts of the economy, and that's creating great opportunities for us. I'd have to say today, the US is still probably the most interesting place for us. I'd say second to that, just to pick another place. We often talk about Korea as being a very interesting market, and we see some very interesting opportunities there. Again, for a lot of the same dynamics. There seems to be a very large capital investment trend going on in the country.

Cherilyn Radbourne: Yeah, the

Speaker Change: Look, I think the place where we see the most...

Speaker Change: Capital being deployed and our business as I've probably said many times on this call and at investor meetings You know very much follows the flow of capital

Cherilyn Radbourne: The the greatest investment going on outside of China, which we don't really invest in right now Is in the u.s. We see huge amounts of Dollars going to all parts of the economy and that's creating great opportunities for us

Cherilyn Radbourne: And so, I have to say today, the U.S. is still probably the most interesting place for us.

Cherilyn Radbourne: You know, I'd say second to that.

Cherilyn Radbourne: Just to pick another place, you know, we often talk about Korea as being a very interesting market and we see some very interesting opportunities there. Again, for a lot of the same dynamics, there seems to be a very large capital investment trend going on in the country.

Sam Pollock: I think where there's a need for capital, that's usually an opportunity for it to get incentivized returns.

Cherilyn Radbourne: And I think, you know, where there's a need for capital, that's usually, you know, an opportunity for it to be, to get incentivized returns.

Maurice Choy: Thank you very much for that.

Sam Pollock: Okay. Thank you.

Speaker Change: Thank you very much for that.

Operator: Thank you. One moment for our next question, and that will come from the line of Devin Dodge with BMO Capital Markets. Your line is open.

Speaker Change: Thank you. Thank you. One moment for our next question.

Speaker Change: And that will come from the line of Devon Dodge with BMO Capital Markets. Your line is open.

Devin Dodge: All right, thanks. Good morning. I wanted to start with the India telecom tower business. With the American Tower deal completed, just wondering if there are complexities with holding a mix of leased and owned sites, is there an impact to the exit strategies available?

Devon Dodge: All right. Thanks.

Devon Dodge: I wanted to start with the India telecom tower business. With the American Tower deal completed, just wondering if there are complexities with holding a mix of leased and owned sites, and is there an impact to the exit strategies available?

Sam Pollock: Hey, Devin. Thanks for the question. This is Dave Joynt. Filling in for Ben this week. Look, I think there's no inherent complexity to having owned sites and leased sites into a single portfolio. I think the nice thing about the tuck-in here is it now gives us even greater development capabilities that we can build up and continue to add a lot of internal value to the business over time. Look, as the leases come up on the existing portfolio we'll be working to extend those on terms that make sense. To Sam's comment about putting them into a single vehicle with rebranding, we think has a lot of benefits as well.

Devon Dodge: Hey Deb, thanks for the question, this is Dave Joynum, filling in for Ben this week.

Devon Dodge: Look, I think there's no inherent complexity to having owned sites and leased sites into a single portfolio. I think the nice thing about the tuck-in here is it now gives us...

Devon Dodge: even greater development capability that we can build up and, you know, continue to add a lot of, you know, terminal value to the business over time.

Devon Dodge: But, look, as the leases come up on the existing portfolio, we'll be working to, you know, extend those, you know, on terms that make sense. And to Sam's comments about putting them into a, you know, a single vehicle with rebranding, we think has a lot of benefits as well.

Devin Dodge: Okay. Makes sense. I just wondered if you could provide a bit more color on the potential synergies, like where they're going to be coming from and how meaningful it could be.

Speaker Change: Okay, makes sense. And just wondering if you could provide a bit more color on the potential synergies, like where they're going to be coming from and how meaningful it could be.

Sam Pollock: Look, I think what I would say is the logical area of synergy, which I sort of already alluded to is having the development platform within the business itself. Obviously with scale from a.

Speaker Change: I think what I would say is the

Speaker Change: Look, the logical area of Synergy, which I sort of already alluded to, is having the development platform kind of within the business itself. And obviously with scale from a, um...

David Krant: an SG&A perspective. I think that makes a big difference. I would say our thesis of the transaction was not premised on the realization of hard-to-get synergies. It was a value opportunity. We feel like we've acquired these at an extremely deep value, and that's where really the value creation is coming from.

Speaker Change: you know, an FG&A perspective, I think that...

Speaker Change: I would say our thesis of the transaction was not premised on the realization of hard-to-get synergies.

Speaker Change: It was a value opportunity, you know, so we feel like we've acquired these at an extremely deep value and that's where really the value creation is coming from. And there will be some O&M opportunities by combining the two, you know, businesses.

Dave Joynt: There will be some O&M opportunities by combining the two businesses. Today, we outsource some of our O&M through Alliance, and then having this business, there will be some overlap where sites are near each other, be able to leverage whatever business has the cheaper opportunity to manage those sites.

Speaker Change: So today we outsourced some of our own M2

Speaker Change: to Reliance, and then having this business, there will be some overlap where we can, where sites are near each other, be able to leverage whatever business has the cheaper opportunity to manage those sites.

Devin Dodge: Okay. Makes sense. Just maybe switching over to IPL. It appears HPC has been performing better in recent months. I think the Q3 was the best performance to date that we've seen there. As you look ahead, and this business continues to demonstrate stability, is BIP the best owner of this asset over the medium to long term, or do you expect to monetize some or all of it to a more strategic buyer?

Speaker Change: Okay, okay, makes sense. And then just maybe switching over to IPL. It appears...

Speaker Change: HPC has been performing better in recent months. I think the Q3 was the best performance to date that we've seen there.

Speaker Change: As you look ahead, and this business continues to demonstrate stability, is BIP the best owner of this asset over the medium to long term, or do you expect to monetize?

Speaker Change: Some or all of it to a more strategic buyer.

Dave Joynt: Hey, Devin, it's Dave again. I guess the first thing I'd comment is we know that commissioning these assets takes a little bit of time. As you note, I think we've made great progress, but the focus for us at the moment is on continuing to sort of stabilize it, get it running at the levels that we want to, up to the capacity of the plants themselves. The position of the asset itself has never been a question. It's in a great location with great access to low-cost feedstock. Right now, we're focused on managing the asset as opposed to thinking about something on a long-term basis. Look, as you note, obviously, there would be a lot of institutional logic for a strategic to own some or all of the assets at some point in time.

Speaker Change: Hey Devin, it's Dave again. I guess the first thing I'd comment is

Speaker Change: You know, we know that commissioning, you know, these assets takes a little bit of time. And so, as you note, I think we've made great progress, but the focus for us at the moment is on continuing to sort of...

Speaker Change: Stabilize it, get it running at the levels that we want to, up to the capacity of the plants themselves.

Speaker Change: The position of the asset itself, you know, has never been a question, you know, it's in a great location with great access to low-cost feedstock. But right now we're focused on kind of managing the asset as opposed to thinking about something on a long-term basis. But look, as you note, obviously there would be a lot of...

Speaker Change: institutional logic for a for a strategic to you know own some or you know or all of the assets at some point in time.

Devin Dodge: Okay. Thanks for that. I'll turn it over.

Speaker Change: Okay, thanks for that. I'll turn it over.

Operator: Thank you. One moment for our next question. That will come from the line of Robert Catellier with CIBC Capital Markets. Your line is open.

Speaker Change: Bye.

Speaker Change: Thank you. One moment for our next question.

Speaker Change: And that will come from the line of Robert Cattelier with CIBC Capital Markets. Your line is open.

Robert Catellier: Hey, good morning, everyone. I'd like to go back to the nuclear topic here because I think it's timely. Can you clarify your interest in investing in nuclear assets, please? Is it even possible in BIP, or are these opportunities limited to other funds and listed entities?

Robert Cattelier: Hey, good morning, everyone. I'd like to go back to the nuclear topic here because I think it's timely. Can you clarify your interest in investing in nuclear assets, please? And is it even possible in BIP, or are these opportunities limited to other funds and listed entities?

Sam Pollock: Hi, Robert. While I can't predict exactly the nature of what that investment would look like, more likely than not, it would be done through our transition fund and also through BIP. It's unlikely it would be a BIP investment.

Speaker Change: Hi, Robert.

Speaker Change: While I can't predict exactly the nature of what that investment would look like, more likely than not it would be done through our transition fund and also through BEP. So it's unlikely it would be a BEP investment.

Robert Catellier: Right. Just on the macro picture, as you alluded to in your letter to unit holders, the market environment right now is increasing deal flow. At the same time, your corporate liquidity is somewhat low at $1.6 billion. We can argue that it's not entirely unusual for BIP. What's your perspective on how these two dynamics influence distribution growth? They seem to point to there being some incentive to retain capital for new investments.

Speaker Change: Right, and then just on the macro picture, as you alluded to in your letter to unit holders, the market environment right now is increasing deal flow, but at the same time your corporate liquidity is somewhat low at $1.6 billion. We can argue that it's not...

Speaker Change: entirely unusual for BIP, but what's your perspective on how these two dynamics influence distribution growth because they seem to point to there being some incentive to retain capital for new investments?

David Krant: I can start. Sam, feel free to layer in. I'll tackle that question two ways. I think first, Rob, on the distribution growth outlook, that's something we revisit annually with our board in Q4. I won't comment on any levels that we're expecting, but we appreciate the value of increasing our distributions between the 5% to 9% target range. I think that's extremely valuable, our business has performed well this year. The business is doing excellent. I won't comment specifically on where we're thinking for the year and the desire to retain cash. I think our liquidity today is strong at $1.6 billion. As I alluded to, we have $1.4 billion cash across our businesses to fund a lot of that organic growth pipeline that we've been alluding to. We feel like we're in a good position.

Speaker Change: I can start, Sam, and feel free to let in.

Speaker Change: So, I'll tackle that question, too, I think first, Rob, on the distribution growth outlook.

Speaker Change: something we revisit annually with our board in the fourth quarter, so I won't comment on you know any

Speaker Change: any levels that we're expecting, but you know, we've

Speaker Change: We appreciate the value of increasing our distributions between the five to nine percent target range. I think that's extremely valuable and our business has performed well this year. The business is doing excellent, so

Speaker Change: You know, I won't comment specifically on where we're thinking for the year and the, you know, the desire to retain cash. I think our liquidity today is strong at $1.6 billion. And as I alluded to, we have $1.4 billion in cash across our businesses to fund a lot of that organic growth pipeline that we've been alluding to.

David Krant: The other thing that we'll have coming in over the next 6 to 12 months will be proceeds from asset sales. We have secured two sales between our Mexican regulated natural gas transmission business and our fiber operations in France that'll generate $225 million of net proceeds to BIP that we expect to receive in the next month or two. We have $5 to 6 billion of proceeds that we expect to generate over the next 12 to 24 months through asset sales. I think that's the real ability for us to replenish the liquidity and get it back so we can continue to deploy it into highly accretive opportunities.

Speaker Change: We feel like we're in a good position. The other thing that we'll have coming in over the next, you know, six to 12 months will be proceeds from asset sales. We have secured two sales between our Mexican.

Speaker Change: transmission business and our fiber operations in France that will generate you know 225 million dollars of net proceeds to bid that we expect to receive in the next month or two.

Speaker Change: And we have $5 to $6 billion of proceeds that we expect to generate over the next 12 to 24 months through asset sales. So I think that's the real ability for us to replenish the liquidity and get it back so we can continue to deploy it into highly creative opportunities.

Sam Pollock: Yeah.

Sam Pollock: Yeah. Go ahead

Sam Pollock: To put a fine point to that is, look, we have lots of liquidity. Our dividend growth is sacrosanct to our business strategy, and we're not going to take away the cash that we put towards our dividends to stretch ourselves on new investments. I think you should take that as our dividend is very important.

Speaker Change: Yeah, maybe I'll just

Speaker Change: To put a fine point to that is, look, we have lots of liquidity.

Speaker Change: You know take away the the cash that we put towards our dividends to stretch ourselves on new investments, so I think

Speaker Change: You should take that as our dividend is is is very important

Robert Catellier: Yeah. Okay. Thanks.

Speaker Change: Okay, thanks.

Operator: Thank you. As a reminder, if you would like to ask a question, please press *11. Our next question will come from the line of Robert Hope with Scotiabank. Your line is open.

Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star 1 1. And our next question will come from the line of Robert Hope with Scotiabank. Your line is open.

Robert Hope: Good morning, everyone. Quasi-election related. Just want to get a sense of your thinking around the prospect for a stronger US dollar for an extended period of time. Could we see you focus on opportunities where we've seen the real strengthening of the US dollar? For instance, Brazil has been quite weak recently. I just want to get a sense of could that potentially add to investment opportunities outside of the continental US?

Speaker Change: Bye.

Robert Hope: Good morning, everyone. Quasi-election related, just want to get a sense of your thinking around the prospect for a stronger US dollar for an extended period of time.

Speaker Change: Could we see you focus on opportunities where we've seen the real strengthening of the US dollar for instance Brazil has been quite weak recently so just want to get a sense of, you know, could that, you know,

Speaker Change: potentially add to investment opportunities outside of the continental U.S.

Speaker Change: Thank you.

David Krant: Well, maybe I'd say it in two different ways. I think first, when we make investments, we don't really take a view on currencies because those are almost impossible to predict. Whenever we make investments, including any new investments we do in Brazil, we hedge our investments and don't take that risk. That's not really a consideration as far as going into countries that maybe the currency is weaker at the moment because that's not part of the thesis. Having said that, obviously a currency strengthen because money is moving into those countries and potentially out of other countries. To the extent that capital is scarce in places like Brazil, and that creates an opportunity for us to earn attractive risk-adjusted returns, then absolutely we'll go to those countries if we think we can achieve those outsized returns.

Speaker Change: Well, maybe I'd say it in two different ways. I think first, when we make investments, you know, we don't really take a view on currencies because those are almost impossible to predict.

Speaker Change: So, whenever we make an investment, including any new investments we do in Brazil, we hedge our investments and don't take that risk.

Speaker Change: So, that's not really a consideration as far as going into countries that maybe the currency is weaker at the moment because that's not part of the thesis. But, having said that.

Speaker Change: You know, obviously a, you know, currency strength because money is moving into those countries and potentially out of other countries.

Speaker Change: And so to the extent that capital is scarce in places like Brazil, and that creates an opportunity for us to earn attractive risk-adjusted returns, then absolutely we'll go to those countries if we think we can achieve those outsized returns.

Robert Hope: Thanks for that. Maybe just turning over to the growth profile of the business. Good to see 7% organic growth once again there. As we take a look into 2025, the capital backlog will continue to add to growth. I want to get a sense of how much inflation that we saw on elevated levels that is now coming down is still yet to roll through the numbers.

Speaker Change: Thank you.

Speaker Change: Thanks for that. And then maybe just turning over to kind of the growth profile of the business. Good to see 7% organic growth once again there. As we take a look into 2025, you know, the

Speaker Change: The capital backlog will continue to add to growth, but I want to get a sense of how much inflation that we saw on elevated levels that is now coming down is still yet to roll through the numbers.

David Krant: Yeah, I can take that, Rob. From an inflation perspective, a lot of our businesses are pricing with very limited lag. You've seen us capture, I'd say 3% to 4% inflation across many of our businesses in the last 12 months. That still is elevated to your point, and certainly better than what we were getting historically. The only business that has a true regulated lag on their inflation posture is the UK and our regulated utility there. You'll still see elevated levels come through there, even though the headline CPI or RPI in the country has normalized or certainly come back down. That'd be the only subsegment where I'd expect to see that trailing. I'd say inflation still is trending 50 to 75 basis points ahead of where we would've historically seen in many of the markets we operate.

Speaker Change: Yeah, I can take that, Rob. From an inflation perspective, a lot of our businesses are pricing with very limited lag. So you've seen us capture, I'd say three to four percent inflation across many of our businesses in the last 12 months. That still is elevated to your point and certainly better than what we were getting historically.

Speaker Change: The only business that has a true regulated lag on their inflation pass through is the UK and our regulated utility there so you'll still see elevated levels come through there even though headline or

Speaker Change: The headline CPI or RPI in the country has normalized or certainly come back down. So that'd be the only subsegment where I'd expect to see that trailing.

Speaker Change: But I'd say inflation still is trending 50 to 75 basis points ahead of where we would have historically seen in many of the markets we operate. So it still should be a tailwind to results as we look ahead.

David Krant: It still should be a tailwind to results as we look ahead.

Robert Hope: Thank you.

Operator: Thank you. I am showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Sam Pollock for any closing remarks.

Speaker Change: Thank you.

Speaker Change: Thank you. I'm showing no further questions in the queue at this time. I would now like to turn the call back over to Mr. Sam Pollock for any closing remarks.

Sam Pollock: Okay. Well, thank you, operator. Thank you to everyone who joined the call this morning. We know that there was probably lots of competing calls with election results coming in. We'd just like to thank everyone for joining, and we wish you a very happy upcoming holiday season and look forward to providing you our Q4 and year-end results early in the new year. All the best. Thank you.

Sam Pollock: Okay, hello. Thank you operator and Thank you to everyone who joined the call this morning. We know that there was probably lots of competing calls with election results coming in

Speaker Change: but we'd just like to thank everyone for joining and we wish you a very happy upcoming holiday season and look forward to providing you our fourth quarter and year-end results early in the new year. All the best, thank you.

Operator: This concludes today's program. Thank you all for participating. You may now disconnect.

Speaker Change: This concludes today's program. Thank you all for participating. You may now disconnect.