CorEnergy Announces Second Quarter 2019 Results

KANSAS CITY, Mo.–(BUSINESS WIRE)–CorEnergy Infrastructure Trust, Inc. (“CorEnergy” or the “Company”) today announced financial results for the second quarter, ended June 30, 2019.

Second Quarter Performance Summary

Second quarter financial highlights are as follows:

 

For the Three Months Ended

 

June 30, 2019

 

 

 

Per Share

 

Total

 

Basic

 

Diluted

Net Income (Attributable to Common Stockholders)1

$

7,511,146

 

 

$

0.59

 

 

$

0.59

 

NAREIT Funds from Operations (NAREIT FFO)1

$

13,022,420

 

 

$

1.02

 

 

$

0.96

 

Funds From Operations (FFO)1

$

13,029,332

 

 

$

1.02

 

 

$

0.96

 

Adjusted Funds From Operations (AFFO)1

$

13,589,336

 

 

$

1.06

 

 

$

0.99

 

Dividends Declared to Common Stockholders

 

 

$

0.75

 

 

 

1 Management uses AFFO as a measure of long-term sustainable operational performance. NAREIT FFO, FFO, and AFFO are non-GAAP measures. Reconciliations of NAREIT FFO, FFO and AFFO, as presented, to Net Income Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.

Recent Developments

  • MoGas FERC Rate Case: The MoGas Pipeline rate case filed with the Federal Energy Regulatory Commission (FERC) is nearing a conclusion as all parties have reached settlement on all issues. This settlement is pending final order by the FERC.
  • Maintained Dividend: Declared common stock dividend of $0.75 per share ($3.00 annualized) for the second quarter 2019, in line with the previous 15 quarterly dividends

“The second quarter was very productive for CorEnergy. We continued assessing assets to acquire and building relationships with potential operators, as well as reviewing opportunities to strengthen our balance sheet,” said CorEnergy Chairman and Chief Executive Officer Dave Schulte. “Most significantly, we are nearing the conclusion of our FERC rate case for the MoGas Pipeline. Our team has worked diligently for over two years to prepare for and present the case. We are pleased to have come to agreeable terms for all the interested parties.”

Portfolio Update

MoGas Pipeline: MoGas and all intervenors in its FERC rate case, filed May 31, 2018, have agreed in principle on new rates that will provide approximately $14.8 million of annual revenue. The settlement is pending before the FERC.

Pinedale Liquids Gathering System: Ultra Petroleum decreased its capital investment forecast to be between $305 and $335 million for 2019 and is currently operating two rigs focused on vertical well drilling. Production guidance for the year, however, remained unchanged due to improved drilling efficiencies and higher working interest in the wells. CorEnergy continues to receive participating rents for Ultra Petroleum’s use of the Pinedale LGS. Participating rents are not guaranteed to continue in future quarters and the Company intends to utilize excess cash flows such as these to reduce its leverage profile and / or invest in new assets.

Outlook

CorEnergy regularly assesses its ability to pay and grow its dividend to common stockholders above the current $0.75 per quarter. The Company targets long-term revenue growth of 1-3% annually from existing contracts through inflation-based and participating rent adjustments and additional growth from acquisitions. CorEnergy believes that a number of actions can be taken to adequately offset the lost revenue from the December 2018 sale of the Portland Terminal, which could include a combination of i) additional investments in revenue generating assets and / or ii) deleveraging of the Company’s balance sheet through preferred equity and debt repurchases, at attractive prices. There can be no assurance that any potential acquisition opportunities will result in consummated transactions.

Dividend Declaration

Common Stock: A second quarter 2019 dividend of $0.75 per share was declared for CorEnergy’s common stock. The dividend is payable on August 30, 2019, to stockholders of record on August 16, 2019. The second quarter 2019 dividend will be paid entirely in cash.

Preferred Stock: For the Company’s 7.375% Series A Cumulative Redeemable Preferred Stock, a cash dividend of $0.4609375 per depositary share was declared. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, is payable on August 30, 2019, to stockholders of record on August 16, 2019.

Second Quarter Earnings Call

CorEnergy will host a conference call on Thursday, August 1, 2019, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 (for international, 1-201-689-8035) approximately five to ten minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit.

A replay of the call will be available until 1:00 p.m. Central Time on September 1, 2019, by dialing 877-481-4010 (for international, 1-919-882-2331). The Conference ID is 50108. A replay of the conference call will also be available on the Company’s website.

About CorEnergy Infrastructure Trust, Inc.

CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA), is a real estate investment trust (REIT) that owns critical energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from operators of our assets, primarily under triple-net participating leases. For more information, please visit corenergy.reit.

Forward-Looking Statements

This press release contains certain statements that may include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are “forward-looking statements.” Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any distribution paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants.

Notes

1NAREIT FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and other adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. FFO as we have presented it here, is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and other income and net realized and unrealized gain or loss on other equity securities. CorEnergy defines AFFO as FFO Adjusted for Securities Investment plus (gain) loss on extinguishment of debt, provision for loan (gain) loss, net of tax, transaction costs, amortization of debt issuance costs, amortization of deferred lease costs, accretion of asset retirement obligation, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), income tax (expense) benefit unrelated to securities investments, amortization of debt premium, and other adjustments as deemed appropriate by Management. Reconciliations of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO to Net Income Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

 

Consolidated Balance Sheets

 

 

 

 

 

June 30, 2019

 

December 31, 2018

Assets

(Unaudited)

 

 

Leased property, net of accumulated depreciation of $96,489,852 and $87,154,095

$

388,903,475

 

 

$

398,214,355

 

Property and equipment, net of accumulated depreciation of $17,655,985 and $15,969,346

108,196,590

 

 

109,881,552

 

Financing notes and related accrued interest receivable, net of reserve of $600,000 and $600,000

1,309,217

 

 

1,300,000

 

Note receivable

 

 

5,000,000

 

Cash and cash equivalents

58,807,431

 

 

69,287,177

 

Deferred rent receivable

29,106,481

 

 

25,942,755

 

Accounts and other receivables

4,533,117

 

 

5,083,243

 

Deferred costs, net of accumulated amortization of $1,623,473 and $1,290,236

2,505,206

 

 

2,838,443

 

Prepaid expenses and other assets

864,988

 

 

668,584

 

Deferred tax asset, net

4,791,913

 

 

4,948,203

 

Goodwill

1,718,868

 

 

1,718,868

 

Total Assets

$

600,737,286

 

 

$

624,883,180

 

Liabilities and Equity

 

 

 

Secured credit facilities, net of debt issuance costs of $184,480 and $210,891

$

35,523,520

 

 

$

37,261,109

 

Unsecured convertible senior notes, net of discount and debt issuance costs of $478,361 and $1,180,729

69,113,639

 

 

112,777,271

 

Asset retirement obligation

8,178,328

 

 

7,956,343

 

Accounts payable and other accrued liabilities

5,030,229

 

 

3,493,490

 

Management fees payable

1,765,864

 

 

1,831,613

 

Unearned revenue

6,453,805

 

 

6,552,049

 

Total Liabilities

$

126,065,385

 

 

$

169,871,875

 

Equity

 

 

 

Series A Cumulative Redeemable Preferred Stock 7.375%, $125,493,175 and $125,555,675 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,197 and 50,222 issued and outstanding at June 30, 2019 and December 31, 2018, respectively

$

125,493,175

 

 

$

125,555,675

 

Capital stock, non-convertible, $0.001 par value; 12,826,031 and 11,960,225 shares issued and outstanding at June 30, 2019 and December 31, 2018 (100,000,000 shares authorized)

12,826

 

 

11,960

 

Additional paid-in capital

349,165,900

 

 

320,295,969

 

Retained earnings

 

 

9,147,701

 

Total Equity

474,671,901

 

 

455,011,305

 

Total Liabilities and Equity

$

600,737,286

 

 

$

624,883,180

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Revenue

 

 

 

 

 

 

 

Lease revenue

$

16,635,876

 

 

$

18,275,859

 

 

$

33,353,586

 

 

$

35,867,718

 

Transportation and distribution revenue

4,868,144

 

 

3,874,157

 

 

9,739,726

 

 

7,827,136

 

Financing revenue

27,989

 

 

 

 

61,529

 

 

 

Total Revenue

21,532,009

 

 

22,150,016

 

 

43,154,841

 

 

43,694,854

 

Expenses

 

 

 

 

 

 

 

Transportation and distribution expenses

1,246,755

 

 

1,534,524

 

 

2,749,898

 

 

3,107,420

 

General and administrative

2,739,855

 

 

3,107,776

 

 

5,610,262

 

 

5,834,833

 

Depreciation, amortization and ARO accretion expense

5,645,250

 

 

6,290,082

 

 

11,290,346

 

 

12,579,412

 

Provision for loan losses

 

 

 

 

 

 

500,000

 

Total Expenses

9,631,860

 

 

10,932,382

 

 

19,650,506

 

 

22,021,665

 

Operating Income

$

11,900,149

 

 

$

11,217,634

 

 

$

23,504,335

 

 

$

21,673,189

 

Other Income (Expense)

 

 

 

 

 

 

 

Net distributions and other income

$

285,259

 

 

$

55,714

 

 

$

541,874

 

 

$

59,665

 

Net realized and unrealized loss on other equity securities

 

 

(881,100

)

 

 

 

(867,134

)

Interest expense

(2,297,783

)

 

(3,196,248

)

 

(4,805,077

)

 

(6,406,838

)

Loss on extinguishment of debt

 

 

 

 

(5,039,731

)

 

 

Total Other Expense

(2,012,524

)

 

(4,021,634

)

 

(9,302,934

)

 

(7,214,307

)

Income before income taxes

9,887,625

 

 

7,196,000

 

 

14,201,401

 

 

14,458,882

 

Taxes

 

 

 

 

 

 

 

Current tax expense (benefit)

 

 

(10,785

)

 

353,744

 

 

(46,334

)

Deferred tax expense (benefit)

62,699

 

 

(604,064

)

 

156,290

 

 

(1,013,341

)

Income tax expense (benefit), net

62,699

 

 

(614,849

)

 

510,034

 

 

(1,059,675

)

Net Income attributable to CorEnergy Stockholders

9,824,926

 

 

7,810,849

 

 

13,691,367

 

 

15,518,557

 

Preferred dividend requirements

2,313,780

 

 

2,396,875

 

 

4,627,908

 

 

4,793,750

 

Net Income attributable to Common Stockholders

$

7,511,146

 

 

$

5,413,974

 

 

$

9,063,459

 

 

$

10,724,807

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

Basic

$

0.59

 

 

$

0.45

 

 

$

0.71

 

 

$

0.90

 

Diluted

$

0.59

 

 

$

0.45

 

 

$

0.71

 

 

$

0.90

 

Weighted Average Shares of Common Stock Outstanding:

 

 

 

 

 

 

 

Basic

12,811,171

 

 

11,928,297

 

 

12,708,626

 

 

11,923,627

 

Diluted

12,811,171

 

 

11,928,297

 

 

12,708,626

 

 

11,923,627

 

Dividends declared per share

$

0.750

 

 

$

0.750

 

 

$

1.500

 

 

$

1.500

 

 

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

 

For the Six Months Ended

 

June 30, 2019

 

June 30, 2018

Operating Activities

 

 

 

Net Income

$

13,691,367

 

 

$

15,518,557

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Deferred income tax, net

156,290

 

 

(1,013,341

)

Depreciation, amortization and ARO accretion

11,870,408

 

 

13,286,595

 

Provision for loan losses

 

 

500,000

 

Loss on extinguishment of debt

5,039,731

 

 

 

Gain on sale of equipment

 

 

(3,724

)

Net realized and unrealized loss on other equity securities

 

 

867,134

 

Common stock issued under directors’ compensation plan

 

 

37,500

 

Changes in assets and liabilities:

 

 

 

Increase in deferred rent receivable

(3,163,726

)

 

(3,709,202

)

Decrease in accounts and other receivables

550,126

 

 

412,434

 

Increase in financing note accrued interest receivable

(9,217

)

 

 

Increase in prepaid expenses and other assets

(196,684

)

 

(326,372

)

Increase (decrease) in management fee payable

(65,749

)

 

65,679

 

Increase in accounts payable and other accrued liabilities

1,541,221

 

 

433,853

 

Decrease in current income tax liability

 

 

(2,167,655

)

Decrease in unearned revenue

(98,244

)

 

(1,383,757

)

Net cash provided by operating activities

$

29,315,523

 

 

$

22,517,701

 

Investing Activities

 

 

 

Purchases of property and equipment

(26,553

)

 

(47,883

)

Proceeds from sale of property and equipment

 

 

11,499

 

Principal payment on note receivable

5,000,000

 

 

 

Net cash provided by (used in) investing activities

$

4,973,447

 

 

$

(36,384

)

Financing Activities

 

 

 

Debt financing costs

 

 

(264,010

)

Repurchases of preferred stock

(60,550

)

 

 

Cash paid for extinguishment of convertible notes

(19,516,234

)

 

 

Dividends paid on Series A preferred stock

(4,627,560

)

 

(4,793,750

)

Dividends paid on common stock

(18,800,372

)

 

(17,270,766

)

Principal payments on secured credit facilities

(1,764,000

)

 

(1,764,000

)

Net cash used in financing activities

$

(44,768,716

)

 

$

(24,092,526

)

Net Change in Cash and Cash Equivalents

$

(10,479,746

)

 

$

(1,611,209

)

Cash and Cash Equivalents at beginning of period

69,287,177

 

 

15,787,069

 

Cash and Cash Equivalents at end of period

$

58,807,431

 

 

$

14,175,860

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information

 

 

 

Interest paid

$

4,361,760

 

 

$

5,546,660

 

Income taxes paid (net of refunds)

282,786

 

 

2,121,321

 

 

 

 

 

Non-Cash Financing Activities

 

 

 

Change in accounts payable and accrued expenses related to debt financing costs

$

 

 

$

(255,037

)

Reinvestment of distributions by common stockholders in additional common shares

403,831

 

 

610,219

 

Common stock issued upon exchange and conversion of convertible notes

29,457,711

 

 

 

 

NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited)

 

For the Three Months Ended

 

For the Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Net Income attributable to CorEnergy Stockholders

$

9,824,926

 

 

$

7,810,849

 

 

$

13,691,367

 

 

$

15,518,557

 

Less:

 

 

 

 

 

 

 

Preferred Dividend Requirements

2,313,780

 

 

2,396,875

 

 

4,627,908

 

 

4,793,750

 

Net Income attributable to Common Stockholders

$

7,511,146

 

 

$

5,413,974

 

 

$

9,063,459

 

 

$

10,724,807

 

Add:

 

 

 

 

 

 

 

Depreciation

5,511,274

 

 

6,139,171

 

 

11,022,395

 

 

12,277,590

 

NAREIT funds from operations (NAREIT FFO)

$

13,022,420

 

 

$

11,553,145

 

 

$

20,085,854

 

 

$

23,002,397

 

Add:

 

 

 

 

 

 

 

Distributions received from investment securities

285,259

 

 

55,714

 

 

541,874

 

 

59,665

 

Less:

 

 

 

 

 

 

 

Net distributions and other income

285,259

 

 

55,714

 

 

541,874

 

 

59,665

 

Net realized and unrealized loss on other equity securities

 

 

(881,100

)

 

 

 

(867,134

)

Income tax (expense) benefit from investment securities

(6,912

)

 

220,500

 

 

(158,705

)

 

241,987

 

Funds from operations adjusted for securities investments (FFO)

$

13,029,332

 

 

$

12,213,745

 

 

$

20,244,559

 

 

$

23,627,544

 

Add:

 

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

5,039,731

 

 

 

Provision for loan losses, net of tax

 

 

 

 

 

 

500,000

 

Transaction costs

88,611

 

 

24,615

 

 

142,581

 

 

56,896

 

Amortization of debt issuance costs

281,630

 

 

353,637

 

 

580,062

 

 

707,181

 

Amortization of deferred lease costs

22,983

 

 

22,983

 

 

45,966

 

 

45,966

 

Accretion of asset retirement obligation

110,993

 

 

127,928

 

 

221,985

 

 

255,856

 

Less:

 

 

 

 

 

 

 

Income tax (expense) benefit

(55,787

)

 

394,349

 

 

(351,329

)

 

817,688

 

Adjusted funds from operations (AFFO)

$

13,589,336

 

 

$

12,348,559

 

 

$

26,626,213

 

 

$

24,375,755

 

 

 

 

 

 

 

 

 

Weighted Average Shares of Common Stock Outstanding:

 

 

 

 

 

 

 

Basic

12,811,171

 

 

11,928,297

 

 

12,708,626

 

 

11,923,627

 

Diluted

14,934,886

 

 

15,382,843

 

 

14,988,429

 

 

15,378,172

 

NAREIT FFO attributable to Common Stockholders

 

 

 

 

 

 

 

Basic

$

1.02

 

 

$

0.97

 

 

$

1.58

 

 

$

1.93

 

Diluted (1)

$

0.96

 

 

$

0.89

 

 

$

1.53

 

 

$

1.78

 

FFO attributable to Common Stockholders

 

 

 

 

 

 

 

Basic

$

1.02

 

 

$

1.02

 

 

$

1.59

 

 

$

1.98

 

Diluted (1)

$

0.96

 

 

$

0.94

 

 

$

1.54

 

 

$

1.82

 

AFFO attributable to Common Stockholders

 

 

 

 

 

 

 

Basic

$

1.06

 

 

$

1.04

 

 

$

2.10

 

 

$

2.04

 

Diluted (2)

$

0.99

 

 

$

0.93

 

 

$

1.95

 

 

$

1.84

 

(1)

Diluted per share calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.

(2)

Diluted per share calculations include a dilutive adjustment for convertible note interest expense.

 

Contacts

CorEnergy Infrastructure Trust, Inc.

Investor Relations

Lesley Schorgl, 877-699-CORR (2677)

info@corenergy.reit

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