CorEnergy Releases First Quarter 2014 Results

CorEnergy Infrastructure Trust, Inc. (NYSE: CORR) (“CorEnergy” or the “Company”) today announced financial results for the first quarter ended March 31, 2014.

First Quarter Highlights and Subsequent Events
  • Declared first quarter 2014 dividend distribution of $0.129, payable on May 22, 2014
  • Reiterating annualized dividend guidance of no less than $0.52 per share – a 4% increase over the prior quarter
  • Completed two transactions in the first quarter, the Portland Terminal Facility acquisition and Black Bison transaction
  • Formally elected to be treated as a REIT for the 2013 tax year

“CorEnergy delivered an excellent first quarter by investing accretively, growing FFO and AFFO at a superior rate, increasing annualized dividend guidance by 4 percent and prudently managing our balance sheet,” said David Schulte, Chief Executive Officer of CorEnergy.

“Consistent with our disciplined growth strategy, we expanded our asset portfolio, closing two transactions in the first quarter. We also completed a highly successful follow-on equity offering. We are increasing our full-year outlook, reflecting the strength of CorEnergy’s business model and confidence around transaction execution.”

Quarterly Performance Review

CorEnergy reported total revenues of $10.0 million in the quarter ended March 31, 2014. A first quarter dividend of $0.129 was declared on April 30, 2014, and is payable on May 22, 2014. Total assets were $331.6 million and total stockholders' equity was $221.9 million as of March 31, 2014, compared to $283.9 million and $177.2 million, respectively, at Dec. 31, 2013. The increase in total assets and stockholders’ equity is primarily due to the acquisition and financing of the Portland Terminal Facility. Net income attributable to common stockholders was $2.1 million, or $0.07 per common share.

Because the Company now operates as a REIT, management believes that non-GAAP performance measures utilized by REITs, including Funds from Operations (“FFO”) and Adjusted Funds from Operations (“AFFO”), also provide useful insights into CorEnergy’s operational performance. AFFO for the quarter ended March 31, 2014, was $0.14 per share as compared to $0.13 per share for the quarter ended Dec. 31, 2013.
First Quarter Ended March 31, 2014 Financial Summary
        For the Three Month Period Ended March 31, 2014
        Total       Per Share
Net Income (attributable to CorEnergy Stockholders)       $ 2,105,159       $ 0.07
Funds From Operations (FFO)       $ 4,535,932       $ 0.15
Adjusted Funds From Operations (AFFO)       $ 4,201,785       $ 0.14
           

FFO and AFFO are non-GAAP measures presented in accordance with the guidelines for calculation and reporting issued by the National Association of Real Estate Investment Trusts. FFO represents net income (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and after adjustments for unconsolidated partnerships and joint ventures. The Company considers FFO an important supplemental measure of operating performance that is frequently used by securities analysts, investors and other interested parties. CorEnergy defines AFFO as FFO plus transaction costs, amortization of debt issuance costs, deferred leasing costs, above-market rent, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), amortization of debt premium and other adjustments as deemed appropriate. Management uses AFFO as a measure of long-term sustainable operational performance.

Portfolio Update

As previously announced, CorEnergy closed an acquisition of a petroleum products terminal facility (the "Portland Terminal Facility") for $40 million in cash on January 21, 2014. The Portland Terminal Facility is leased to a subsidiary of Arc Logistics Partners LP (NYSE: ARCX) under a 15-year triple net participating lease.

As announced on March 17, 2014, CorEnergy closed a transaction to finance the acquisition by Black Bison Water Services, LLC (“Black Bison”) of salt water disposal properties and related capital improvement projects. The financing will be secured by three salt water disposal properties serving oil and gas producers in Wyoming’s Powder River Basin and Green River Basin.

Outlook

CorEnergy expects its energy infrastructure assets – the Pinedale LGS, the Eastern Interconnect Project, the Portland Terminal Facility, Mowood and Black Bison – to produce stable and recurring revenues in 2014. The Company believes that the cash flows from its holdings will support 2014 annualized dividend payments of no less than $0.52 per share. The Company has a broadening set of opportunities in the pipeline, which provide the potential to reach $50 to $200 million per project type. There can be no assurance that any of these acquisition opportunities will result in consummated transactions. The Company has a $20 million revolving credit facility in place, which can be utilized for future acquisitions. As of March 31, 2014, there were no outstanding borrowings against the facility. The Company expects to utilize balance sheet resources, including prudent leverage when available, supplemented with accretive equity issuance as needed.

Dividend Policy

In 2013, CorEnergy changed its fiscal year as part of its transition from a business development company to a REIT. As a result of this change, the dividend payment schedule for calendar 2014 will vary from prior years. Going forward, the Company intends to maintain a quarterly February/May/August/November dividend payment cycle. Dividend payouts may be affected by cash flow requirements and remain subject to other risks and uncertainties.

2014 First Quarter Earnings Conference Call

CorEnergy will host a conference call Tuesday, May 13, 2014, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at 877-407-8035 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.corridortrust.com.

A replay of the call will be available until 11:59 p.m. Central Time June 13, 2014, by dialing 877-660-6853. The Conference ID # is 13582140. A replay of the webcast will also be available on the company’s website at corenergy.corridortrust.com through May 13, 2015.

About CorEnergy Infrastructure Trust, Inc.

CorEnergy Infrastructure Trust, Inc. (NYSE: CORR), primarily owns midstream and downstream U.S. energy infrastructure assets subject to long-term triple net participating leases with energy companies. These assets include pipelines, storage tanks, transmission lines and gathering systems. The Company’s principal objective is to provide stockholders with an attractive risk-adjusted total return, with an emphasis on distributions and long-term distribution growth (reported to our investors on Form 1099). CorEnergy is managed by Corridor InfraTrust Management, LLC, a real property asset manager focused on U.S. energy infrastructure real assets, and is an affiliate of Tortoise Capital Advisors, L.L.C., an investment manager specializing in listed energy investments, with approximately $16.4 billion of assets under management in NYSE-listed closed-end investment companies, open-end funds and other accounts as of April 30, 2014. For more information, please visit corenergy.corridortrust.com.

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.
 
CorEnergy Infrastructure Trust, Inc.
CONSOLIDATED BALANCE SHEETS
 
      March 31, 2014       December 31, 2013
Assets (Unaudited)
Leased property, net of accumulated depreciation of $15,815,415
and $12,754,588 $ 271,125,556 $ 232,220,618
Other equity securities, at fair value 24,107,243 23,304,321
Cash and cash equivalents 23,095,733 17,963,266
Property and equipment, net of accumulated depreciation of
$2,108,495 and $2,037,685 3,247,673 3,318,483
Financing note and related accrued interest receivable, net 4,107,955 -
Lease receivable 438,239 711,229
Accounts receivable 2,213,860 2,068,193
Intangible lease asset, net of accumulated amortization of
$802,832 and $729,847 291,939 364,924
Deferred debt issuance costs, net of accumulated amortization of
$717,670 and $572,830 1,080,684 1,225,524
Deferred lease costs, net of accumulated amortization of $78,613
and $63,272 841,849 857,190
Hedged derivative asset 611,326 680,968
Income tax receivable - 834,382
Prepaid expenses and other assets   433,618   326,561
Total Assets $ 331,595,675 $ 283,875,659
 
Liabilities and Equity
Current maturities of long-term debt $ 3,528,000 $ 2,940,000
Long-term debt (net of current maturities) 66,178,000

67,060,000
Accounts payable and other accrued liabilities 2,786,408 2,920,267
Unearned revenue 2,844,914 -
Deferred tax liability 4,991,526 5,332,087
Income tax payable 198,865 -
Line of credit   483,105   81,935

Total Liabilities
$ 81,010,818 $

78,334,289
 
Equity
Warrants, no par value; 0 and 945,594 issued and outstanding at
March 31, 2014 and December 31, 2013, respectively (5,000,000
authorized) $ - $ 1,370,700
Capital stock, non-convertible, $0.001 par value; 31,635,537 shares
issued and outstanding at March 31, 2014 and 24,156,163 shares
issued and outstanding at December 31, 2013 (100,000,000 shares
authorized) 31,635 24,156
Additional paid-in capital 220,458,108 173,441,019
Accumulated retained earnings 665,698 1,580,062
Accumulated other comprehensive income   706,783   777,403
Total CorEnergy Equity   221,862,224   177,193,340

Non-controlling interest
  28,722,633   28,348,030
Total Equity   250,584,857   205,541,370
Total Liabilities and Equity $ 331,595,675 $

283,875,659
 
 
CorEnergy Infrastructure Trust, Inc.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
      For the Three Months Ended

March 31, 2014
     

March 31, 2013
Revenue
Lease revenue $ 6,762,408 $ 5,638,244
Sales revenue 3,259,530 2,515,573
Financing revenue   25,619  

-
 
Total Revenue   10,047,557     8,153,817  
 
Expenses
Cost of sales (excluding depreciation expense) 2,707,358 2,003,639
Management fees 783,868 643,814
Asset acquisition expenses 16,217 31,817
Professional fees 399,128 454,183
Depreciation expense 3,131,637 2,857,036
Amortization expense 15,341 15,279
Operating expenses 222,741 206,904
Directors' fees 65,034 18,000
Other expenses   168,708     122,706  
Total Expenses   7,510,032     6,353,378  
Operating Income   2,537,525     1,800,439  
Other Income (Expense)
Net distributions and dividend income $

-
$ 13,124
Net realized and unrealized gain on trading securities - 316,063
Net realized and unrealized gain on other equity securities 1,294,182 2,425,986
Interest expense   (821,921 )   (737,381 )
Total Other Income   472,261     2,017,792  

Income before income taxes
  3,009,786     3,818,231  
Taxes
Current tax expense 854,075 285,891
Deferred tax expense (benefit)   (340,562 )   735,053  
Income tax expense, net   513,513     1,020,944  

Net Income
2,496,273 2,797,287
Less: Net income attributable to non-controlling interest   391,114     384,534  

Net Income attributable to CORR Stockholders
$ 2,105,159   $ 2,412,753  
 
Net income $ 2,496,273 $ 2,797,287
Other comprehensive income:
Changes in fair value of qualifying hedges
attributable to CORR stockholders (70,620 ) -
Changes in fair value of qualifying hedges
attributable to non-controlling interest   (16,511 )   -  

Net Change in Other Comprehensive Income
$ (87,131 ) $ -  

Total Comprehensive Income
2,409,142 2,797,287
Less: Comprehensive income attributable to non-controlling interest   374,603     384,534  

Comprehensive Income attributable to CORR Stockholders
$ 2,034,539   $ 2,412,753  
 
Earnings Per Common Share:
Basic and Diluted $ 0.07 $ 0.10
Weighted Average Shares of Common Stock Outstanding:
Basic and Diluted 29,973,357 24,141,720
Dividends declared per share $ 0.125 $ 0.125
 
 
CorEnergy Infrastructure Trust, Inc.
CONSOLIDATED STATEMENTS OF EQUITY

 
                Additional     Accumulated Other     Retained Earnings        
Capital Stock Paid-in Comprehensive (Accumulated Non-Controlling
Shares Amount Warrants Capital Income Deficit) Interest Total
Balance at December 31, 2012 24,140,667   24,141   1,370,700   175,256,675     -     4,209,023     29,981,653     210,842,192  
 
Net income - - - - - 4,502,339 1,466,767 5,969,106
 
Net change in cash flow hedges -   -   -   -     777,403     -     181,762     959,165  
 
Total comprehensive income - - - - 777,403 4,502,339 1,648,529 6,928,271
 
Dividends - - - (1,923,760 ) - (7,131,300 ) - (9,055,060 )

Distributions to non-controlling

interest
- - - - - - (3,282,152 ) (3,282,152 )

Reinvestment of dividends paid

to stockholders
15,496   15   -   108,104     -     -     -     108,119  
 
Balance at December 31, 2013 24,156,163 $ 24,156  

 $1,370,700
$ 173,441,019   $ 777,403   $ 1,580,062   $ 28,348,030   $ 205,541,370  
 
Net income - - - - - 2,105,159 391,114 2,496,273
 
Net change in cash flow hedges -   -   -   -     (70,620 )   -     (16,511 )   (87,131 )
 
Total comprehensive income - - - - (70,620 ) 2,105,159 374,603 2,409,142
 
Net offering proceeds 7,475,000 7,475 - 45,617,088 - - - 45,624,563
 
Dividends - - - - - (3,019,523 ) - (3,019,523 )

Reinvestment of dividends paid

to stockholders
4,374 4 - 29,301 - - - 29,305
 

Warrant expiration
-   -  

 (1,370,700)
  1,370,700     -     -     -     -  
Balance at March 31, 2014
(Unaudited) 31,635,537 $ 31,635 $ - $ 220,458,108   $ 706,783   $ 665,698   $ 28,722,633   $ 250,584,857  
 
 
CorEnergy Infrastructure Trust, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
      For the Three Months Ended
March 31, 2014         March 31, 2013
Operating Activities  

Net income (Loss)
$ 2,496,273 $ 2,797,287
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Deferred income tax, net (340,561 ) 735,053
Depreciation 3,131,637 2,857,036
Amortization 233,166 216,738
Realized and unrealized gain on trading securities - (316,063 )
Realized and unrealized gain on other equity securities (1,294,182 ) (2,425,986 )

Unrealized gain on derivative contract
(17,489 ) -
Changes in assets and liabilities:
Increase in accounts receivable (145,667 ) (741,371 )
Decrease in lease receivable 272,990 -
(Increase) decrease in prepaid expenses and other assets (107,057 ) 136,042

Increase (decrease) in accounts payable and other accrued liabilities
8,017 (349,318 )
Increase (decrease) in current income tax liability 1,033,247 (3,647,016 )
Increase (decrease) in unearned income   2,844,914     (711,228 )
Net cash provided by (used in) operating activities $ 8,115,288   $ (1,448,826 )
 
Investing Activities
Proceeds from sale of long-term investment of trading and other equity securities - 4,557,379
Deferred lease costs - (5,620 )

Acquisition of leased assets
(41,887,644 ) -
Purchases of property and equipment - (41,163 )
Issuance of financing note receivable (4,107,955 ) -
Return of capital on distributions received   491,260     314,340  
Net cash (used in) provided by investing activities $ (45,504,339 ) $ 4,824,936  
 
Financing Activities
Payments on lease obligation - (20,698 )
Debt financing costs (220,000 ) (10,999 )
Net offering proceeds 45,624,563 -
Dividends paid (2,990,215 ) (2,968,442 )
Advances on revolving line of credit 1,523,266 139,397
Payments on revolving line of credit (1,122,096 ) -

Principal payment on credit facility
  (294,000 )   -  

Net cash provided by (used in) financing activities
$ 42,521,518   $ (2,860,742 )
Net change in cash and cash equivalents $ 5,132,467 $ 515,368
Cash and cash equivalents at beginning of period   17,963,266     17,680,783  
Cash and cash equivalents at end of period $ 23,095,733   $ 18,196,151  
 
Supplemental Disclosure of Cash Flow Information
Interest paid $ 690,570 $ 531,318

Income taxes paid (refunds received)
$ (179,172 ) $ 3,895,800
Non-Cash Investing Activities
Change in accounts payable and accrued expenses related to acquisition expenditures $ 78,121 -
Non-Cash Financing Activities
Reinvestment of distributions by common stockholders in additional common shares $ 29,305 $ 49,141
Change in accounts payable and accrued expenses related to debt financing costs $ (220,000 ) -
 
 
CorEnergy Infrastructure Trust, Inc.
NON-GAAP FINANCIAL MEASURES RECONCILIATION
FFO and AFFO Reconciliation
 
      For the Three Months Ended
March 31, 2014       March 31, 2013
Net Income (attributable to CorEnergy Stockholders): $ 2,105,159 $ 2,412,753
Add:
Depreciation 3,131,637 2,857,036
Distributions received from investment securities 491,260 314,339
Income tax expense, net 513,513 1,020,944
Less:

Net realized and unrealized gain on trading securities
- 316,063

Net realized and unrealized gain on other equity securities
1,294,182 2,425,986
Non-controlling interest attributable to FFO reconciling items   411,455     411,378
Funds from operations (FFO): 4,535,932 3,451,645
Add:
Transaction costs 16,217 31,817
Amortization of debt issuance costs 144,840 128,474
Amortization of deferred lease costs 15,279 15,279
Amortization of above market leases 72,985 72,985
Noncash costs associated with derivative instruments (17,489 ) 3,350
Less:
EIP lease adjustment 542,809 542,809
Non-controlling interest attributable to AFFO reconciling items   23,170     26,330

Adjusted funds from operations (AFFO):
  4,201,785     3,134,411
 
Weighted Average Shares 29,973,357 24,141,720
FFO per share $ 0.15 $ 0.14
AFFO per share $ 0.14 $ 0.13

Copyright Business Wire 2010

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