DALLAS, May 3, 2018 /PRNewswire/ -- InfraREIT, Inc.
(NYSE: HIFR) ("InfraREIT" or the "Company") today reported
financial results for the first quarter of 2018 and provided the
Company's financial outlook.
For the first quarter of 2018, InfraREIT reported the following
highlights:
- Net income was $17.8 million
- Net income attributable to InfraREIT, Inc. common stockholders
per share ("EPS") was $0.29 per
share
- Non-GAAP earnings per share ("Non-GAAP EPS") was $0.29 per share
- Funds from operations ("FFO") was $29.3
million and FFO on an adjusted basis ("AFFO") was
$28.6 million
- Quarterly dividend declared of $0.25 per share of common stock, $1.00 per share annualized
Reaffirmed Guidance:
- 2018 EPS range of $1.29 to
$1.39
- 2018 Non-GAAP EPS range of $1.22
to $1.32
- Expect to maintain the Company's quarterly cash dividend of
$0.25 per share, or $1.00 per share annualized through 2018
- Earnings and dividend guidance assumes the existing lease
payments continue as scheduled and that InfraREIT maintains its
real estate investment trust ("REIT") status throughout 2018
- Footprint capital expenditures range of $70 million to $180
million for the period of 2018 through 2020
Recent events:
- InfraREIT's Board of Directors completed its initial review of
the Company's REIT status and directed management to pursue an
alternative structure that would involve, among other things,
InfraREIT terminating its REIT status and opting for a traditional
C-corporation structure ("De-REIT alternative"). Any De-REIT
alternative could involve negotiations with Hunt Consolidated, Inc.
("HCI") and its affiliates (collectively, "Hunt") regarding the
arrangements currently in place between the Company and Hunt and
may require certain regulatory approvals. The Board of
Directors has not set a specific timeline for evaluating and
selecting a De-REIT alternative. In tandem with the Board's
evaluation of a De-REIT alternative, the Conflicts Committee will
continue to monitor HCI's Schedule 13D filings regarding Hunt's
intentions with respect to the Company.
"Our pursuit of a De-REIT alternative does not change our core
strategy," said David A. Campbell,
Chief Executive Officer of InfraREIT. "We are committed to
operating and expanding our franchise as a transmission-focused
utility, supporting load growth in West
Texas and the expansion of renewables in the
Panhandle. We advanced our strategy in the first quarter with
two important milestones. Sharyland successfully energized
the final line segment of our second circuit, expanding the
generation export capacity from the Panhandle and allowing more low-cost,
emissions-free wind generation to reach the broader ERCOT
market. Also, we placed into service the first synchronous
condensers within the ERCOT system, at the Alibates and Tule Canyon
stations. These condensers enhance grid stability and export
capacity of the transmission system in the Panhandle," added Campbell.
First Quarter 2018 Results
Lease revenue, consisting
of only base rent, increased 15 percent to $45.7 million for the three months ended March
31, 2018, compared to $39.6
million for the same period in 2017. There was no
percentage rent recognized during the first quarter of 2018 or 2017
as Sharyland Utilities, L.P.'s ("Sharyland") year-to-date adjusted
gross revenue did not exceed the annual specified breakpoints under
the Company's leases. The Company anticipates that little to
no percentage rent will be recognized in the first and second
quarters of each year, with the largest amounts of percentage rent
recognized in the third and fourth quarters of each year.
Net income was $17.8 million in
the first quarter of 2018, compared to net income of $11.0 million in the first quarter of 2017.
Net income attributable to InfraREIT, Inc. common stockholders was
$0.29 per share during the first
quarter of 2018 compared to $0.18 per share during the same period in
2017. The $6.8 million increase
in net income is a result of a $6.1
million increase in lease revenue, $1.1 million decrease in depreciation expense and
$0.7 million increase in other
income, net partially offset by a $1.0
million increase in interest expense, net.
Non-GAAP EPS was $0.29 per share
for the first quarter of 2018 compared to $0.20 per share for the first quarter of 2017,
representing an increase of 45 percent. The drivers of growth
in Non-GAAP EPS were the same as the drivers of the increase in net
income. FFO was $29.3 million
for the first quarter of 2018, compared to $23.7 million for the same period in 2017,
representing an increase of $5.6
million resulting mainly from the increase in lease
revenue. For the first quarter of 2018, AFFO was $28.6 million, compared to $24.7 million for the same period in 2017,
representing an increase of 16 percent.
Liquidity and Capital Resources
As of March 31, 2018, the Company had $1.6 million of unrestricted cash and cash
equivalents and $289.5 million of
unused capacity under its revolving credit facilities.
Outlook and Guidance
EPS is projected in the range of
$1.29 to $1.39 for 2018. Non-GAAP EPS is estimated
in the range of $1.22 to $1.32 for 2018. The difference between
Non-GAAP EPS and EPS is due to adjustments related to straight-line
rent and expenses associated with the asset exchange transaction
completed in November of 2017 ("Asset Exchange Transaction").
InfraREIT expects to maintain the Company's current quarterly cash
dividend of $0.25 per share, or
$1.00 per share annualized, through
2018. These forecasted amounts assume that InfraREIT
maintains its REIT status throughout 2018 and that the existing
lease payments are made by Sharyland as scheduled during 2018.
The Company estimates footprint capital expenditures in the
following ranges over the next three years: $50 million to $80
million for 2018; $10 million to $50 million for 2019; and $10 million to
$50 million for 2020.
The Company's consolidated debt profile continues to target debt
as a percentage of total capitalization at or below 60 percent and
AFFO-to-debt of at least 12 percent.
The guidance provided above constitutes forward-looking
statements, which are based on current economic conditions and
estimates, and the Company does not include other potential
impacts, such as changes in accounting or unusual items.
Supplemental information relating to the Company's financial
outlook is posted in the Investor Relations section of the
Company's Web site at www.InfraREITInc.com.
Company Structure Review
InfraREIT's Board of
Directors completed its initial review of the Company's REIT status
and directed management to pursue a De-REIT alternative. Hunt
has informed the Company that it agrees with the Board's
direction.
Any De-REIT alternative could involve one or more of the
following: combining Sharyland with Sharyland Distribution &
Transmission Services, L.L.C. ("SDTS"), terminating the leases
between SDTS and Sharyland, terminating the Company's operating
partnership, and/or other negotiations with Hunt, including
terminating or renegotiating the Company's management agreement and
development agreement, and engaging in related negotiations.
InfraREIT intends to explore various De-REIT options and has
not yet determined to pursue a specific form of De-REIT
alternative. There is no specific timeline set for completing
the evaluation of a De-REIT alternative and there can be no
assurance that any De-REIT alternative will be executed. The
Company expects to continue operating as a REIT until the execution
of a De-REIT alternative, if any.
Communications from Hunt Consolidated, Inc.
On
January 16, 2018, InfraREIT's
shareholder, HCI, filed an amendment to its Schedule 13D with the
U.S. Securities and Exchange Commission. The Company's
Conflicts Committee intends to consider any proposal from HCI;
however, at this time, no offer has been made to InfraREIT.
Dividends and Distributions
On February 27, 2018, InfraREIT's Board of Directors
declared cash distributions and dividends of $0.25 per unit and share, respectively, to
unitholders and stockholders of record on March 29, 2018, which were paid on April 19, 2018.
Annual Stockholders Meeting
InfraREIT's Annual Meeting
of Stockholders will be held on Wednesday, May 16, 2018 at
11:00 a.m. U.S. Central Time, at the
Fairmont Dallas Hotel, 1717 North Akard Street, Dallas, Texas 75201. The Board of
Directors established Monday, March 12,
2018, as the record date for determining stockholders
entitled to vote at the Annual Meeting, in person or by proxy.
Hunt Project Quarterly Updates
InfraREIT's quarterly
"Hunt Project Updates" can be found on the Company's Web site
(www.InfraREITInc.com) under the "Hunt Transmission-Our Developer"
and "Investor Relations" sections and in the "Q1 2018 Results &
Supplemental Information" presentation posted on the Company's Web
site.
Conference Call and Webcast
As previously announced,
management will host a teleconference call on May 3, 2018, at 10
a.m. U.S. Central Time (11
a.m. U.S. Eastern Time). David
A. Campbell, Chief Executive Officer, and Brant Meleski, Chief Financial Officer, will
discuss InfraREIT's results and financial outlook.
Investors and analysts are invited to participate in the call by
phone at 1-855-560-2576, or internationally at 1-412-542-4162
(access code: 10118251) or via the Internet at
www.InfraREITInc.com. A replay of the call will be available
on the Company's Web site or by phone at 1-877-344-7529, or
internationally at 1-412-317-0088 (access code: 10118251), for a
seven-day period following the call.
Non-GAAP Measures
This press release contains certain
financial measures that are not recognized under generally accepted
principles in the United States of
America ("GAAP"). In particular, InfraREIT uses
Non-GAAP EPS, FFO and AFFO as important supplemental measures of
the Company's operating performance. InfraREIT is no longer
including cash available for distribution ("CAD"); earnings before
interest, taxes, depreciation and amortization ("EBITDA"); and
Adjusted EBITDA. The Company presents non-GAAP performance
measures because management believes they help investors understand
InfraREIT's business, performance and ability to earn and
distribute cash to its stockholders by providing perspectives not
immediately apparent from net income. Reporting on these
measures in InfraREIT's public disclosures also ensures that this
information is available to all of InfraREIT's investors. The
non-GAAP measures presented in this press release are not intended
to be considered in isolation or as a substitute for, or superior
to, the financial information prepared and presented in accordance
with GAAP.
InfraREIT offers these measurers to assist users in assessing
the Company's operating performance under GAAP, but these measures
are non-GAAP measures and should not be considered measures of
liquidity, alternatives to net income or indicators of any other
performance measures determined in accordance with GAAP, nor are
they indicative of funds available to fund the Company's cash
needs, including capital expenditures, make payments on the
Company's indebtedness or make distributions. In addition,
InfraREIT's method of calculating these measures may be different
from methods used by other companies and, accordingly, may not be
comparable to similar measures as calculated by other
companies. Investors should not rely on these measures as a
substitute for any GAAP measure, including net income, cash flows
from operating activities or revenues. Reconciliations of
these measures to their most directly comparable GAAP measures are
included in the Schedules to this press release.
About InfraREIT, Inc.
InfraREIT is a real estate
investment trust that is engaged in owning and leasing
rate-regulated electric transmission assets in the state of
Texas. The Company is
externally managed by Hunt Utility Services, LLC, an affiliate of
Hunt Consolidated, Inc. (a diversified holding company based in
Dallas, Texas, and managed by the
Ray L. Hunt family). The Company's shares are traded on the
New York Stock Exchange under the symbol "HIFR." Additional
information on InfraREIT is available at www.InfraREITInc.com.
Forward-Looking Statements
This press release contains
forward-looking statements within the meaning of the federal
securities laws. These statements give InfraREIT management's
current expectations and include projections of results of
operations or financial condition or forecasts of future events.
Words such as "could," "will," "may," "assume," "forecast,"
"strategy," "guidance," "outlook," "target," "expect," "intend,"
"plan," "estimate," "anticipate," "believe" or "project" and
similar expressions are used to identify forward-looking
statements. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release include
InfraREIT's expectations regarding anticipated financial and
operational performance, including projected or forecasted
financial results, distributions to stockholders, capital
expenditures, AFFO-to-debt ratios, capitalization matters and other
forecasted metrics and statements regarding a potential De-REIT
alternative. The assumptions and estimates underlying the
forward-looking statements included in this press release are
inherently uncertain and, though considered reasonable by
InfraREIT's management team as of the date of its preparation, are
subject to a wide variety of significant business, economic and
competitive risks and uncertainties that could cause actual results
to differ materially from those contained in this press release.
Risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward-looking
statements include, among others, the following: (a) decisions by
regulators or changes in governmental policies or regulations with
respect to the Company's organizational structure, lease
arrangements, capitalization, acquisitions and dispositions of
assets, recovery of investments, the Company's authorized rate of
return and other regulatory parameters; (b) the impact of any
De-REIT alternative; (c) the implications of the Company's
relationships with HCI and its affiliates on any transaction or
arrangement that may be proposed with respect to InfraREIT's
business or structure; (d) the Company's current reliance on its
tenant for all of its revenues and, as a result, its dependency on
the tenant's solvency and financial and operating performance; (e)
the amount of available investment to grow the Company's rate base;
(f) the Company's ability to negotiate future rent payments or to
renew leases with its tenant; (g) insufficient cash available to
meet distribution requirements; and (h) the effects of existing and
future tax and other laws and governmental regulations. These
and other applicable uncertainties, factors and risks are described
more fully in the Company's filings with the U. S. Securities and
Exchange Commission. For the above reasons, there can be no
assurance that any forward-looking statements included herein will
prove to be indicative of the Company's future performance or that
actual results will not differ materially from those presented.
In no event should the inclusion of forecasted financial
information in this press release be regarded as a representation
by any person that the results contained in the forecasted
financial information will be achieved.
Any forward-looking statement made by the Company in this press
release is based only on information currently available to
InfraREIT and speaks only as of the date on which it is made.
InfraREIT undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, other than as required by applicable
law.
InfraREIT,
Inc.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands, except
per share amounts)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Revenue
|
|
|
|
|
|
|
|
|
Base rent
|
|
$
|
45,656
|
|
|
$
|
39,624
|
|
Percentage
rent
|
|
|
—
|
|
|
|
—
|
|
Total lease
revenue
|
|
|
45,656
|
|
|
|
39,624
|
|
Operating costs
and expenses
|
|
|
|
|
|
|
|
|
General and
administrative expense
|
|
|
6,088
|
|
|
|
5,981
|
|
Depreciation
|
|
|
11,577
|
|
|
|
12,687
|
|
Total operating costs
and expenses
|
|
|
17,665
|
|
|
|
18,668
|
|
Income from
operations
|
|
|
27,991
|
|
|
|
20,956
|
|
Other (expense)
income
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(10,674)
|
|
|
|
(9,698)
|
|
Other income,
net
|
|
|
733
|
|
|
|
3
|
|
Total other
expense
|
|
|
(9,941)
|
|
|
|
(9,695)
|
|
Income before
income taxes
|
|
|
18,050
|
|
|
|
11,261
|
|
Income tax
expense
|
|
|
286
|
|
|
|
244
|
|
Net
income
|
|
|
17,764
|
|
|
|
11,017
|
|
Less: Net income
attributable to noncontrolling interest
|
|
|
4,900
|
|
|
|
3,068
|
|
Net income
attributable to InfraREIT, Inc.
|
|
$
|
12,864
|
|
|
$
|
7,949
|
|
Net income
attributable to InfraREIT, Inc. common stockholders per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.29
|
|
|
$
|
0.18
|
|
Diluted
|
|
$
|
0.29
|
|
|
$
|
0.18
|
|
Cash dividends
declared per common share
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
Weighted average
common shares outstanding (basic shares)
|
|
|
43,832
|
|
|
|
43,775
|
|
Redemption of
operating partnership units
|
|
|
—
|
|
|
|
—
|
|
Weighted average
dilutive shares outstanding (diluted shares)
|
|
|
43,832
|
|
|
|
43,775
|
|
Due to the
anti-dilutive effect, the computation of diluted earnings per
share does not reflect the
following adjustments:
Net income
attributable to noncontrolling interest
|
|
|
|
|
|
|
|
|
|
$
|
4,900
|
|
|
$
|
3,068
|
|
Redemption of
operating partnership units
|
|
|
16,872
|
|
|
|
16,900
|
|
InfraREIT,
Inc.
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands, except
share amounts)
|
|
|
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
(Unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
Assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
1,624
|
|
|
$
|
2,867
|
|
Restricted
cash
|
|
|
1,683
|
|
|
|
1,683
|
|
Due from
affiliates
|
|
|
32,605
|
|
|
|
35,172
|
|
Inventory
|
|
|
6,891
|
|
|
|
6,759
|
|
Prepaids and other
current assets
|
|
|
1,401
|
|
|
|
2,460
|
|
Total current
assets
|
|
|
44,204
|
|
|
|
48,941
|
|
Electric Plant,
net
|
|
|
1,782,965
|
|
|
|
1,772,229
|
|
Goodwill
|
|
|
138,384
|
|
|
|
138,384
|
|
Other
Assets
|
|
|
33,251
|
|
|
|
34,314
|
|
Total
Assets
|
|
$
|
1,998,804
|
|
|
$
|
1,993,868
|
|
Liabilities and
Equity
|
|
|
|
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
26,947
|
|
|
$
|
21,230
|
|
Short-term
borrowings
|
|
|
35,500
|
|
|
|
41,000
|
|
Current portion of
long-term debt
|
|
|
67,847
|
|
|
|
68,305
|
|
Dividends and
distributions payable
|
|
|
15,176
|
|
|
|
15,169
|
|
Accrued
taxes
|
|
|
5,919
|
|
|
|
5,633
|
|
Total current
liabilities
|
|
|
151,389
|
|
|
|
151,337
|
|
Long-Term Debt,
Less Deferred Financing Costs
|
|
|
839,649
|
|
|
|
841,215
|
|
Regulatory
Liabilities
|
|
|
104,180
|
|
|
|
100,458
|
|
Total
liabilities
|
|
|
1,095,218
|
|
|
|
1,093,010
|
|
Commitments and
Contingencies
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
Common stock, $0.01
par value; 450,000,000 shares authorized; 43,960,884 and
43,796,915 issued and outstanding as of
March 31, 2018 and December 31, 2017, respectively
|
|
|
440
|
|
|
|
438
|
|
Additional paid-in
capital
|
|
|
709,461
|
|
|
|
706,357
|
|
Accumulated
deficit
|
|
|
(47,854)
|
|
|
|
(49,728)
|
|
Total InfraREIT, Inc.
equity
|
|
|
662,047
|
|
|
|
657,067
|
|
Noncontrolling
interest
|
|
|
241,539
|
|
|
|
243,791
|
|
Total
equity
|
|
|
903,586
|
|
|
|
900,858
|
|
Total Liabilities
and Equity
|
|
$
|
1,998,804
|
|
|
$
|
1,993,868
|
|
InfraREIT,
Inc.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2018
|
|
|
2017
|
|
Cash flows from
operating activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
17,764
|
|
|
$
|
11,017
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
11,577
|
|
|
|
12,687
|
|
Amortization of
deferred financing costs
|
|
|
1,071
|
|
|
|
1,004
|
|
Allowance for funds
used during construction - other funds
|
|
|
(730)
|
|
|
|
—
|
|
Equity based
compensation
|
|
|
140
|
|
|
|
140
|
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
|
|
Due from
affiliates
|
|
|
2,567
|
|
|
|
5,496
|
|
Inventory
|
|
|
(132)
|
|
|
|
47
|
|
Prepaids and other
current assets
|
|
|
(573)
|
|
|
|
(721)
|
|
Accounts payable and
accrued liabilities
|
|
|
3,153
|
|
|
|
140
|
|
Net cash provided by
operating activities
|
|
|
34,837
|
|
|
|
29,810
|
|
Cash flows from
investing activities
|
|
|
|
|
|
|
|
|
Additions to electric
plant
|
|
|
(15,011)
|
|
|
|
(52,223)
|
|
Proceeds from asset
exchange transaction
|
|
|
1,632
|
|
|
|
—
|
|
Net cash used in
investing activities
|
|
|
(13,379)
|
|
|
|
(52,223)
|
|
Cash flows from
financing activities
|
|
|
|
|
|
|
|
|
Proceeds from
short-term borrowings
|
|
|
12,000
|
|
|
|
34,000
|
|
Repayments of
short-term borrowings
|
|
|
(17,500)
|
|
|
|
(9,500)
|
|
Repayments of
long-term debt
|
|
|
(2,032)
|
|
|
|
(1,921)
|
|
Dividends and
distributions paid
|
|
|
(15,169)
|
|
|
|
(15,161)
|
|
Net cash (used in)
provided by financing activities
|
|
|
(22,701)
|
|
|
|
7,418
|
|
Net decrease in cash,
cash equivalents and restricted cash
|
|
|
(1,243)
|
|
|
|
(14,995)
|
|
Cash, cash
equivalents and restricted cash at beginning of period
|
|
|
4,550
|
|
|
|
19,294
|
|
Cash, cash
equivalents and restricted cash at end of period
|
|
$
|
3,307
|
|
|
$
|
4,299
|
|
|
Schedule 1
InfraREIT, Inc.
Explanation
and Reconciliation of Non-GAAP EPS
Non-GAAP EPS
InfraREIT defines non-GAAP net
income as net income (loss) adjusted in a manner the Company
believes is appropriate to show its core operational performance,
which includes (a) an adjustment for the difference between the
amount of base rent payments that the Company receives with respect
to the applicable period and the amount of straight-line base rent
recognized under GAAP and (b) adding back the transaction costs
related to the Asset Exchange Transaction. The Company
defines Non-GAAP EPS as non-GAAP net income (loss) divided by the
weighted average shares outstanding calculated in the manner
described in the footnotes below.
The following tables set forth a reconciliation of net income
attributable to InfraREIT, Inc. per diluted share to Non-GAAP
EPS:
|
|
Three Months Ended
March 31, 2018
|
|
|
Three Months Ended
March 31, 2017
|
|
(In thousands,
except per share amounts, unaudited)
|
|
Amount
|
|
|
Per Share
(3)
|
|
|
Amount
|
|
|
Per Share
(3)
|
|
Net income
attributable to InfraREIT, Inc.
|
|
$
|
12,864
|
|
|
$
|
0.29
|
|
|
$
|
7,949
|
|
|
$
|
0.18
|
|
Net income
attributable to noncontrolling interest
|
|
|
4,900
|
|
|
|
0.29
|
|
|
|
3,068
|
|
|
|
0.18
|
|
Net income
|
|
|
17,764
|
|
|
|
0.29
|
|
|
|
11,017
|
|
|
|
0.18
|
|
Base rent adjustment
(1)
|
|
|
(120)
|
|
|
|
—
|
|
|
|
957
|
|
|
|
0.02
|
|
Transaction costs
(2)
|
|
|
151
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Non-GAAP net
income
|
|
$
|
17,795
|
|
|
$
|
0.29
|
|
|
$
|
11,974
|
|
|
$
|
0.20
|
|
|
|
(1)
|
This adjustment
relates to the difference between the timing of cash base rent
payments made under the Company's leases and when the Company
recognizes base rent revenue under GAAP. The Company
recognizes base rent on a straight-line basis over the applicable
term of the lease commencing when the related assets are placed in
service, which is frequently different than the period in which the
cash base rent becomes due.
|
(2)
|
This adjustment
reflects the transaction costs related to the Asset Exchange
Transaction. These costs are exclusive of the Company's
routine business operations or typical rate case costs and have
been excluded to present additional insights on InfraREIT's core
operations.
|
(3)
|
The weighted average
common shares outstanding of 43.8 million was used to calculate net
income attributable to InfraREIT, Inc. per diluted share. The
weighted average redeemable partnership units outstanding of 16.9
million was used to calculate net income attributable to
noncontrolling interest per share. The combination of the
weighted average common shares and redeemable partnership units
outstanding of 60.7 million was used for the remainder of the per
share calculations.
|
|
|
Schedule 2
InfraREIT, Inc.
Explanation
and Reconciliation of FFO and AFFO
FFO and AFFO
The National Association of Real
Estate Investment Trusts ("NAREIT") defines FFO as net income
(computed in accordance with GAAP), excluding gains and losses from
sales of property (net) and impairments of depreciated real estate,
plus real estate depreciation and amortization (excluding
amortization of deferred financing costs) and after adjustments for
unconsolidated partnerships and joint ventures. Applying the
NAREIT definition to the Company's consolidated financial
statements, which is the basis for the FFO presented in this press
release and the reconciliations below, results in FFO representing
net income (loss) before depreciation, impairment of assets and
gain (loss) on sale of assets. FFO does not represent cash
generated from operations as defined by GAAP and it is not
indicative of cash available to fund all cash needs, including
distributions.
AFFO is defined as FFO adjusted in a manner the Company believes
is appropriate to show its core operational performance, including:
(a) an adjustment for the difference between the amount of base
rent payments that the Company receives with respect to the
applicable period and the amount of straight-line base rent
recognized under GAAP; (b) adding back the transaction costs
related to the Asset Exchange Transaction; and (c) adjusting for
other income (expense), net.
The following table sets forth a reconciliation of net income to
FFO and AFFO:
|
|
Three Months Ended
March 31,
|
|
(In thousands,
unaudited)
|
|
2018
|
|
|
2017
|
|
Net income
|
|
$
|
17,764
|
|
|
$
|
11,017
|
|
Depreciation
|
|
|
11,577
|
|
|
|
12,687
|
|
FFO
|
|
|
29,341
|
|
|
|
23,704
|
|
Base rent adjustment
(1)
|
|
|
(120)
|
|
|
|
957
|
|
Other income, net
(2)
|
|
|
(733)
|
|
|
|
(3)
|
|
Transaction costs
(3)
|
|
|
151
|
|
|
|
—
|
|
AFFO
|
|
$
|
28,639
|
|
|
$
|
24,658
|
|
|
|
(1)
|
See footnote (1) on
Schedule 1 on Explanation and Reconciliation of Non-GAAP
EPS
|
(2)
|
Includes allowance
for funds used during construction ("AFUDC") on other funds of $0.7
million for the three months ended March 31, 2018. There was
no AFUDC on other funds recorded during the three months ended
March 31, 2017.
|
(3)
|
See footnote (2) on
Schedule 1 on Explanation and Reconciliation of Non-GAAP
EPS
|
|
|
Schedule 3
InfraREIT, Inc.
Explanation
and Reconciliation of Forecasted Guidance for 2018
Forecasted GAAP Net Income Attributable to InfraREIT, Inc.
Per Share to Non-GAAP EPS
The Company provides yearly
guidance for Non-GAAP EPS, which is one of the supplemental
financial measures it uses in evaluating the Company's operating
performance. The Company believes that Non-GAAP EPS helps the
Company and investors better understand the Company's business and
performance by providing perspectives not immediately apparent from
net income.
The following table sets forth a reconciliation of the
forecasted GAAP net income attributable to InfraREIT, Inc. per
share to Non-GAAP EPS for the year ending December 31, 2018:
|
|
Full Year
2018
|
|
(Per share
amounts, unaudited)
|
|
Low
|
|
|
High
|
|
Net income
attributable to InfraREIT, Inc.
|
|
$
|
1.29
|
|
|
$
|
1.39
|
|
Net income
attributable to noncontrolling interest
|
|
|
1.29
|
|
|
|
1.39
|
|
Net
income
|
|
|
1.29
|
|
|
|
1.39
|
|
Base rent
adjustment
|
|
|
(0.08)
|
|
|
|
(0.08)
|
|
Transaction
costs
|
|
|
0.01
|
|
|
|
0.01
|
|
Non-GAAP
EPS
|
|
$
|
1.22
|
|
|
$
|
1.32
|
|
For additional
information, contact:
|
|
|
For
Investors:
|
Brook
Wootton
|
|
Vice President,
Investor Relations
|
|
InfraREIT,
Inc.
|
|
214-855-6748
|
|
|
For Media:
|
Jeanne
Phillips
|
|
Senior Vice
President, Corporate Affairs & International
Relations
|
|
Hunt Consolidated,
Inc.
|
|
214-978-8534
|
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SOURCE InfraREIT, Inc.