InfraREIT Reports Second Quarter 2015 and Year-to-Date Results

Aug 07, 2015, 08:30 ET from InfraREIT, Inc.

DALLAS, Aug. 7, 2015 /PRNewswire/ -- InfraREIT, Inc. (NYSE: HIFR) ("InfraREIT" or the "Company") today reported financial results for the second quarter and six-month period ended June 30, 2015 and the Company's financial outlook.

InfraREIT reported the following second quarter 2015 financial highlights:

  • Cash available for distribution (CAD) of $18.3 million, or $0.30 per share
  • Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $33.9 million
  • Quarterly dividend declared of $0.225 per share of common stock, $0.90 per share annualized
  • Net income of $8.8 million, or $0.15 per diluted share
  • Raising guidance for 2015 CAD per share from $1.07 to a range of $1.07 to $1.12
  • Reaffirming guidance of three-year cumulative annual growth in distributions per share of 10 percent to 15 percent through the end of 2018

"Our solid performance continued into the second quarter as we consistently executed on our strategy," said David A. Campbell, Chief Executive Officer of InfraREIT.  "We continue to make investments to ensure reliable service and support growth in our service territories, enabling us to expand on our Footprint Projects.  Our growth is driven by placing needed transmission and distribution assets into service under our REIT structure."

Solid Results in Second Quarter 2015 Lease revenue increased approximately 17 percent to $29.5 million for the three months ended June 30, 2015, compared to the same period in 2014.  Base rent contributed all of the lease revenue for the second quarter of 2015, compared to $24.5 million of base rent and $0.7 million of percentage rent for the second quarter of 2014.  The increase in base rent was driven by the addition of assets under lease.  As previously indicated, InfraREIT expects to recognize little to no percentage rent during the first or second quarters of each year and expects to recognize the largest amounts during the third and fourth quarters of each year.

General and administrative expense increased to $4.7 million in the second quarter of 2015, compared to $3.3 million for the second quarter of 2014, primarily as a result of higher management fees and increased professional services fees.  Depreciation expense was $9.7 million and $8.4 million for the second quarter of 2015 and 2014, respectively, and the increase was due to additional assets placed in service.

Net interest expense was $6.9 million and $8.0 million during the second quarters of 2015 and 2014, respectively.  The decrease resulted from lower interest expense due to the repayment of the outstanding amounts under InfraREIT's revolving credit facilities in February 2015 with the proceeds received in connection with the initial public offering (IPO).

Other income, net was $0.8 million and $0.2 million during the second quarters of 2015 and 2014, respectively.  The increase resulted primarily from $0.5 million increase in allowance for funds used during construction (AFUDC) on other funds.

Net income was $8.8 million in the second quarter of 2015, or $0.15 per diluted share, compared to $5.5 million in the second quarter of 2014, or $0.12 per diluted share.  Diluted per share net income was based on 60.6 million weighted average diluted shares outstanding for the second quarter of 2015, compared to 45.6 million weighted average diluted shares outstanding during the second quarter of 2014.

In the second quarter of 2015, CAD was $18.3 million, or $0.30 per share, compared to $16.6 million, or $0.36 per share in the same period in 2014.  CAD per share was based on 60.6 million shares outstanding as of June 30, 2015, compared to 45.5 million shares outstanding as of June 30, 2014.

Adjusted EBITDA was $33.9 million in the second quarter of 2015, an increase of 5 percent, compared to $32.2 million in the same period in 2014.  Funds from Operations (FFO) was $18.5 million for the second quarter of 2015, an increase of 33 percent, compared to $13.9 million from the same period in 2014.  For the second quarter 2015, FFO on an adjusted basis (AFFO) was $26.8 million, an increase of 12 percent, compared to $24.0 million in the same period in 2014.

First Half 2015 Performance Lease revenue of $58.8 million for the six months ended June 30, 2015, increased $8.7 million, or approximately 17 percent, compared to the same period in 2014.  Base rent contributed all of the lease revenue for the first six months of 2015, compared to $49.4 million of base rent and $0.7 million of percentage rent for the first six months of 2014.  The increase in base rent was driven by the addition of assets under lease. 

General and administrative expense was $53.5 million in the first six months of 2015, compared to $6.7 million for the first six months of 2014.  Higher general and administrative expense resulted from the issuance of 1.7 million shares of common stock to Hunt-InfraREIT, L.L.C. (Hunt-InfraREIT) as a non-cash reorganization advisory fee, resulting in an expense of $44.9 million in the first quarter of 2015, $0.9 million of increased professional services fees and $0.8 million of increased management fees.  Depreciation expense increased 14 percent to $19.2 million for the first six months of 2015, from $16.8 million in the first six months of 2014 as additional assets were placed in service.

Net interest expense was $14.4 million and $15.7 million during the six months ended June 30, 2015 and 2014, respectively.  The decrease resulted from lower interest expense due to the repayment of the outstanding amounts under InfraREIT's revolving credit facilities in February 2015 with the proceeds received in connection with the IPO.

Other income, net was $1.5 million and less than $0.1 million for the six months ended June 30, 2015 and 2014, respectively.  The increase in other income, net was due to an increase in AFUDC on other funds of $0.6 million and a $0.9 million charge related to a change in fair value of the Operating Partnership's contingent consideration owed to Hunt-InfraREIT during the six months ended June 30, 2014.

Net loss was $27.0 million in the first six months of 2015, or $(0.47) per diluted share, including the effect of a $44.9 million non-cash expense incurred in connection with the IPO.  Net income for the first six months of 2014 was $10.5 million, or $0.23 per diluted share.  Diluted per share net (loss) income was based on 57.8 million weighted average diluted shares outstanding for the first six months of 2015, compared to 45.6 million weighted average diluted shares outstanding during the first six months of 2014. 

The first six months of 2015 CAD was $36.5 million, or $0.60 CAD per share, compared to $29.3 million, or $0.64 CAD per share in the same period in 2014.  CAD per share was based on 60.6 million shares outstanding as of June 30, 2015, compared to 45.5 million shares outstanding as of June 30, 2014.

Adjusted EBITDA was $68.3 million in the first six months of 2015, an increase of 13 percent, compared to $60.4 million in the same period in 2014.  In the first six months of 2015, FFO was $(7.9) million, compared to $27.3 million for the same period in 2014.  The Company also reported AFFO of $53.6 million for the first six months of 2015, an increase of 21 percent, compared to $44.3 million for the same period in 2014.

Liquidity and Capital Resources As of June 30, 2015, the Company had $50.5 million of unrestricted cash and cash equivalents.  The Company primarily utilizes its cash for the payment of capital expenditures, operating expenses, debt service and dividend payments.  InfraREIT also had $1.7 million of restricted cash and $325.0 million of unused capacity under its revolving credit facilities as of June 30, 2015.

Outlook and Guidance Update InfraREIT is updating its previously provided guidance for 2015.  CAD per share for the full year of 2015 is estimated at a range of $1.07 to $1.12 per share.  The Company continues to expect its three-year cumulative annual growth in distributions per share to be in the range of 10 percent to 15 percent through December 31, 2018.  InfraREIT expects to achieve the lower half of this growth range solely through Footprint Projects, and to exceed the midpoint of the range through the acquisition of the Cross Valley Line and Golden Spread Interconnection from Hunt.  The Company believes it could achieve the top of the range through additional Footprint Projects or acquisitions.  Regarding InfraREIT's consolidated debt profile, the Company targets 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 represents 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.

Monthly ROFO Project Updates Generally, InfraREIT's monthly "ROFO Project Updates" will be provided after the closing of trading on the New York Stock Exchange on or about the 15th day of each month.  These ROFO Project Updates can be found on the Company's Web site (www.InfraREITInc.com) under the "Hunt Transmission-Our Developer" and "Investor Relations" sections.  InfraREIT has also provided a ROFO Project Update in its "2Q 2015 Results & Supplemental Information" presentation posted on the Company's Web site as of today.  The next ROFO Project Update will be issued on September 15, 2015.

Dividends and Distributions On June 5, 2015, InfraREIT's Board of Directors declared a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, on June 30, 2015 of $0.225 per unit for a total distribution of $13.6 million, $9.8 million of which was allocated to InfraREIT.  Also, on June 5, 2015, the Company's board of directors declared a cash dividend to shareholders of record on June 30, 2015, of $0.225 per share for a total of $9.8 million.  The cash distribution and cash dividend were paid on July 23, 2015.

Conference Call and Webcast As previously announced, management will host a teleconference call August 7, 2015, at 10 a.m. U.S. Central (11 a.m. U.S. Eastern). 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: 10068113) or via the Internet at www.InfraREITInc.com.  A replay of the call will be available on the Company Web site or by phone at 1-877-344-7529, or internationally at 1-412-317-0088, (access code: 10068113) 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 accounting principles (GAAP).  These non-GAAP measures are presented because InfraREIT's management believes these non-GAAP measures 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.  These measures are also measures frequently used by securities analysts, investors and other interested parties.  The presentation of CAD, EBITDA, Adjusted EBITDA, FFO and AFFO 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.  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 that do not use the same methodology as InfraREIT.  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 owns rate-regulated electric transmission and distribution 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 contain 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 its anticipated financial and operational performance, including projected or forecasted financial results, project timing, distributions to stockholders, dividend growth, capital expenditures, lease payments, CAD growth, AFFO-to-debt ratios and capitalization matters.  Forward-looking statements can be affected by assumptions used or known or unknown risks or uncertainties.  Consequently, no forward-looking statements can be guaranteed and actual results may differ materially and adversely from those reflected in the forward-looking statements.  Factors that could cause actual results to differ materially from those indicated in the forward-looking statements include, among others, the following: (a) risks that the capital expenditures the Company expects will not materialize for a variety of reasons, including as a result of lower oil and gas drilling and related midstream and service company activities in the Permian Basin relative to the Company's current expectations, (b) the Company's ability to acquire ROFO Projects from Hunt, (c) 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, (d) defaults on or non-renewal or early termination of leases by the Company's tenant, (e) changes in the regulated rates the tenants of the Company's assets may charge their customers and (f) defaults on or non-renewal or early termination of leases by the Company's tenant.  These and other applicable uncertainties, factors and risks are described more fully in the Company's filings with the Securities and Exchange Commission.

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.

 

 

 

InfraREIT, Inc. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share amounts) (Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Lease revenue

Base rent

$

29,458

$

24,542

$

58,830

$

49,379

Percentage rent

683

683

Total lease revenue

29,458

25,225

58,830

50,062

Operating costs and expenses

General and administrative expense

4,728

3,284

53,461

6,696

Depreciation

9,671

8,366

19,179

16,827

Total operating costs and expenses

14,399

11,650

72,640

23,523

Income (loss) from operations

15,059

13,575

(13,810)

26,539

Other (expense) income

Interest expense, net

(6,939)

(7,984)

(14,361)

(15,665)

Other income, net

847

172

1,473

39

Total other expense

(6,092)

(7,812)

(12,888)

(15,626)

Income (loss) before income taxes

8,967

5,763

(26,698)

10,913

Income tax expense

124

250

332

408

Net income (loss)

8,843

5,513

(27,030)

10,505

Less: Net income (loss) attributable to noncontrolling interest

2,481

1,278

(6,519)

2,425

Net income (loss) attributable to InfraREIT, Inc.

$

6,362

$

4,235

$

(20,511)

$

8,080

Net income (loss) attributable to InfraREIT, Inc. common shareholders per share:

Basic

$

0.15

$

0.12

$

(0.48)

$

0.23

Diluted

$

0.15

$

0.12

$

(0.48)

$

0.23

Cash dividends declared per common share

$

0.225

$

$

0.625

$

Weighted average common shares outstanding (basic shares)

43,565

35,053

42,391

35,053

Redemption of operating partnership units

Weighted average dilutive shares outstanding (diluted shares)

43,565

35,053

42,391

35,053

Due to the anti-dilutive effect, the computation of diluted earnings per share does not reflect the following adjustments:

Net income (loss) attributable to noncontrolling interest

$

2,481

$

1,278

$

(6,519)

$

2,425

Redemption of operating partnership units

17,028

10,562

15,424

10,523

 

 

InfraREIT, Inc. CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)

June 30,

2015

December 31, 2014

(Unaudited)

Assets

Current Assets

Cash and cash equivalents

$

50,495

$

15,612

Restricted cash

1,682

1,682

Due from affiliates

21,776

27,822

Inventory

6,938

7,393

Assets held for sale

41,211

Prepaids and other current assets

1,409

4,897

Total current assets

82,300

98,617

Electric Plant, net

1,325,582

1,227,146

Goodwill

138,384

138,384

Deferred Assets and Other Regulatory Assets, net

36,277

37,948

Investments

2,519

2,519

Total Assets

$

1,585,062

$

1,504,614

Liabilities and Equity

Current Liabilities

Accounts payable and accrued liabilities

$

28,167

$

25,295

Short-term borrowings

219,000

Current portion of long-term debt

19,430

19,234

Dividends and distributions payable

13,634

14,130

Contingent consideration

27,378

Accrued taxes

2,691

2,359

Total current liabilities

63,922

307,396

Long-Term Debt

600,757

610,522

Regulatory Liability

6,177

1,242

Total liabilities

670,856

919,160

Commitments and Contingencies

Equity

Members' capital - 35,053,186 shares issued and outstanding as of December 31, 2014

440,387

Common stock, $0.01 par value; 450,000,000 shares authorized; 43,565,495 issued and outstanding as of June 30, 2015

436

Additional paid-in capital

702,213

Accumulated deficit

(38,698)

Accumulated other comprehensive loss

Total InfraREIT, Inc. equity

663,951

440,387

Noncontrolling interest

250,255

145,067

Total equity

914,206

585,454

Total Liabilities and Equity

$

1,585,062

$

1,504,614

 

 

InfraREIT, Inc. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)

Six Months Ended June 30,

2015

2014

Cash flows from operating activities

Net (loss) income

$

(27,030)

$

10,505

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation

19,179

16,827

Amortization of deferred financing costs

1,824

1,659

Allowance for funds used during construction - equity

(1,481)

(930)

Change in fair value of contingent consideration

895

Reorganization structuring fee

44,897

Realized gain on sale of marketable securities

(66)

Equity based compensation

308

120

Changes in assets and liabilities:

Due from affiliates

6,046

13,865

Inventory

455

(391)

Prepaids and other current assets

(855)

(1,337)

Accounts payable and accrued liabilities

7,683

4,789

Net cash provided by operating activities

50,960

46,002

Cash flows from investing activities

Additions to electric plant

(115,627)

(112,063)

Proceeds from sale of assets

41,211

Sale of marketable securities

1,065

Cash paid to InfraREIT, L.L.C. investors in the merger, net of cash assumed

(172,400)

Net cash used in investing activities

(245,751)

(112,063)

Cash flows from financing activities

Net proceeds from issuance of common stock upon initial public offering

493,722

Proceeds from short-term borrowings

33,000

82,000

Repayments of short-term borrowings

(253,000)

Proceeds from borrowings of long-term debt

11,000

Repayments of long-term debt

(9,569)

(5,056)

Net change in restricted cash

(1)

Deferred financing costs

(153)

(715)

Dividends and distributions paid

(34,326)

Net cash provided by financing activities

229,674

87,228

Net increase in cash and cash equivalents

34,883

21,167

Cash and cash equivalents at beginning of period

15,612

7,746

Cash and cash equivalents at end of period

$

50,495

$

28,913

 

Non-GAAP Measures

Schedule 1 InfraREIT, Inc. Explanation and Reconciliation of CAD

CAD The Company's definition of CAD includes a deduction of the portion of capital expenditures needed to maintain its net assets which equals depreciation expense within the applicable period. The portion of the capital expenditures in excess of depreciation, which the Company refers to as growth capital expenditures, will increase its net assets. Also included in CAD are various other adjustments from net income, as outlined below and described in more detail on Schedules 2 and 3.

The following sets forth a reconciliation of net income (loss) to CAD:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2015

2014

2015

2014

Net income (loss)

$

8,843

$

5,513

$

(27,030)

$

10,505

Depreciation

9,671

8,366

19,179

16,827

FFO

18,514

13,879

(7,851)

27,332

Non-cash reorganization structuring fee

44,897

Percentage rent adjustment (1)

6,095

6,729

12,559

13,056

Base rent adjustment (2)

3,068

3,548

5,131

3,984

Amortization of deferred financing costs

912

830

1,824

1,659

Reorganization expenses

333

Non-cash equity compensation

185

120

308

120

Other income, net (3)

(847)

(172)

(1,473)

(39)

Capital expenditures to maintain net assets

(9,671)

(8,366)

(19,179)

(16,827)

CAD

$

18,256

$

16,568

$

36,549

$

29,285

Shares outstanding (mm of shares)

60.6

(4)

45.5

(5)

60.6

(6)

45.5

(7)

CAD per share

$

0.30

$

0.36

$

0.60

$

0.64

CAD payout ratio

74.7%

(8)

N/A  

74.5%

(9)

N/A  

1)

Represents the amount of percentage rent owed to the Company related to the applicable period.  The amount related to the first quarter of each year is paid in May while the second quarter amount for each year is due in August.  Although the Company receives percentage rent payments related to the first half of each year, it does not recognize lease revenue related to these percentage rent payments until its tenant's annual gross revenues exceed minimum specified breakpoints in the leases.

2)

This adjustment relates to the difference between the timing of cash based 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 rent becomes due.

3)

Includes AFUDC on equity of $0.9 million and $0.5 million for the three months ended June 30, 2015 and 2014, respectively, and $1.5 million and $0.9 million for the six months ended June 30, 2015 and 2014, respectively.

4)

Calculated based on outstanding shares of 60.6 million as of June 30, 2015, which consists of 43.6 million outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2015.  Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 43.6 million weighted average shares outstanding during the three months ended June 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.

5)

Calculated based on outstanding shares of 45.5 million as of June 30, 2014, which consists of 35.1 million outstanding shares of common stock of InfraREIT and 10.5 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2014.  Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 35.1 million weighted average shares outstanding during the three months ended June 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.

6)

Calculated based on outstanding shares of 60.6 million as of June 30, 2015, which consists of 43.6 million outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2015.  Net loss attributable to InfraREIT, Inc. common shareholders per share was calculated based on 42.4 million weighted average shares outstanding during the six months ended June 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.

7)

Calculated based on outstanding shares of 45.5 million as of June 30, 2014, which consists of 35.1 million outstanding shares of common stock of InfraREIT and 10.5 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2014.  Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 35.1 million weighted average shares outstanding during the six months ended June 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.

8)

Reflects the distributions of $13.6 million divided by CAD of $18.3 million.

9)

Reflects the post-IPO distributions of $22.1 million divided by the post-IPO CAD of $29.7 million (based on a pro-rata calculation from the IPO date).

 

Schedule 2 InfraREIT, Inc. Explanation and Reconciliation of EBITDA and Adjusted EBITDA

EBITDA and Adjusted EBITDA InfraREIT defines EBITDA as net income (loss) before interest expense, net; income tax expense; depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted in a manner the Company believes is appropriate to show its core operational performance, including: (a) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and the amount of percentage rent the Company recognizes under GAAP during the period, (c) 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, (d) adding back the one-time reorganization expenses related to the Company's IPO and related reorganization transactions, and (e) adjusting for other income (expense), net.

The following table sets forth a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2015

2014

2015

2014

Net income (loss)

$

8,843

$

5,513

$

(27,030)

$

10,505

Interest expense, net

6,939

7,984

14,361

15,665

Income tax expense

124

250

332

408

Depreciation

9,671

8,366

19,179

16,827

EBITDA

25,577

22,113

6,842

43,405

Non-cash reorganization structuring fee

44,897

Percentage rent adjustment (1)

6,095

6,729

12,559

13,056

Base rent adjustment (2)

3,068

3,548

5,131

3,984

Reorganization expenses

333

Other income, net (3)

(847)

(172)

(1,473)

(39)

Adjusted EBITDA

$

33,893

$

32,218

$

68,289

$

60,406

1)

See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD

2)

See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD

3)

See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD

 

Schedule 3 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 the press release and the reconciliation below, results in FFO representing net (loss) income 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) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and the amount of percentage rent the Company recognizes under GAAP during the period, (c) 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, (d) adding back the one-time reorganization expenses related to the Company's IPO and related reorganization transactions, and (e) adjusting for other income (expense), net.

The following table sets forth a reconciliation of net income (loss) to FFO and AFFO:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2015

2014

2015

2014

Net income (loss)

$

8,843

$

5,513

$

(27,030)

$

10,505

Depreciation

9,671

8,366

19,179

16,827

FFO

18,514

13,879

(7,851)

27,332

Non-cash reorganization structuring fee

44,897

Percentage rent adjustment (1)

6,095

6,729

12,559

13,056

Base rent adjustment (2)

3,068

3,548

5,131

3,984

Reorganization expenses

333

Other income, net (3)

(847)

(172)

(1,473)

(39)

AFFO

$

26,830

$

23,984

$

53,596

$

44,333

1)

See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD

2)

See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD

3)

See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD

 

For additional information, contact:

For Investors:      

Brook Wootton

Director, 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.



RELATED LINKS

http://www.infrareitinc.com