Ladies and gentlemen, thank you for standing by, and welcome to the Brookfield Infrastructure Partners L.P. Quarter Two 2021 Results. And at this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised, today's conference call is being recorded. Thank you. At this time, I will turn the call over to David Krant, CFO. Sir, please go ahead.

Thank you, operator, and good morning everyone. Thank you all for joining us for Brookfield Infrastructure Partners second quarter earnings conference call for 2021. My name is David Krant and I'm the Chief Financial Officer of Brookfield Infrastructure Partners. Joining me today is Sam Pollock, our Chief Executive Officer; and our guest speaker this quarter, Dave Joynt, Investment Professional responsible for the transport sector. Following our remarks, we look forward to taking your questions. At this time, I'd like to remind you that in responding to questions, as always talking about our growth initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our Annual Report on Form 20-F, which is available on our website. Now with respect to performance, we are pleased to report that Brookfield Infrastructure had another strong quarter. Funds from operations or FFO totaled $394 million or $0.85 per unit, an increase of 18% compared to the second quarter of 2020. Results were fueled by the ongoing economic recovery, which is driving growth within our base business. Over the last three months, we have offered them a number of strategic initiatives that strengthened our balance sheet and demonstrated robust access to capital markets. Condition supporting capital markets activity and our global operations remain favorable, allowing to complete over $7 billion of asset level of refinancing activity across our portfolio. In combination with over $1.3 billion of net proceeds from two recently completed asset sales, our balance sheet is in excellent shape to fund an extended investment pipeline. Now as it relates to our results for the second quarter, the 18% increase in FFO was supported by…

Thanks, David, and good morning everyone. This is Dave Joynt. I'm pleased to be joined today's call to provide a spotlight on our North American transport operations. As many of you know, U.S. GDP grew 6.5% in second quarter and the economy now exceeds pre-pandemic size. Many of our businesses are benefiting from the economic recovery and are well positioned to deliver even stronger performance against favorable economic backdrop. We have two assets in North America that exemplified the growth potential we are seeing across the platform, Genesee & Wyoming or G&W and Trapac. I'll spend a few minutes touching on each business. G&W is a large scale rail operation with 113 short-line railroads and 22,000 kilometers of track forming a key component of the North American rail network. It also operates the three railroads in Europe. G&W generates resilient cash flows as a provider of critical first and last mile transportation for industrial customers and Class I railroads. We've seen carloads for our core North American business increase by 20% relative to prior year and are now back in line with the same period of 2019. G&W's critical infrastructure connects customers with their end destinations via Class I railroads, and this affords G&W the opportunity to outperform underlying industrial growth in two ways. First, growth through organic projects. One example of this would be our recent agreement with the Georgia Ports Authority to expand rail services at the Port of Savannah. G&W will provide safe, reliable, efficient rail services where the port authorities knew making a rail terminal. This project will double the rail capacity of Savannah which is already one of the country's largest and fastest growing ports. Second, growth through follow-on opportunities. G&W is well positioned to acquire, integrate, and drive value in smaller rail operations. In…

Thank you, Dave. Good morning everyone. Today I will discuss the exciting strategic initiatives we currently have underway and I'll conclude the call with our outlook for the balance of 2021. As David mentioned earlier in the call, we ended the quarter with a significant cushion to our liquidity position as we recently completed the latest phase of our capital recycling program. We received proceeds totaling nearly $1.8 billion thus far in 2021. This is nearly half of our planned capital recycling activity that we expected through 2023. With respect to our asset rotation initiatives, the divestment of our Canadian and U.S. District Energy platforms closed in June and July respectively and resulted in aggregate proceeds to Brookfield Infrastructure of approximately $1 billion. In addition, we received net proceeds of approximately $300 million from the previous - previously announced carve out of our smart meter portfolio at the U.K. Now I'll turn to our growth initiatives. We continue to progress a number of acquisitions and organic opportunities. With respect to our BIP to privatize in our pipeline, we believe our patience has paid off. On July 27th, IPLs Board of Directors formally recommended to existing shareholders to accept their offer. This follows the termination of the proposed transaction from another company and recommendations from two leading independent proxy advisors to vote against that transaction. We now expect a clear path to acquire the company, with the tender offer expiring tomorrow, August 6. Based on conversations to date with many IPL shareholders, we are confident that we will progress with the privatization, expect to deploy approximately $2 billion in this essential midstream operation. The completion of this acquisition is expected in the third quarter and will mark the start of the next expansion period for our business, which should drive strong…

And the first question will come from the line of Robert Kwan of RBC Capital Markets.

Lot to talk about the building backlog here, and I'm just wondering, when you look at the returns that you've locked in on your backlog, how does that compare to history? And if you can even just, as well, numerically frame where the backlog sits expected return wise versus your 12% to 15% equity IRR hurdles?

Maybe, I'll start with that one Robert, and then maybe David or Dave will jump in with some of their perspective. Yes, I think, for the most part, when it comes to organic growth, these are the types of projects that you tend to have less competition for, because they relate to a franchise area or specific business perimeter where you don't have as much competition. So you don't see the same cost of capital pressures that you do on new investments where people are utilizing various means to compete. So what that means is, our return levels tends to be more consistent throughout the cycles and we don't see the highs and lows to the same degree that you do in the M&A cycles. And so, I think, our plus remains 15% returns are still consistent. We haven't seen a big drop-off in that. In fact, in some respect, with lower interest rates, maybe in fact, we might benefit a bit during this period of time, because a lot of those projects are evaluated on an unlevered basis, not a levered basis. And as for the amount of projects as we telegraphed on the call, we're seeing a increase in the level of backlog. I think, if you look forward six months to a year, our hope will be that our backlog will be at levels higher than what we traditionally have, and that's just because - that's a reflection of the growth of the economy that we're seeing and just the number of customer-initiated projects that - that are coming our way. So obviously things can change with all these new variants, where this Lambda or Epsilon or the Delta, those could always slow things down. But if we don't see slowdown because of that, then I think there could be a great level of backlog going forward.

The only thing I'd add I think Robert, just from a quantum standpoint, I think our backlog is around $2.3 billion, which is pretty nearer in the last few years, but we've taken out our smart meter build out that we sold, our District Energy operations have come out of that. So from a like-for-like basis, we're probably near $2.5 billion, $2.6 billion, which would be elevated for our business. I think, that's really what's driving some of the reported backlog and as everything - a lot of customer initiated demand.

Just turning to acquisitions. Can you talk about the geographies and the asset classes where you're seeing the best opportunities and more importantly good value? But also on the flip side, are there asset classes you're really interested in acquiring, I don't know if that's going to be airports which you've talked about in the past, where valuations has been very high relative to your own views on value?

So today the large majority of opportunities are in Europe and North America. If I look at our pipeline, that's probably more than usual. I'd say, we still have situations where we are progressing in South America and Asia, but probably less than what we've seen in the past on a relative basis. And then, so that's - I'd say, that's from a geographic perspective. Looking at a - from a sector perspective, there is no doubt. We are seeing lots of opportunities in data and that remains a big focus for us, just the amount of capital that's being invested to just improve the connectivity of both fixed and wireless networks is off the charts. And so, we're in discussions probably with every single strategic player out there about how we can help out. And so, I think, that will continue to be a big focus for us. I'm encouraged by the level of transfer opportunities. So Dave is extremely busy looking at number of situations that there - there appears to be a lot more capacity constraints, and so, people are looking at expanding their networks to deal with that increased capacity and the various augments they have in their systems. And so, I think, the engagement with the shipping companies, in particular, is higher than it's been over the long time. So I think, we're very encouraged by that. And we continue to look for opportunities in the utility sectors where - traditionally from a debt perspective returns might have been a bit lower, but the capital needs are higher as electrification of society takes off. So I think we're hoping there could be opportunities for us in those sectors as well.

Got it. And just on any asset classes that you're really interested in acquiring but your views on value are much lower than where the market is?

Yes. So, I think maybe you mentioned, I think, airports earlier and I didn't touch on that. We - that's a sector we've been looking to get into. There has been noise in Australia, there are transactions over there - it's a great asset. The - it does feel like a lot of these assets are trading at levels that maybe today don't make sense. Overall, we're trying to see if we can come up with a value proposition for those type of assets that we can make work. So I don't think - there is no sector that we're avoiding because we're seeing - does it makes sense, but what I would say is, we have a large set of opportunities. And so, we're picking the one where we think we can get the best risk adjusted returns. So we're not trying to force getting into an area where are still going to focus on driving returns and deploying capital where we have our advantages.

And the next question comes from the line of Rupert Merer of National Bank.

Looking at your liquidity, quite a high liquidity level right now, $6.5 billion, and you mentioned the capital recycling initiatives remain robust. Now looking at the IPL deal, it looks like you could be issuing stock there. So maybe liquidity will remain high following that deal too. How should we be thinking about pace of investment going forward versus capital recycling and where do you think this liquidity level will stand maybe at the end of this year and the end of next year?

I'll start there, and then Dave will jump in as well. But first of all, I can't speculate or predict where liquidity will end up, because obviously it depends on a number of transactions that may or may not take place, both from a sale and divestiture side. We always look to maintain healthy levels of liquidity so that we can be opportunistic to take advantage of the investment opportunities as they arise. We have, I'd say, an extremely robust pipeline of opportunities to invest, and can't say whether or not we will succeed in all of them, but if we do, I think we - it could be at a level that's higher than that we will be seeing over the last number of years. And so, that's one of the reasons why we maintain high level. And as it relates to capital recycling, I think, we have - a number of people asking questions about how we pace those processes. And typically, well, this is a great time to sell assets. And I think we've mentioned in the past, we don't try to accelerate transactions and when we typically try - try to time them from a business plan perspective. Each investment we make, we have a buy, fix or improve and then sell strategy to it, and we try to get as much of those business plan initiatives done before we sell a derisk business. That's always been our plan. And typically, look, in spite of whatever environment we have, we will follow that strategy. Other than, if - we just feel that someone prepared to pay us, even if a project is quite 100% done. So we get fully paid for that and maybe we might accelerate a bit. But for the most part, we just follow our long-term investment strategy, bring investments to the market when it makes sense and utilize as many tools that we have in our toolkit to finance new investments, whether that's from capital recycling, whether it take advantage of issuing debt or equity in the capital markets, we have lots of ways of financing growth.

Very good, Thanks for the color. Looking at results in Q2, can you give some color on what the - you think the residual impact of the pandemic could be? How much of a headwind would you say the pandemic was in the quarter? If you're looking at your crystal ball, maybe what's the outlook for the next few months barring any impact from the fourth wave, of course?

Hi, Rupert. It's Dan here. I think - what we're seeing is a tremendous recovery from the pandemic across the board. So we're seeing it in all regions. There may still be some fits and starts as - there is a lot of media attention on variances. Sam mentioned a couple of them earlier. But at this point, we're seeing a lot of momentum, like, I say the momentum is heavily on the side of - are returning to normal and growth across the board. So while there may be little fits and starts here and there, at this point, we have no reason - we're not seeing any change in that direction of momentum across the global portfolio. So I don't know if that's helpful, but that's - that would be my color on that.

Are you seeing any residual impacts on some of your businesses like toll roads? Are you able to quantify what the impact is today?

Yes, Rupert, it's very, very modest. Maybe only region where we had sequentially quarter-over-quarter a little setback was in India. This quarter we lost $1 million or $2 million of that. So very nominal. The other businesses that were impacted in the prior year like our U.K. connections business is back up to pre-shutdown levels. Our Brazilian toll road is continuing to have strong heavy traffic. So I'd say, it's just - I'd say, fits and starts in India in April or early May was the only impact on our financial results this quarter.

And our next question will come from the line of Frederic Bastien of Raymond James.

There was no mention of foreign exchange headwinds or tailwinds in your prepared comments. Can you provide some color on any related impact in the quarter and whether you remain appropriately hedged on that front?

Yes, Frederic. It's David here. I can handle that one. I think from - I'll tackle it in reverse order. From a hedging perspective, we're extremely happy with where we're at today. Roughly 80% of our FFO over the next 24 months is as either denominated in USD or hedged back to it. So I think that's - that's a really - that pretty much leaves Brazil as the only unhedged currency in our portfolio. In terms of the impact this quarter, I'd say they were very, very modest. I think real finished pretty flat year-on-year. It might have been up 1%. So very nominal on a quarterly average. And our hedge currencies are all in line with the prior year. So that's - as I already mentioned, it might have been $1 million or $2 million of FFO impacts, plus or minus the currency.

And David, what do you expect the impact to be if currencies stay the same maybe for the second half?

Yes, second half, if the real if it stays where it is, would be a bit of a tailwind, maybe 3%, 4% at the current levels. And our hedge currencies are in line. So I'd say, it's modestly positive.

Okay. Thanks for that. Now I appreciate that the devastating floods from a few weeks back in Germany and China weren't in your jurisdiction, but they caused stress in already fragile global supply chain. Has the related disruptions had any knock on effects on either your transport business or any other - any other of your platforms, broadly speaking?

It's Dave here. What I would say is, despite a lot of headlines around supply chain shortages and disruptions, et cetera, I think what we're seeing on the ground is very strong demand across our ports businesses, our rail businesses. So I can appreciate that despite pockets of the economy that are experiencing some disruptions, but we're not seeing it.

And we do have a follow-up from the line of Robert Catellier of CIBC.

Yes, thank you. I just wanted to touch on IPL briefly here. During that long process, there was some discussion about trying to get into tri-lateral discussions with the other sooner, which I believe was for a potential carve out. So now that you have a clear line of sight on acquiring IPL, is there a possibility carve out still in play?

Hi, Robert. This is Sam here. As you know, I'm very superstitious when it comes to transactions. So I tend not to look too far forward until they are completed. And so, are - we tend not to speculate on what we might or might not do with the assets until we own. And so, I think, we are right now looking forward to a positive outcome over the next coming weeks where we can get the general levels, active appropriate amounts and then move forward with the privatization. I think if we are successful in acquiring the business, it will be very commercial at how we look at maximizing the value and reducing risk across the portfolio. And so that could involve conversations with the host of parties, including the one that you were alluding too. So - but today, I think it's - it's too early to talk about that and rather I do that maybe in a later date.

Yes. Okay. I understand. Just on the $7 billion of refinancing here. I know expansion of the term is equally important part, but I wanted you to give some ballpark. Can you give us some potential annual savings from that refinancing activity?

Yes, Rob, it's David here. As you look to the $7 billion is a gross asset level numbers. So by the time we look at our ownership, I'd say the interest savings will be overly material, probably I'm hesitant to give you a number right now, but we can follow up with that.

Yes, no, that's okay. It's not material. And I think that's the answer. It's more of a extension --

More the duration, to your point.

And lastly - go ahead.

Go ahead.

No. I just had another question but if you have a final comment on that one?

No, I was just going to add the real benefit was fully bought to businesses. We would have had to assume various refinancings over the next couple of years. And you'll be able to accelerate those financing so that they are now out of the way and we've taken that risk off the table, I mean, that just positions us well for that investment. I'd say, we feel very good about the way it was accomplished.

Okay. And then last question from me is just on the North American residential infrastructure business. I'm wondering how much capital you expect to deploy on tuck-in acquisitions there and if you can compare that to the organic growth expectations? Thank you.

Look, I - the tuck-in acquisitions, they are all going to be relatively small other than if we can combine or acquire one or two of the other major players. It's a highly fragmented market. And it's really only two or three businesses of scale. And we know who they are, they know who we are, and will continue to have those conversations. But I think for the most part, this is a organic growth story. We've got a number of initiatives underway of how we can, you know much like we have in the U.K., increase the products that we - that we sell through the channel and increase the various adoption partners if you want to call that. Very fewer networks where we can leverage each other's distribution channels in order to increase the amount of rental product that we can surface, So we've got a whole bunch of initiatives underway that are organic in nature and I think can grow that business very substantially.

And the next question will come from the line of Naji Baydoun of Industrial Alliance.

I wasn’t sure if, that I was going through. I just wanted to start with the - maybe some background on the Digital Realty JV. Maybe you can just talk about why it was the right time to establish this partnership and maybe a potential scale or magnitude of the investments you'd be looking up?

Sure, I'll start and again David might chime in. But I think the place to begin is just with our initial joint venture initiatives with the Digital Realty going back a couple of years ago where we joined forces to buy what we thought was a growth platform in Latin America. It's a business I think that had - maybe eight existing data center in Brazil and plans to grow that substantially. And I think both Digital and ourselves started by combining there. I describe it as industry leading expertise in design and customer contacts with our knowledge of Brazil and South America. We thought we will make a very formidable team and that's proven to be the case. We've had tremendous success in that - in that particular investment where we now more than doubled the size of the business. We will be operating in four or five different countries over the next couple of years. We’ll probably move to Chile and Mexico and we're also looking to go into Colombia. And there'll be other markets in the country we can expand into. So we've just really - I think hit one out of park with them down there. And given that strong relationship we developed with them, we thought the next natural place to go to where both of us saw opportunities to grow is India. And we reached the market separately and then decided that combining - combining our resources, we could accelerate and be more aggressive in growing that business. So that we look to do. We see India as an equally or maybe even higher growth markets than Latin America. This is rapidly growing consumption in that country. And this we were talking early, but just the - the fact that the streaming that goes on with the - within the population there is just off the charts. And so, the data consumption, it's going to fuel the need for significant in country urban data centers. And so, we think we're well positioned to do that. We've already secured land in Navi Mumbai. We are going to be looking at other markets like Chennai. And I think the opportunity to invest, I think, collectively between us and Digital Realty over $1 billion over the next number of years, I think, is very - is very strong. So while those maybe very ambitious goals, we think that with the two of us we can build a very formidable franchise.

That's great color, Sam. Thank you. And just to clarify, the JV, it's 50% ownership to BIP and not other partners with Brookfield, correct?

No, it's 50-50 with the fund and Digital Realty, and BIP is 25%.

Okay. Got it. Perfect. And just my another question is about some - the comment that you made about being at the high end of organic growth, I guess, over the near term. It really sounds like all the drivers of organic growth are kind of firing and also there is - I'm trying to understand, do you think it's fair to say that this sort of pace can be sustained for not just the near term, but maybe a number of years if some of the same dynamics continue to play out.

It's very hard to say exactly - predicting too far the future, but there's no doubt. The tailwinds for the next 12 to 18 months, I think, everyone can feel very confident that they'll be there. And hopefully you know if - the various governments and central banks can ensure that the economy is going to be overheated, then we have to increase interest rates too much, then I think this could be sustainable for an extended period of time, but that's where we'll have to keep an eye on.

Thank you. I will now turn the call over to Sam Pollock, CEO, for closing remarks. Sir, you may begin.

Okay. Well, thank you, operator, and thank you everyone who joined us on the call today. We appreciate you listening and hearing about our progress, and we look forward to speaking to you again next quarter. And I'd just like to wish everyone for those in the Northern hemisphere, at least, a great summer holiday. Thank you.

Thank you for your participation in today's conference call. You may now disconnect.