CorEnergy Announces Second Quarter 2023 Results
- CorEnergy reported total revenue of $35.7 million for Q2 2023.
- The company generated a net loss of $3.2 million and adjusted EBITDA of $5.8 million.
- CorEnergy entered into an agreement to sell MoGas and Omega Pipeline Systems for $175.0 million in cash.
- The company filed proposed cost-of-service based tariff increases.
- CorEnergy amended their credit facility to manage near-term debt maturities.
- The 2023 outlook was revised to expect adjusted EBITDA of $24.0 to $26.0 million.
- None.
Second Quarter 2023 and Recent Highlights
-
Reported Total Revenue of
for the three months ended June 30, 2023.$35.7 million -
Generated Net Loss of
and Adjusted EBITDA (a non-GAAP financial measure) of$3.2 million .$5.8 million - Transported an average of 156,078 barrels per day.
-
Entered into agreement to sell MoGas and Omega Pipeline Systems for
in cash, now anticipated to close around the end of the calendar year, pending Federal Trade Commission review and subject to customary closing conditions.$175.0 million -
Filed additional proposed cost-of-service based tariff increases as a result of volume shortfalls:
-
In February 2023, a
36% tariff increase on Crimson's SPB system and began collection of a10% increase in March 2023. -
In March 2023, a
107% increase on Crimson’s KLM system, in addition to the10% tariff increase filed Q3 2022 that is currently being collected. -
In July 2023, a
10% increase on Crimson'sSouthern California system in addition to the10% tariff increase filed Q3 2022 that is currently being collected.
-
In February 2023, a
- Amended the Company's credit facility to revise the covenant requirements for Q3 and Q4 2023, providing additional time to manage near-term debt maturities through the proposed sale of CorEnergy's MoGas and Omega Pipeline Systems.
-
Updated the Company's 2023 outlook to reflect changes in volume, maintenance capital and timing of the Company's anticipated MoGas and Omega sale, expecting Adjusted EBITDA of
to$24.0 .$26.0 million
Management Commentary
"
Second Quarter Performance Summary
Second quarter financial highlights are as follows:
|
For the Three Months Ended |
||||||||||
|
June 30, 2023 |
||||||||||
|
|
Per Common Share |
|||||||||
|
Total |
Basic |
Diluted |
||||||||
Net Loss |
$ |
(3,167,350 |
) |
$ |
(0.40 |
) |
$ |
(0.40 |
) |
||
Net Cash Provided by Operating Activities |
$ |
2,627,405 |
|
|
|
||||||
Adjusted Net Loss1 |
$ |
(985,747 |
) |
|
|
||||||
Cash Available for Distribution (CAD)1 |
$ |
(7,702,815 |
) |
|
|
||||||
Adjusted EBITDA2 |
$ |
5,848,769 |
|
|
|
||||||
|
|
|
|
||||||||
Dividends Declared to Common Stockholders |
|
$ |
— |
|
|
1 Non-GAAP financial measure. Adjusted Net Loss excludes special items of
2 Non-GAAP financial measure. Adjusted EBITDA excludes special items of
Crimson Rate Increases
During the third quarter of 2022, Crimson filed for a tariff increase of
During the first quarter of 2023, Crimson filed for a
On July 1, 2023, Crimson submitted an application to the CPUC to increase tariffs on the
The Company plans to file and begin collecting an additional
Business Development Activities
CorEnergy continues to seek emerging carbon capture and sequestration business opportunities in
2023 Outlook
CorEnergy revised its outlook for 2023, now calling for:
-
Adjusted EBITDA of
to$24.0 , inclusive of maintenance expense of$26.0 million to$9.0 , reflecting reduced volumes and delays in tariff processes (see Note 2 for additional details);$10.0 million -
Capital expenditures in the range of
to$11.5 , incurred at periodic times throughout the year based on project timing.$12.5 million - An expectation that the Company’s Class B Common Stock will mandatorily convert to Common Stock at a ratio of 0.68:1, as opposed to 1:1, during Q1 2024.
Dividend and Distribution Status
CorEnergy's Board of Directors maintained the suspension of dividend payments on its
CorEnergy’s
Based on the suspension of dividend payments to CorEnergy’s public equity holders, the Crimson Class A-1, Class A-2, and Class A-3 Units and CorEnergy’s Class B Common Stock will not receive dividends. The Crimson Class A-1 Units will accumulate a preferred distribution based on the CorEnergy Series A Cumulative Redeemable Preferred Shares, which would be paid prior to the Company resuming common dividend payments.
The unpaid and accumulated preferred dividend amounts are included in the financial statements and notes.
Second Quarter Results Call
CorEnergy will host a conference call on Monday, August 14, 2023 at 11:00 a.m. Central Time to discuss its financial results. The call may also include discussion of Company developments and forward-looking and other material information about business and financial matters. To join the call, dial +1-973-528-0011 and provide access code 390317 at least five minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit.
A replay of the call will be available until 10:00 a.m. Central Time on September 13, 2023, by dialing +1-919-882-2331. The Conference ID is 48880. A webcast replay of the conference call will also be available on the Company’s website, corenergy.reit.
About CorEnergy Infrastructure Trust, Inc.
CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a real estate investment trust that owns and operates or leases regulated natural gas transmission and distribution lines and crude oil gathering, storage and transmission pipelines and associated rights-of-way. For more information, please visit corenergy.reit.
Forward-Looking Statements
The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q is filed. With the exception of historical information, certain statements contained in this press release 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, such as those pertaining to our guidance, pursuit of growth opportunities, anticipated transportation volumes, expected rate increases, planned capital expenditures, planned dividend payment levels, planned cost reductions, potential and pending asset sales, expected ESG program updates and developments, future compliance with debt covenants. capital resources and liquidity, and our planned acts relating thereto, and results of operations and financial condition. You can identify forward-looking statements by use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," or similar expressions or other comparable terms or discussions of strategy, plans or intentions. 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, among others, changes in economic and business conditions; a decline in oil production levels; competitive and regulatory pressures; failure to realize the anticipated benefits of requested tariff increases; risks related to the uncertainty of the projected financial information with respect to Crimson; compliance with environmental, safety and other laws; our continued ability to access debt and equity markets and comply with existing debt covenants; failure to complete pending asset sales on our expected timeline or at all; risks associated with climate change; risks associated with changes in tax laws and our ability to continue to qualify as a REIT; and other factors 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 dividends 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 and other applicable requirements.
1 Management uses Adjusted Net Loss as a measure of profitability and CAD as a measure of long-term sustainable performance. Adjusted Net Loss and CAD are non-GAAP measures. Adjusted Net Loss represents net loss adjusted for transaction costs, restructuring costs, less gain on sale of equipment. CAD represents Adjusted Net Loss adjusted for depreciation and amortization, amortization of debt issuance costs, stock-based compensation, and deferred tax benefit less transaction costs, restructuring costs, maintenance capital expenditures, preferred dividend requirements, and mandatory debt amortization.
2 Management uses Adjusted EBITDA as a measure of operating performance. Adjusted EBITDA represents net loss adjusted for items such as transaction costs, restructuring costs, depreciation and amortization, stock-based compensation, income tax benefit, net, and interest expense less gain on the sale of equipment. Future period non-GAAP guidance includes adjustments for special items not indicative of our core operations, which may include, without limitation, items included in the additional financial information attached to this press release. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual or unanticipated charges, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this future period non-GAAP guidance to the most comparable GAAP measures. Accordingly, we are not providing such comparable GAAP measures or reconciliations in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense.
CONSOLIDATED BALANCE SHEETS |
|||||||
|
|||||||
|
June 30, 2023 |
December 31, 2022 |
|||||
Assets |
(Unaudited) |
|
|||||
Property and equipment, net of accumulated depreciation of |
$ |
339,805,290 |
|
$ |
440,148,967 |
|
|
Leased property, net of accumulated depreciation of |
|
— |
|
|
1,226,565 |
|
|
Financing notes and related accrued interest receivable, net of reserve of |
|
710,467 |
|
|
858,079 |
|
|
Cash and cash equivalents |
|
9,237,764 |
|
|
17,830,482 |
|
|
Accounts and other receivables |
|
9,028,808 |
|
|
14,164,525 |
|
|
Due from affiliated companies |
|
5,416 |
|
|
167,743 |
|
|
Deferred costs, net of accumulated amortization of |
|
303,322 |
|
|
415,727 |
|
|
Inventory |
|
3,579,851 |
|
|
5,950,051 |
|
|
Prepaid expenses and other assets |
|
5,178,308 |
|
|
9,478,146 |
|
|
Operating right-of-use assets |
|
6,096,799 |
|
|
4,722,361 |
|
|
Deferred tax asset, net |
|
217,430 |
|
|
— |
|
|
Assets held for sale |
|
108,670,305 |
|
|
— |
|
|
Total Assets |
$ |
482,833,760 |
|
$ |
494,962,646 |
|
|
Liabilities and Equity |
|
|
|||||
Secured credit facilities, net of deferred financing costs of |
$ |
102,596,049 |
|
$ |
100,334,453 |
|
|
Unsecured convertible senior notes, net of discount and debt issuance costs of |
|
116,652,380 |
|
|
116,323,530 |
|
|
Accounts payable and other accrued liabilities |
|
16,244,763 |
|
|
26,316,216 |
|
|
Income tax payable |
|
8,529 |
|
|
174,849 |
|
|
Due to affiliated companies |
|
156,274 |
|
|
209,750 |
|
|
Operating lease liability |
|
6,067,985 |
|
|
4,696,410 |
|
|
Deferred tax liability, net |
|
— |
|
|
1,292,300 |
|
|
Unearned revenue |
|
566,154 |
|
|
5,948,621 |
|
|
Liabilities held for sale |
|
7,234,513 |
|
|
— |
|
|
Total Liabilities |
$ |
249,526,647 |
|
$ |
255,296,129 |
|
|
Equity |
|
|
|||||
Series A Cumulative Redeemable Preferred Stock |
$ |
129,525,675 |
|
$ |
129,525,675 |
|
|
Common stock, non-convertible, |
|
15,351 |
|
|
15,254 |
|
|
Class B Common Stock, |
|
684 |
|
|
684 |
|
|
Additional paid-in capital |
|
327,074,755 |
|
|
327,016,573 |
|
|
Retained deficit |
|
(341,821,204 |
) |
|
(333,785,097 |
) |
|
Total CorEnergy Equity |
|
114,795,261 |
|
|
122,773,089 |
|
|
Non-controlling interest |
|
118,511,852 |
|
|
116,893,428 |
|
|
Total Equity |
|
233,307,113 |
|
|
239,666,517 |
|
|
Total Liabilities and Equity |
$ |
482,833,760 |
|
$ |
494,962,646 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
|||||||
|
|||||||
|
For the Three Months Ended |
||||||
|
June 30, 2023 |
March 31, 2023 |
|||||
Revenue |
|
|
|||||
Transportation and distribution |
$ |
28,540,632 |
|
$ |
29,239,115 |
|
|
Pipeline loss allowance subsequent sales |
|
7,009,996 |
|
|
— |
|
|
Lease and other revenue |
|
103,352 |
|
|
103,057 |
|
|
Total Revenue |
|
35,653,980 |
|
|
29,342,172 |
|
|
Expenses |
|
|
|||||
Transportation and distribution |
|
17,787,024 |
|
|
17,481,063 |
|
|
Pipeline loss allowance subsequent sales cost of revenue |
|
7,050,776 |
|
|
— |
|
|
General and administrative |
|
7,447,410 |
|
|
6,771,582 |
|
|
Depreciation and amortization |
|
3,237,526 |
|
|
4,031,627 |
|
|
Total Expenses |
|
35,522,736 |
|
|
28,284,272 |
|
|
Operating Income |
$ |
131,244 |
|
$ |
1,057,900 |
|
|
Other Income (expense) |
|
|
|||||
Other income |
$ |
195,678 |
|
$ |
(4,404,565 |
) |
|
Interest expense |
|
(4,426,351 |
) |
|
141,813 |
|
|
Total Other Expense |
|
(4,230,673 |
) |
|
(4,262,752 |
) |
|
Loss before income taxes |
|
(4,099,429 |
) |
|
(3,204,852 |
) |
|
Taxes |
|
|
|||||
Current tax expense |
|
2,625 |
|
|
7,076 |
|
|
Deferred tax benefit |
|
(934,704 |
) |
|
(11,595 |
) |
|
Income tax benefit, net |
|
(932,079 |
) |
|
(4,519 |
) |
|
Net Loss |
|
(3,167,350 |
) |
|
(3,200,333 |
) |
|
Less: Net income attributable to non-controlling interest |
|
809,212 |
|
|
809,212 |
|
|
Net Loss attributable to CorEnergy Infrastructure Trust, Inc. |
$ |
(3,976,562 |
) |
$ |
(4,009,545 |
) |
|
Preferred dividend requirements |
|
2,388,130 |
|
|
2,388,130 |
|
|
Net Loss attributable to Common Stockholders |
$ |
(6,364,692 |
) |
$ |
(6,397,675 |
) |
|
|
|
|
|||||
Common Stock |
|
|
|||||
Basic weighted average shares outstanding |
$ |
15,350,883 |
|
|
15,272,267 |
|
|
Basic net loss per share |
$ |
(0.40 |
) |
$ |
(0.40 |
) |
|
|
|
|
|||||
Diluted weighted average shares outstanding |
|
15,815,840 |
|
|
15,737,224 |
|
|
Diluted net loss per share |
$ |
(0.40 |
) |
$ |
(0.41 |
) |
|
|
|
|
|||||
Class B Common Stock |
|
|
|||||
Basic and diluted weighted average shares outstanding |
|
683,761 |
|
|
683,761 |
|
|
Basic and diluted net loss per share |
$ |
(0.40 |
) |
$ |
(0.40 |
) |
|
|
|
|
|||||
Dividends declared per common share |
$ |
— |
|
$ |
— |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
|||||||
|
|||||||
|
For the Six Months Ended |
||||||
|
June 30, 2023 |
June 30, 2022 |
|||||
Operating Activities |
|
|
|||||
Net income (loss) |
$ |
(6,367,683 |
) |
$ |
6,534,883 |
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|||||
Deferred income tax, net |
|
(946,299 |
) |
|
88,422 |
|
|
Depreciation and amortization |
|
7,269,153 |
|
|
7,968,981 |
|
|
Amortization of debt issuance costs |
|
774,047 |
|
|
824,120 |
|
|
Gain on sale of equipment |
|
(1,074 |
) |
|
(22,678 |
) |
|
Stock-based compensation |
|
92,344 |
|
|
151,359 |
|
|
Changes in assets and liabilities: |
|
|
|||||
Accounts and other receivables |
|
1,482,880 |
|
|
1,024,635 |
|
|
Inventory |
|
2,224,250 |
|
|
(587,295 |
) |
|
Prepaid expenses and other assets |
|
4,095,376 |
|
|
1,785,571 |
|
|
Due from affiliated companies, net |
|
108,852 |
|
|
140,509 |
|
|
Accounts payable and other accrued liabilities |
|
(6,069,668 |
) |
|
1,071,089 |
|
|
Income tax payable |
|
(166,320 |
) |
|
305,205 |
|
|
Unearned revenue |
|
162,160 |
|
|
280,795 |
|
|
Other changes, net |
|
(30,613 |
) |
|
(206,457 |
) |
|
Net cash provided by operating activities |
$ |
2,627,405 |
|
$ |
19,359,139 |
|
|
Investing Activities |
|
|
|||||
Purchases of property and equipment |
|
(7,967,423 |
) |
|
(4,141,485 |
) |
|
Proceeds from reimbursable projects |
|
858,134 |
|
|
2,103,544 |
|
|
Other changes, net |
|
(789,739 |
) |
|
124,701 |
|
|
Net cash used in investing activities |
$ |
(7,899,028 |
) |
$ |
(1,913,240 |
) |
|
Financing Activities |
|
|
|||||
Dividends paid on Series A preferred stock |
|
— |
|
|
(4,776,260 |
) |
|
Dividends paid on Common Stock |
|
— |
|
|
(1,492,690 |
) |
|
Reinvestment of Dividends Paid to Common Stockholders |
|
— |
|
|
403,204 |
|
|
Distributions to non-controlling interest |
|
— |
|
|
(1,618,424 |
) |
|
Advances on the Crimson Revolver |
|
7,000,000 |
|
|
4,000,000 |
|
|
Payments on the Crimson Revolver |
|
(1,000,000 |
) |
|
(4,000,000 |
) |
|
Principal payments on the Crimson Term Loan |
|
(4,000,000 |
) |
|
(4,000,000 |
) |
|
Dividends paid on Vested RSUs |
|
(15,612 |
) |
|
— |
|
|
Payments on financing arrangement |
|
(2,203,747 |
) |
|
(1,170,635 |
) |
|
Net cash used in financing activities |
$ |
(219,359 |
) |
$ |
(12,654,805 |
) |
|
Net change in Cash and Cash Equivalents |
|
(5,490,982 |
) |
|
4,791,094 |
|
|
Cash and Cash Equivalents at beginning of period |
|
17,830,482 |
|
|
11,540,576 |
|
|
Cash and Cash Equivalents at end of period |
$ |
12,339,500 |
|
$ |
16,331,670 |
|
|
|
|
|
|||||
Supplemental Disclosure of Cash Flow Information |
|
|
|||||
Interest paid |
$ |
9,007,546 |
|
$ |
4,999,845 |
|
|
Income taxes paid (net of refunds) |
|
191,000 |
|
|
(12,055 |
) |
|
|
|
|
|||||
Non-Cash Investing Activities |
|
|
|||||
Purchases of property, plant and equipment in accounts payable and other accrued liabilities |
$ |
1,430,552 |
|
$ |
771,180 |
|
|
|
|
|
|||||
Non-Cash Financing Activities |
|
|
|||||
Assets acquired under financing arrangement |
$ |
— |
|
$ |
1,226,402 |
|
Non-GAAP Financial Measurements (Unaudited)
The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted Net Loss and CAD:
|
For the Three Months Ended |
||||||
|
June 30, 2023 |
March 31, 2023 |
|||||
Net Loss |
$ |
(3,167,350 |
) |
$ |
(3,200,333 |
) |
|
Add: |
|
|
|||||
Transaction costs |
|
1,857,826 |
|
|
495,579 |
|
|
Restructuring costs |
|
323,777 |
|
|
1,683,777 |
|
|
Less: |
|
|
|||||
Gain on the sale of equipment |
|
— |
|
|
1,074 |
|
|
Adjusted Net Loss, excluding special items |
$ |
(985,747 |
) |
$ |
(1,022,051 |
) |
|
Add: |
|
|
|||||
Depreciation and amortization |
|
3,237,526 |
|
|
4,031,627 |
|
|
Amortization of debt issuance costs |
|
356,054 |
|
|
417,993 |
|
|
Stock-based compensation |
|
102,718 |
|
|
(10,374 |
) |
|
Deferred tax benefit |
|
(934,704 |
) |
|
(11,595 |
) |
|
Less: |
|
|
|||||
Transaction costs |
|
1,857,826 |
|
|
495,579 |
|
|
Restructuring costs |
|
323,777 |
|
|
1,683,777 |
|
|
Maintenance capital expenditures |
|
2,099,717 |
|
|
2,222,948 |
|
|
Preferred dividend requirements - Series A |
|
2,388,130 |
|
|
2,388,130 |
|
|
Preferred dividend requirements - Non-controlling interest |
|
809,212 |
|
|
809,212 |
|
|
Mandatory debt amortization |
|
2,000,000 |
|
|
2,000,000 |
|
|
Cash Available for Distribution (CAD) |
$ |
(7,702,815 |
) |
$ |
(6,194,046 |
) |
The following table reconciles net cash provided by (used in) operating activities, as reported in the Consolidated Statements of Cash Flows to CAD:
|
For the Three Months Ended |
||||||
|
June 30, 2023 |
March 31, 2023 |
|||||
Net cash provided by (used in) operating activities |
$ |
5,735,036 |
|
$ |
(3,107,631 |
) |
|
Changes in working capital |
|
(6,140,792 |
) |
|
4,333,875 |
|
|
Maintenance capital expenditures |
|
(2,099,717 |
) |
|
(2,222,948 |
) |
|
Preferred dividend requirements |
|
(2,388,130 |
) |
|
(2,388,130 |
) |
|
Preferred dividend requirements - non-controlling interest |
|
(809,212 |
) |
|
(809,212 |
) |
|
Mandatory debt amortization included in financing activities |
|
(2,000,000 |
) |
|
(2,000,000 |
) |
|
Cash Available for Distribution (CAD) |
$ |
(7,702,815 |
) |
$ |
(6,194,046 |
) |
|
|
|
|
|||||
Other Special Items: |
|
|
|||||
Transaction costs |
$ |
1,857,826 |
|
$ |
495,579 |
|
|
Restructuring costs |
|
323,777 |
|
|
1,683,777 |
|
|
|
|
|
|||||
Other Cash Flow Information: |
|
|
|||||
Net cash used in investing activities |
$ |
(4,409,007 |
) |
$ |
(3,490,021 |
) |
|
Net cash provided by (used in) financing activities |
|
(331,528 |
) |
|
112,169 |
|
The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted EBITDA:
|
For the Three Months Ended |
||||||
|
June 30, 2023 |
March 31, 2023 |
|||||
Net Loss |
$ |
(3,167,350 |
) |
$ |
(3,200,333 |
) |
|
Add: |
|
|
|||||
Transaction costs |
|
1,857,826 |
|
|
495,579 |
|
|
Restructuring costs |
|
323,777 |
|
|
1,683,777 |
|
|
Depreciation and amortization |
|
3,237,526 |
|
|
4,031,627 |
|
|
Stock-based compensation |
|
102,718 |
|
|
(10,374 |
) |
|
Income tax benefit, net |
|
(932,079 |
) |
|
(4,519 |
) |
|
Interest expense, net |
|
4,426,351 |
|
|
4,404,565 |
|
|
Less: |
|
|
|||||
Gain on the sale of equipment |
|
— |
|
|
1,074 |
|
|
Adjusted EBITDA |
$ |
5,848,769 |
|
$ |
7,399,248 |
|
Source: CorEnergy Infrastructure Trust, Inc.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230814645123/en/
CorEnergy Infrastructure Trust, Inc.
Investor Relations
Matt Kreps or Jeff Teeven
877-699-CORR (2677)
info@corenergy.reit
Source: CorEnergy Infrastructure Trust, Inc.
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