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CorEnergy Announces Third Quarter 2020 Results, Dividends

·15 min read

CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or the "Company") today announced financial results for the third quarter, ended September 30, 2020.

Third Quarter Performance Summary

Third quarter financial highlights are as follows:

For the Three Months Ended

September 30, 2020

Per Share

Total

Basic

Diluted

Net Loss (Attributable to Common Stockholders)1

$

(6,228,770)

$

(0.46)

$

(0.46)

NAREIT Funds from Operations (NAREIT FFO)1

$

(4,175,478)

$

(0.31)

$

(0.31)

Funds From Operations (FFO)1

$

(4,175,478)

$

(0.31)

$

(0.31)

Adjusted Funds From Operations (AFFO)1

$

(2,879,414)

$

(0.21)

$

(0.21)

Dividends Declared to Common Stockholders

$

0.05

1 Management uses AFFO as a measure of long-term sustainable operational performance. NAREIT FFO, FFO, and AFFO are non-GAAP measures. Reconciliations of NAREIT FFO, FFO and AFFO, as presented, to Net Loss Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.

Management Commentary

"Within CorEnergy's existing asset portfolio, our MoGas and Omega assets are generating steady, predictable results, even as we implemented multiple expansion projects with customers on these lines," said Dave Schulte, Chairman and Chief Executive Officer. "We expect the most recent of our MoGas expansion projects to come online by the beginning of December, driving incremental revenue generating capabilities under a new 10-year contract with Spire, in addition to a recent 10-year expansion agreement signed with Ameren. Our Omega pipeline is providing increased support as the Department of Defense constructs additional natural gas using facilities at Fort Leonard Wood, a 30,000 person Army post. Finally, we are working toward resolution of the rents due at our GIGS asset, which the tenant is using on a daily basis. Rents continue to accrue uninterrupted under the lease agreement, and we intend to enforce our full claim if resolution is not reached."

"CorEnergy has completed substantial diligence, and we are evaluating funding options for an acquisition as part of our goal to announce a transaction before year end," continued Schulte. "We believe our stakeholders are best served by using our resources to acquire critical assets serving credit-worthy counterparties, enabling CorEnergy to provide a stable dividend in 2021, with long term prospects for growth. Of course, there is no assurance that any particular acquisition will be completed, due to a number of factors including market conditions."

Dividend Declaration

Common Stock: A third quarter 2020 dividend of $0.05 per share was declared for CorEnergy's common stock. The dividend will be paid on November 30, 2020, to stockholders of record on November 16, 2020.

Preferred Stock: For the Company's 7.375% Series A Cumulative Redeemable Preferred Stock, a cash dividend of $0.4609375 per depositary share was declared. The preferred stock dividend, which equates to an annual dividend payment of $1.84375 per depositary share, will be paid on November 30, 2020, to stockholders of record on November 16, 2020.

Third Quarter Results Call

CorEnergy will host a conference call on Tuesday, November 3, 2020, at 1:00 p.m. Central Time to discuss its financial results. Please dial into the call at +1-201-689-8035 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 1:00 p.m. Central Time on December 3, 2020, by dialing +1-919-882-2331. The Conference ID is 58666. 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 (REIT) that owns critical energy assets, such as pipelines, storage terminals, and transmission and distribution assets. We receive long-term contracted revenue from customers and operators of our assets, including triple-net participating leases and from long term customer contracts. For more information, please visit corenergy.reit.

Forward-Looking Statements

This press release contains certain statements that may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical fact, included herein are "forward-looking statements." Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including those discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any distribution paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants.

Notes

1NAREIT FFO represents net loss (computed in accordance with GAAP), excluding gains (or losses) from sales of depreciable operating property, impairment losses of depreciable properties, real estate-related depreciation and amortization (excluding amortization of deferred financing costs or loan origination costs) and other adjustments for unconsolidated partnerships and non-controlling interests. Adjustments for non-controlling interests are calculated on the same basis. FFO as we have presented it here, is derived by further adjusting NAREIT FFO for distributions received from investment securities, income tax expense (benefit) from investment securities, net distributions and other income and net realized and unrealized gain or loss on other equity securities. CorEnergy defines AFFO as FFO Adjusted for Securities Investment plus deferred rent receivable write-off, (gain) loss on extinguishment of debt, provision for loan (gain) loss, net of tax, transaction costs, amortization of debt issuance costs, accretion of asset retirement obligation, non-cash costs associated with derivative instruments, and certain costs of a nonrecurring nature, less maintenance, capital expenditures (if any), income tax (expense) benefit unrelated to securities investments, amortization of debt premium, and other adjustments as deemed appropriate by Management. Reconciliations of NAREIT FFO, FFO Adjusted for Securities Investments and AFFO to Net Loss Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

Consolidated Balance Sheets

September 30,
2020

December 31,
2019

Assets

(Unaudited)

Leased property, net of accumulated depreciation of $5,631,017 and $105,825,816

$

66,121,507

$

379,211,399

Property and equipment, net of accumulated depreciation of $21,815,093 and $19,304,610

105,510,927

106,855,677

Financing notes and related accrued interest receivable, net of reserve of $600,000 and $600,000

1,202,960

1,235,000

Cash and cash equivalents

104,221,404

120,863,643

Deferred rent receivable

29,858,102

Accounts and other receivables

3,103,170

4,143,234

Deferred costs, net of accumulated amortization of $1,979,058 and $1,956,710

1,229,159

2,171,969

Prepaid expenses and other assets

1,861,017

804,341

Deferred tax asset, net

4,367,933

4,593,561

Goodwill

1,718,868

1,718,868

Total Assets

$

289,336,945

$

651,455,794

Liabilities and Equity

Secured credit facilities, net of debt issuance costs of $0 and $158,070

$

$

33,785,930

Unsecured convertible senior notes, net of discount and debt issuance costs of $3,206,295 and $3,768,504

114,843,705

118,323,496

Asset retirement obligation

8,646,065

8,044,200

Accounts payable and other accrued liabilities

3,760,287

6,000,981

Management fees payable

969,756

1,669,950

Unearned revenue

6,053,376

6,891,798

Total Liabilities

$

134,273,189

$

174,716,355

Equity

Series A Cumulative Redeemable Preferred Stock 7.375%, $125,270,350 and $125,493,175 liquidation preference ($2,500 per share, $0.001 par value), 10,000,000 authorized; 50,108 and 50,197 issued and outstanding at September 30, 2020 and December 31, 2019, respectively

$

125,270,350

$

125,493,175

Capital stock, non-convertible, $0.001 par value; 13,651,521 and 13,638,916 shares issued and outstanding at September 30, 2020 and December 31, 2019 (100,000,000 shares authorized)

13,652

13,639

Additional paid-in capital

342,734,629

360,844,497

Retained deficit

(312,954,875

)

(9,611,872

)

Total Equity

155,063,756

476,739,439

Total Liabilities and Equity

$

289,336,945

$

651,455,794

Consolidated Statements of Operations (Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Revenue

Lease revenue

$

20,126

$

16,984,903

$

21,320,998

$

50,338,489

Deferred rent receivable write-off

(30,105,820

)

Transportation and distribution revenue

4,573,155

4,068,338

14,156,361

13,808,064

Financing revenue

32,099

28,003

88,319

89,532

Total Revenue

4,625,380

21,081,244

5,459,858

64,236,085

Expenses

Transportation and distribution expenses

1,438,443

1,116,194

4,035,807

3,866,092

General and administrative

2,793,568

2,494,240

10,195,635

8,104,502

Depreciation, amortization and ARO accretion expense

2,169,806

5,645,342

11,479,799

16,935,688

Loss on impairment of leased property

140,268,379

Loss on impairment and disposal of leased property

146,537,547

Loss on termination of lease

458,297

Total Expenses

6,401,817

9,255,776

312,975,464

28,906,282

Operating Income (Loss)

$

(1,776,437

)

$

11,825,468

$

(307,515,606

)

$

35,329,803

Other Income (Expense)

Net distributions and other income

$

29,654

$

360,182

$

449,512

$

902,056

Interest expense

(2,247,643

)

(2,777,122

)

(8,053,650

)

(7,582,199

)

Gain (loss) on extinguishment of debt

(28,920,834

)

11,549,968

(33,960,565

)

Total Other Income (Expense)

(2,217,989

)

(31,337,774

)

3,945,830

(40,640,708

)

Loss before income taxes

(3,994,426

)

(19,512,306

)

(303,569,776

)

(5,310,905

)

Taxes

Current tax expense (benefit)

(2,431

)

(1,270

)

(399,505

)

352,474

Deferred tax expense (benefit)

(72,897

)

(91,436

)

225,628

64,854

Income tax expense (benefit), net

(75,328

)

(92,706

)

(173,877

)

417,328

Net Loss attributable to CorEnergy Stockholders

(3,919,098

)

(19,419,600

)

(303,395,899

)

(5,728,233

)

Preferred dividend requirements

2,309,672

2,313,780

6,880,137

6,941,688

Net Loss attributable to Common Stockholders

$

(6,228,770

)

$

(21,733,380

)

$

(310,276,036

)

$

(12,669,921

)

Loss Per Common Share:

Basic

$

(0.46

)

$

(1.65

)

$

(22.73

)

$

(0.98

)

Diluted

$

(0.46

)

$

(1.65

)

$

(22.73

)

$

(0.98

)

Weighted Average Shares of Common Stock Outstanding:

Basic

13,651,521

13,188,546

13,650,449

12,870,357

Diluted

13,651,521

13,188,546

13,650,449

12,870,357

Dividends declared per share

$

0.050

$

0.750

$

0.850

$

2.250

Consolidated Statements of Cash Flows (Unaudited)

For the Nine Months Ended

September 30,
2020

September 30,
2019

Operating Activities

Net loss

$

(303,395,899

)

$

(5,728,233

)

Adjustments to reconcile net loss to net cash provided by operating activities:

Deferred income tax, net

225,628

64,854

Depreciation, amortization and ARO accretion

12,441,775

17,828,773

Loss on impairment of leased property

140,268,379

Loss on impairment and disposal of leased property

146,537,547

Loss on termination of lease

458,297

Deferred rent receivable write-off, noncash

30,105,820

(Gain) loss on extinguishment of debt

(11,549,968

)

33,960,565

Gain on sale of equipment

(3,542

)

(1,800

)

Changes in assets and liabilities:

Increase in deferred rent receivable

(247,718

)

(3,656,655

)

Decrease in accounts and other receivables

1,040,064

2,081,674

Increase in financing note accrued interest receivable

(11,293

)

Increase in prepaid expenses and other assets

(1,056,726

)

(26,026

)

Decrease in management fee payable

(700,194

)

(166,587

)

Increase (decrease) in accounts payable and other accrued liabilities

(2,551,374

)

3,449,442

Decrease in unearned revenue

(838,422

)

(40,477

)

Net cash provided by operating activities

$

10,722,374

$

47,765,530

Investing Activities

Purchases of property and equipment, net

(885,711

)

(311,566

)

Proceeds from sale of property and equipment

7,500

Principal payment on note receivable

5,000,000

Principal payment on financing note receivable

43,333

32,500

Net cash provided by (used in) investing activities

$

(834,878

)

$

4,720,934

Financing Activities

Debt financing costs

(161,963

)

Net offering proceeds on convertible debt

116,355,125

Repurchases of preferred stock

(161,997

)

(60,550

)

Dividends paid on Series A preferred stock

(6,933,124

)

(6,941,340

)

Dividends paid on common stock

(11,603,792

)

(28,949,060

)

Cash paid for extinguishment of convertible notes

(1,316,250

)

(78,939,743

)

Cash paid for maturity of convertible notes

(1,676,000

)

Cash paid for settlement of Pinedale Secured Credit Facility

(3,074,572

)

Principal payments on secured credit facilities

(1,764,000

)

(2,646,000

)

Net cash used in financing activities

$

(26,529,735

)

$

(1,343,531

)

Net Change in Cash and Cash Equivalents

$

(16,642,239

)

$

51,142,933

Cash and Cash Equivalents at beginning of period

120,863,643

69,287,177

Cash and Cash Equivalents at end of period

$

104,221,404

$

120,430,110

Supplemental Disclosure of Cash Flow Information

Interest paid

$

9,066,335

$

5,893,078

Income taxes paid (net of refunds)

(466,382

)

282,786

Non-Cash Investing Activities

Proceeds from sale of leased property provided directly to secured lender

$

18,000,000

$

Purchases of property, plant and equipment in accounts payable and other accrued liabilities

313,859

Non-Cash Financing Activities

Change in accounts payable and accrued expenses related to debt financing costs

$

$

197,227

Reinvestment of distributions by common stockholders in additional common shares

403,831

Common stock issued upon exchange and conversion of convertible notes

419,129

62,639,326

Proceeds from sale of leased property used in settlement of Pinedale Secured Credit Facility

(18,000,000

)

NAREIT FFO, FFO Adjusted for Securities Investment and AFFO Reconciliation (Unaudited)

For the Three Months Ended

For the Nine Months Ended

September 30,
2020

September 30,
2019

September 30,
2020

September 30,
2019

Net Loss attributable to CorEnergy Stockholders

$

(3,919,098

)

$

(19,419,600

)

$

(303,395,899

)

$

(5,728,233

)

Less:

Preferred Dividend Requirements

2,309,672

2,313,780

6,880,137

6,941,688

Net Loss attributable to Common Stockholders

$

(6,228,770

)

$

(21,733,380

)

$

(310,276,036

)

$

(12,669,921

)

Add:

Depreciation

2,045,651

5,511,367

11,080,993

16,533,762

Amortization of deferred lease costs

7,641

22,983

53,607

68,949

Loss on impairment of leased property

140,268,379

Loss on impairment and disposal of leased property

146,537,547

Loss on termination of lease

458,297

NAREIT funds from operations (NAREIT FFO)

$

(4,175,478

)

$

(16,199,030

)

$

(11,877,213

)

$

3,932,790

Less:

Income tax (expense) benefit from investment securities

(45,205

)

149,585

(203,910

)

Funds from operations adjusted for securities investments (FFO)

$

(4,175,478

)

$

(16,153,825

)

$

(12,026,798

)

$

4,136,700

Add:

Deferred rent receivable write-off

30,105,820

(Gain) loss on extinguishment of debt

28,920,834

(11,549,968

)

33,960,565

Transaction costs

946,817

14,799

1,145,807

157,380

Amortization of debt issuance costs

308,061

313,022

961,975

893,084

Accretion of asset retirement obligation

116,514

110,992

345,199

332,977

Income tax expense (benefit)

(75,328

)

(137,911

)

(24,292

)

213,418

Adjusted funds from operations (AFFO)

$

(2,879,414

)

$

13,067,911

$

8,957,743

$

39,694,124

Weighted Average Shares of Common Stock Outstanding:

Basic

13,651,521

13,188,546

13,650,449

12,870,357

Diluted

13,651,521

15,609,545

13,650,449

15,197,745

NAREIT FFO attributable to Common Stockholders

Basic

$

(0.31

)

$

(1.23

)

$

(0.87

)

$

0.31

Diluted (1)

$

(0.31

)

$

(1.23

)

$

(0.87

)

$

0.31

FFO attributable to Common Stockholders

Basic

$

(0.31

)

$

(1.22

)

$

(0.88

)

$

0.32

Diluted (1)

$

(0.31

)

$

(1.22

)

$

(0.88

)

$

0.32

AFFO attributable to Common Stockholders

Basic

$

(0.21

)

$

0.99

$

0.66

$

3.08

Diluted (2)

$

(0.21

)

$

0.94

$

0.66

$

2.89

(1) For the three and nine months ended September 30, 2020 and 2019 diluted per share calculations exclude dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization because such impact is antidilutive. For periods presented without per share dilution, the number of weighted average diluted shares is equal to the number of weighted average basic shares presented.

(2) For the three and nine months ended September 30, 2019, diluted per share calculations include a dilutive adjustment for convertible note interest expense.

Source: CorEnergy Infrastructure Trust, Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005983/en/

Contacts

CorEnergy Infrastructure Trust, Inc.
Investor Relations
Debbie Hagen or Matt Kreps
877-699-CORR (2677)
info@corenergy.reit