Business Wire | Aug 3, 2020 04:30PM EDT

CorEnergy Announces Second Quarter 2020 Results, Dividends

Aug. 03, 2020

KANSAS CITY, Mo.--(BUSINESS WIRE)--Aug. 03, 2020--CorEnergy Infrastructure Trust, Inc. ("CorEnergy" or the "Company") today announced financial results for the second quarter, ended June 30, 2020.

Second Quarter Performance Summary

Second quarter financial highlights, including the impact of the net loss from events surrounding the sale of the Pinedale Liquids Gathering System (LGS) asset, are as follows:

For the Three Months Ended

June 30, 2020

Per Share

Total Basic Diluted

Net Income (Loss) (Attributable to $ (139,744,105 ) $ (10.24 ) $ (10.24 )Common Stockholders)^1

NAREIT Funds from Operations (NAREIT $ 10,775,168 $ 0.79 $ 0.79 FFO)^1

Funds From Operations (FFO)^1 $ 10,775,168 $ 0.79 $ 0.79

Adjusted Funds From Operations $ (291,172 ) $ (0.02 ) $ (0.02 )(AFFO)^1

Dividends Declared to Common $ 0.05 Stockholders

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 Income (Loss) Attributable to CorEnergy Stockholders are included at the end of this press release. See Note 1 for additional information.

Management Commentary

"Following a challenging second quarter that included the sale of our Pinedale LGS asset, we are now endeavoring to acquire new assets by the end of the year to rebuild CorEnergy's dividend paying capabilities. These opportunities may include assets where we can leverage our Private Letter Ruling (PLR) to both own and operate infrastructure assets," said CorEnergy Chief Executive Officer Dave Schulte. "Regarding our asset portfolio, we have seen an improvement in the situation at our Grand Isle Gathering System (GIGS) asset amid rising oil prices and a restart of production by our tenant, from which we continue to seek resolution of the nonpayment of rent. Our MoGas and Omega systems are delivering steady financial performance in keeping with their status as transportation and distribution assets less subject to the impact of commodity price swings. We recently executed agreements with key MoGas shippers that will drive increased revenue beginning in the fourth quarter. Based on these developments, we declared payment of the regular preferred dividend and a common dividend of $0.05 per share for the second quarter."

Dividend Declaration

Common Stock: A second quarter 2020 dividend of $0.05 per share was declared for CorEnergy's common stock. The dividend will be paid on August 31, 2020, to stockholders of record on August 17, 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 August 31, 2020, to stockholders of record on August 17, 2020.

Second Quarter Results Call

CorEnergy will host a conference call on Tuesday, August 4, 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 September 4, 2020, by dialing +1-919-882-2331. The Conference ID is 58663. 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 income (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, amortization of deferred lease 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 Income (Loss) Attributable to CorEnergy Stockholders are included in the additional financial information attached to this press release.

Consolidated Balance Sheets



June 30, December 31, 2020 2019

Assets (Unaudited)

Leased property, net of accumulated $ 67,315,379 $ 379,211,399 depreciation of $4,430,269 and $105,825,816

Property and equipment, net of accumulated 105,358,280 106,855,677 depreciation of $20,970,190 and $19,304,610

Financing notes and related accrued interestreceivable, net of reserve of $600,000 and 1,196,338 1,235,000 $600,000

Cash and cash equivalents 113,713,646 120,863,643

Deferred rent receivable - 29,858,102

Accounts and other receivables 2,926,765 4,143,234

Deferred costs, net of accumulated 1,380,436 2,171,969 amortization of $1,827,781 and $1,956,710

Prepaid expenses and other assets 719,094 804,341

Deferred tax asset, net 4,295,036 4,593,561

Goodwill 1,718,868 1,718,868

Total Assets $ 298,623,842 $ 651,455,794

Liabilities and Equity

Secured credit facilities, net of debt $ - $ 33,785,930 issuance costs of $0 and $158,070

Unsecured convertible senior notes, net ofdiscount and debt issuance costs of 114,679,280 118,323,496 $3,370,720 and $3,768,504

Asset retirement obligation 8,529,551 8,044,200

Accounts payable and other accrued 5,494,411 6,000,981 liabilities

Management fees payable 1,661,651 1,669,950

Unearned revenue 6,283,847 6,891,798

Total Liabilities $ 136,648,740 $ 174,716,355

Equity

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

Capital stock, non-convertible, $0.001 parvalue; 13,651,521 and 13,638,916 sharesissued and outstanding at June 30, 2020 and 13,652 13,639 December 31, 2019 (100,000,000 sharesauthorized)

Additional paid-in capital 345,726,877 360,844,497

Retained deficit (309,035,777 ) (9,611,872 )

Total Equity 161,975,102 476,739,439

Total Liabilities and Equity $ 298,623,842 $ 651,455,794

Consolidated Statements of Operations (Unaudited)



For the Three Months Ended For the Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Revenue

Lease revenue $ 5,554,368 $ 16,635,876 $ 21,300,872 $ 33,353,586

Deferred rentreceivable - - (30,105,820 ) - write-off

Transportationand 4,382,706 4,868,144 9,583,206 9,739,726 distributionrevenue

Financing 29,913 27,989 56,220 61,529 revenue

Total Revenue 9,966,987 21,532,009 834,478 43,154,841

Expenses

Transportationand 1,222,135 1,246,755 2,597,364 2,749,898 distributionexpenses

General and 4,325,924 2,739,855 7,402,067 5,610,262 administrative

Depreciation,amortizationand ARO 3,662,926 5,645,250 9,309,993 11,290,346 accretionexpense

Loss onimpairment of - - 140,268,379 - leasedproperty

Loss onimpairment anddisposal of 146,537,547 - 146,537,547 - leasedproperty

Loss ontermination of 458,297 - 458,297 - lease

Total Expenses 156,206,829 9,631,860 306,573,647 19,650,506

Operating $ (146,239,842 ) $ 11,900,149 $ (305,739,169 ) $ 23,504,335 Income (Loss)

Other Income (Expense)

Netdistributions $ 102,038 $ 285,259 $ 419,858 $ 541,874 and otherincome

Interest (2,920,424 ) (2,297,783 ) (5,806,007 ) (4,805,077 )expense

Gain (loss) onextinguishment 11,549,968 - 11,549,968 (5,039,731 )of debt

Total OtherIncome 8,731,582 (2,012,524 ) 6,163,819 (9,302,934 )(Expense)

Income (Loss)before income (137,508,260 ) 9,887,625 (299,575,350 ) 14,201,401 taxes

Taxes

Current taxexpense (2,431 ) - (397,074 ) 353,744 (benefit)

Deferred taxexpense (71,396 ) 62,699 298,525 156,290 (benefit)

Income taxexpense (73,827 ) 62,699 (98,549 ) 510,034 (benefit), net

Net Income(Loss)attributable (137,434,433 ) 9,824,926 (299,476,801 ) 13,691,367 to CorEnergyStockholders

Preferreddividend 2,309,672 2,313,780 4,570,465 4,627,908 requirements

Net Income(Loss)attributable $ (139,744,105 ) $ 7,511,146 $ (304,047,266 ) $ 9,063,459 to CommonStockholders



Earnings(Loss) Per Common Share:

Basic $ (10.24 ) $ 0.59 $ (22.27 ) $ 0.71

Diluted $ (10.24 ) $ 0.59 $ (22.27 ) $ 0.71

WeightedAverage Sharesof Common StockOutstanding:

Basic 13,651,521 12,811,171 13,649,907 12,708,626

Diluted 13,651,521 12,811,171 13,649,907 12,708,626

Dividendsdeclared per $ 0.050 $ 0.750 $ 0.800 $ 1.500 share

Consolidated Statements of Cash Flows (Unaudited)



For the Six Months Ended

June 30, 2020 June 30, 2019

Operating Activities

Net income (loss) $ (299,476,801 ) $ 13,691,367

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

Deferred income tax, net 298,525 156,290

Depreciation, amortization and ARO accretion 9,963,908 11,870,408

Loss on impairment of leased property 140,268,379 -

Loss on impairment and disposal of leased 146,537,547 - property

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 ) 5,039,731

Gain on disposal of equipment (3,542 ) -

Changes in assets and liabilities:

Increase in deferred rent receivable (247,718 ) (3,163,726 )

Decrease in accounts and other receivables 1,216,469 550,126

Increase in financing note accrued interest (4,671 ) (9,217 )receivable

(Increase) decrease in prepaid expenses and 85,197 (196,684 )other assets

Decrease in management fee payable (8,299 ) (65,749 )

Increase (decrease) in accounts payable and (613,391 ) 1,541,221 other accrued liabilities

Decrease in unearned revenue (607,951 ) (98,244 )

Net cash provided by operating activities $ 16,421,801 $ 29,315,523

Investing Activities

Purchases of property and equipment, net (85,144 ) (26,553 )

Proceeds from sale of property and equipment 7,500 -

Principal payment on note receivable - 5,000,000

Principal payment on financing note 43,333 - receivable

Net cash provided by (used in) investing $ (34,311 ) $ 4,973,447 activities

Financing Activities

Repurchases of preferred stock (161,997 ) (60,550 )

Dividends paid on Series A preferred stock (4,623,452 ) (4,627,560 )

Dividends paid on common stock (10,921,216 ) (18,800,372 )

Cash paid for extinguishment of convertible (1,316,250 ) (19,516,234 )notes

Cash paid for maturity of convertible notes (1,676,000 ) -

Cash paid for settlement of Pinedale Secured (3,074,572 ) - Credit Facility

Principal payments on secured credit (1,764,000 ) (1,764,000 )facilities

Net cash used in financing activities $ (23,537,487 ) $ (44,768,716 )

Net Change in Cash and Cash Equivalents $ (7,149,997 ) $ (10,479,746 )

Cash and Cash Equivalents at beginning of 120,863,643 69,287,177 period

Cash and Cash Equivalents at end of period $ 113,713,646 $ 58,807,431



Supplemental Disclosure of Cash Flow Information

Interest paid $ 5,392,894 $ 4,361,760

Income taxes paid (net of refunds) (466,407 ) 282,786



Non-Cash Investing Activities

Proceeds from sale of leased property $ 18,000,000 $ - provided directly to secured lender

Purchases of property, plant and equipmentin accounts payable and other accrued 110,000 - liabilities



Non-Cash Financing Activities

Reinvestment of distributions by common $ - $ 403,831 stockholders in additional common shares

Common stock issued upon exchange and 419,129 29,457,711 conversion of convertible notes

Proceeds from sale of leased property usedin settlement of Pinedale Secured Credit (18,000,000 ) - Facility

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

For the Three Months Ended For the Six Months Ended

June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019

Net Income(loss)attributable $ (137,434,433 ) $ 9,824,926 $ (299,476,801 ) $ 13,691,367 to CorEnergyStockholders

Less:

PreferredDividend 2,309,672 2,313,780 4,570,465 4,627,908 Requirements

Net Income(loss)attributable $ (139,744,105 ) $ 7,511,146 $ (304,047,266 ) $ 9,063,459 to CommonStockholders

Add:

Depreciation 3,523,429 5,511,274 9,035,342 11,022,395

Loss onimpairment of - - 140,268,379 - leasedproperty

Loss onimpairment anddisposal of 146,537,547 - 146,537,547 - leasedproperty

Loss ontermination of 458,297 - 458,297 - lease

NAREIT fundsfrom $ 10,775,168 $ 13,022,420 $ (7,747,701 ) $ 20,085,854 operations(NAREIT FFO)

Less:

Income tax(expense)benefit from - (6,912 ) 149,585 (158,705 )investmentsecurities

Funds fromoperationsadjusted for $ 10,775,168 $ 13,029,332 $ (7,897,286 ) $ 20,244,559 securitiesinvestments(FFO)

Add:

Deferred rentreceivable - - 30,105,820 - write-off

(Gain) loss onextinguishment (11,549,968 ) - (11,549,968 ) 5,039,731 of debt

Transaction 92,293 88,611 198,990 142,581 costs

Amortizationof debt 325,665 281,630 653,914 580,062 issuance costs

Amortizationof deferred 22,983 22,983 45,966 45,966 lease costs

Accretion ofasset 116,514 110,993 228,685 221,985 retirementobligation

Income taxexpense (73,827 ) 55,787 51,036 351,329 (benefit)

Adjusted fundsfrom $ (291,172 ) $ 13,589,336 $ 11,837,157 $ 26,626,213 operations(AFFO)



WeightedAverage Sharesof Common StockOutstanding:

Basic 13,651,521 12,811,171 13,649,907 12,708,626

Diluted 13,651,521 14,934,886 13,649,907 14,988,429

NAREIT FFOattributable to CommonStockholders

Basic $ 0.79 $ 1.02 $ (0.57 ) $ 1.58

Diluted ^(1) $ 0.79 $ 0.96 $ (0.57 ) $ 1.53

FFOattributable to CommonStockholders

Basic $ 0.79 $ 1.02 $ (0.58 ) $ 1.59

Diluted ^(1) $ 0.79 $ 0.96 $ (0.58 ) $ 1.54

AFFOattributable to CommonStockholders

Basic $ (0.02 ) $ 1.06 $ 0.87 $ 2.10

Diluted ^(2) $ (0.02 ) $ 0.99 $ 0.87 $ 1.95

For the three and six months ended June 30, 2019, diluted per share(1) calculations include dilutive adjustments for convertible note interest expense, discount amortization and deferred debt issuance amortization.

For the three and six months ended June 30, 2019, diluted per share(2) 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/20200803005673/en/

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