Brookfield Infrastructure Partners L.P. (BIP) Q4 2016 Earnings Report, Transcript and Summary

Welcome to the Brookfield Infrastructure Partners 2016, Fourth Quarter and Year-End Conference Call and Webcast. [Operator Instructions]. At this time, I would like to turn the conference over to Melissa Low, Vice President Investor Relations and Communications. Please go ahead Ms. Low.

Thank you, operator and good morning. Thank you all for joining us for Brookfield Infrastructure Partners fourth quarter earnings conference call for 2016. On the call today is Bahir Manios, our chief financial officer and Sam Pollock, Chief Executive Officer. Following their remarks, we look forward to taking your questions and comments. At this time, I would like to remind you that in responding to questions and 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 risk and future results may differ materially. For further information on known risk factors, I would encourage you to review our annual report on form 20s which is available on our website. With that, I would like to turn the call over to Bahir.

Thank you Melissa and good morning everyone. 2016 was an active year for Brookfield Infrastructure. We delivered on many key priorities in the business is now better position to prosper than before. Our results were strong, we added high-quality assets to each of our operating groups and maintain high level of liquidity and financial flexibility. We generated a 14% increase in FFO per unit and an 11% increase in quarterly distributions, coming on the back of another strong year of a same-store organic growth and contribution from new investments. Before I go through our recap of our financial results, I wanted to touch on a few of our key accomplish was for the year. First, we deployed approximate $850 million in organic projects. This projects expended the size of our utilities rate base, our road and rail networks and our energy systems. We also replenished this backlog but adding approximately $1.4 billion in new projects. The level of organic growth potential in our business is strong and provides a high degree of visibility and a substantial portion of the capital spent is expected to be completed in the next two to three years. Second, we executed on over to billion dollars of investments which include our first acquisition in India and Peru enabling us to expand our global toll road business. We also diversified our ports operation by acquiring a world-class Australian container terminal business. And lastly, in Brazil, we're pleased to have executed upon our investment thesis that we have been focused on for almost 2 years now. Made a commitment to acquire high-quality natural gas transmission systems and secured a number of electricity transmission projects. On the balance sheet front, we raised almost $1 billion at the corporate level through a series of equity and preferred unit issuances and completed over $3 billion of long term financings, as we capitalized on historically low-interest rates. Last, but not least, we have launched the next phase of our capital recycling program. During the year we opportunistically raised almost $1 billion of proceeds through realizations including selling our Canadian electricity transmission and European gas distribution businesses generating IRR's of 20% and 32% respectively, in addition to also monetizing our toll hold position in Asciano. Turning now to our financial results which as I noted earlier were strong. Our businesses generated FFO of $944 million or $2.72 on a per unit basis, compared with $808 million or $2.39 per unit in 2015 which represents increases of 17% and 14% respectively. Our results reflect the contribution of new investments that closed during the year as well as organic growth of 2% achieved across the business. It is worthwhile noting here that this meaningful growth in our FFO per unit was achieved despite the impact of foreign exchange that affected our results by approximately $43 million. I will now take you through the results of our operating segments in a bit more detail. First, our utilities business generated an FFO of $399 million for 2016 which is an 8% increase over the prior-year, excluding the impact of foreign currency. Results for the segment continued to benefit from inflation and fixation and investment in growth-capital projects that more than offset the impact of foreign exchange and lower revenue from the sale of two North American transmission businesses. I also wanted to touch from a couple of key highlight items. Or key highlights-- as they pertain to our utilities of operating group. First, one being our UK distribution business where we have another exceptional year, setting another record for new sales. During the fourth quarter of the business also completed a 285,000,000 pound financing via the U.S. private placement market which was oversubscribed by more than 2.5 times and completed at an average all-in rate of 2.9% with an average term of 15 years. Second, we're also expecting to close shortly on the acquisition of a Peruvian water irrigation system for approximately $15 million. While modest in size, it is a high-quality business that is being acquired for good value and will add another leg to our growing water business. Lastly, at our regulated terminal in Australia, the regulator recently released a final decision in relation to the rate we set. While the decision confirmed a lack of 5.82%, the regulator provided our terminal with the ability to enhance its revenues through certain expense recoveries which should result in higher than planned annual FFO of approximately $10 million. Turning now to our transport segment that generated FFO of $423 million in 2016 which was 12% ahead of the prior-year or 6% including the impact of foreign currency. These results were driven by higher tariffs and volumes across a number of our operations. Results for the segment also reflect the contribution from the incremental interest we acquired in our Brazilian forward business during the year, the new toll road assets in India and Peru that we invested in, as well as a partial contribution from the recently acquired Australian ports business. A couple of operational highlights to note here would be first, at our Australian rail business, with improvement in INR prices throughout the quarter resulted in lower than expected customer discounts in the business. And also with respect to our newly acquired Australia container terminals, we're progressing well the integration plans there, actively pursuing a number of growth projects in addition to several cost-cutting initiatives. Our energy segment generated FFO of $175 million in 2016, compared to $19 million in the prior year. This improvement captures the incremental contribution from increased ownership and reduced leverage in our North American natural gas transmission business contributions from a newly acquired gas storage business, as well as strong same-store growth of 16% across the various operations. At our North American natural transmission business, the Chicago market expansion project was completed in November at a cost of $75 million which was almost 10% below budget. This project will contribute approximately $10 million of FFO to BIP's results annually on a full run-rate basis. We're also seeing increasing demand for gas transported from the North end of our system to the markets in the South. This growth in demand is being driven by new investments related to U.S. LNG export facilities and pipelines that export gas to Mexico. Our first expansion scheduled to be in service in the fourth quarter of 2018, has a capital budget of $200 million and is supported by twenty-year take-or-pay contract with an LNG customer that should increase BIP's EBITDA by over $20 million per year. We believe that this is the first of several expansions of this nature that could materialize over the next five years. Finally, our communications infrastructure operations acquired in March 2015, generated FFO of $77 million for the year, compared to $60 million in the prior year. Our management team in that business has been extremely focused on identifying growth opportunities and during the quarter we made some good headway in that regard. First, attack in acquisition of the ETA'S group, a portfolio of around 400 sites, was recent closed on, where our share of investment was approximately $40 million and, also, we were recently selected as the preferred bidder to the deploy a fiber to the home network and attempt 35 km outside of Paris, connecting up to 85,000 households with ultra-fast broadband. So that concludes my recap of our financial and operating highlights and before I turn the call over to Sam, I wanted to provide some updates on our liquidity and risk management activities. During the past three months substantial progress is made on executing the funding plan for our strategic initiative. In November, a total of 23.8 million units were issued at a gross price of $32 per unit, raising proceeds of approximately $750 million. Subsequent to period end, a preferred unit issuance was completed for approximately 300 million, capitalizing on Brookfield Infrastructure investment-grade credit rating and strong market demand. These initiatives have increased our corporate liquidity to approximately $3.2 billion. From a risk management perspective, 75% of our foreign denominated FFO has been converted back into U.S. dollars for the next 24 months. Interest rates on approximately 90% of our long term debt, has also been fixed for approximately 10 years and on the financing front, we're actively working on two upcoming maturities, the first being the upcoming refinancing of our North American natural gas transmission business and also the corporate debt maturity comes to in the third quarter of the year. Beyond these two refinancings, there are no other significant upcoming maturities during the next 24 months to address and our debt maturity profile remains very well laddered. With that thanks for your time this morning and I will now turn the call over to Sam.

Great. Thanks, Bahir. Good morning everyone. I thought I'll begin my remarks is quarter reflect the investment environment and some of the strategies we're deploying to invest capital. For the last several years, the number one question posed by existing or prospective uni holders, has related to how Brookfield Infrastructure can source investment opportunities in its period of low-interest rates, high liquidity and high valuations. And while we've seen sub movement in long rates, economic conditions for the most part, have not changed materially in the last few months. Our optimism about our ability to source attractive investments, is due to the fact in our experience, somewhere in the many markets we operate in, there is a company or government that is capital constrained due to uncertainties related to political market or company specific factors. For instance, a year ago the main driver of uncertainty was the direction of commodity prices and interest rates. Today, the most common contributing factor to uncertainty seems to be political events. Our strategy to take a long term perspective on the regions, where we have established businesses and to invest further during periods of market weakness. In that regard, we seek to deploy capital in countries that a long-standing reputation of the rule of law, respect for capital and despite potential for growth and development in the future. While we don't know what may occur in the short term, we believe that countries we invest in have strong underlying fundamentals in the long term. Recently, we have taken a long term view on Brazil by acquiring a number of high-quality assets. In 2016 the focus is on executing transactions, while the country was in a severe recession and lost its investment-grade status. We witnessed an environment where there was an increase of supply in assets coming to market and in that case, particularly high-quality assets that would not become available under normal market conditions. In addition, competition for those assets was limited. As a result, we're very fortunate that as Bahir mentioned we will be shortly deploying over $1 billion in the gas and electricity utility sectors. Is possible that similar situations may be developing in Mexico. Due to the protectionist attitudes guarding considerable momentum in the United States, the level of uncertainty and anxiety related to Mexico's future economic performance has not been this bad in over 20 years. The peso has dropped to its lowest level since 1994 and the countries forward direct investment is likely to slow down as capital sits on the sidelines. We believe that concerns over country may overshoot, much like they did in Brazil and as a result, our business development efforts have increased to capitalize on opportunities that may arise. Our team spent a considerable amount of time of the last 24 months identifying [indiscernible] price public companies to execute public to private transactions. And while there are still the occasional take-private opportunity, due to a mismatch between public and private valuations, our main focus at the moment has shifted a bit and is targeted towards corporate carve outs. These types of opportunities tend to occur when there's an acceleration of capital spend by industrial companies that substantially exceeds the availability of public market equity capital. As a result, industrials and other owners of infrastructure assets tend to look to sell non-core assets to fund the capital programs. This corporate carve out trend plays well to servicing and executing large-scale multifaceted transactions. We have historically been very successful in securing attractive large-core infrastructure businesses from industrial companies. Some of the examples from our recent past include, our acquisition of the Brazilian railroad from Bally, our North American container terminals that we bought a half interest in from a Mitsui OSK lines and of course more recently the gas transmission assets from Petrobras. This year our focus is on corporate carve out opportunities in the North American energy and Indian telecommunication sectors. Going into India now, just to talk a bit about that, in India the government is made strides in making the operating and legal environments more investor friendly and the expected GDP growth rate for the foreseeable future is far in excess of many developed countries. This makes an attractive market to invest in for the long term. Last year we purchased our infrastructure-- our first infrastructure business in India, acquiring a network of toll roads that span the country, deployed just under $100 million. While modest in size, this transaction was a unique entry point into the country and one that allows us to establish ourselves as a local operator. Leveraging our new operating presence, we recently announced acquisition of communication towers in India and what we would think of as a classic carve-out transaction. We will soon be investing upwards of $200 million to acquire portfolio of 40,000 Telecommunication towers from reliance telecom, representing approximately 10% of the country's towers. The telecoms sector in India may create further exciting carve-out opportunities, as virtually all the large integrated mobile network operators are looking to raise significant liquidity in order to invest in the deployment of the 3G and 4G networks. This is a high-quality business that is very similar to our existing tower business in France and generates secure sustainable cash flows that will benefit from sizable growth in the industry. We're very excited about the prospect of quickly establishing a leading tower business in India and several other opportunities are being evaluated the could add meaningful scale to our global towers portfolio in the coming year. So now let me move on to the outlook for our business. The contractual nature of the business positions Brookfield Infrastructure to deliver solid results regardless of the political and economic uncertainties in the world today. We generate steady and reliable same-store growth owing to the inflation embedded in our contracts, volume growth on our networks and the commissioning of growth projects from a capital backlog. As Bahir talk about our balance sheet is strong, liquidity is robust and our operations are continuing to perform well. As a result, we're pleased to announce that the Board of Directors has approved an 11% increase in our quarterly distribution to $0.435 per unit. This will mark the eighth year we have raised our distribution since our inception in 2008 and the seventh consecutive year that we have achieved double-digit distribution growth. With a funding plan in place, our property for the coming weeks will be to close the acquisition of the Brazilian gas transmission system and to start integrating the business into our utilities' operating group. In our business plan, we traditionally estimate deploying anywhere between $500 to $1 billion annually in our new investment activities, however our current pipeline is pretty robust. As a result we believe Brookfield Infrastructure is well-positioned to continue to outperform its objectives and extend its track record of delivering double-digit growth in 2017. We're also focused on executing the next phase of our capital recycling program with the maturing profile of a number of our businesses, proceeds from asset sales are expected to be $1.5 billion-$2 billion over the next few years. With that I'll turn the call back over to the operator to open the line for questions.

[Operator Instructions]. Our first question is from Cherilyn Radbourne with TD Securities. Please go ahead.

Sam, maybe I could get you to start by elaborating a little bit on how long it field has had a team in Mexico and where you think opportunities could materialize as a result of the current uncertainty and currency weakness?

Sure. I figured I might get a question on Mexico given it's a pretty topical item these days. So, we've been from the infrastructure perspective in Mexico for about two to three years with an office that we opened up and with the people on the ground, Brookfield itself has been there longer. We've owned industrial properties for a number of years and in fact, sold them just not that long ago. But, suffice it to say it is a region that we know fairly well although not to the same degree obviously as places like Brazil. Having said that, what attracted us to the Mexican market more recently was the liberalization of the energy sector your and so we've made -- I've made a number of trips down to Mexico in fact just one last week where I go and meet with the CEO of CSC and with a number of ministers in government to check on the progress of the opening up of that sector in particular which has been I would say for the last number of years our main focus. I would say today we also have an interest in a number of transportation assets and I think -- despite a number of the negative tradewinds that there are in the market, given the devaluation of the peso it could represent a very interesting entry point for people like ourselves and obviously the lower peso should enhance the competitiveness of the ministry in that country.

And then on fiber to the home, you secure your first mandate there, could you give us some color on how big you think that opportunity could be over time and frame the basic is this model for us and how it might or might not compare to your UK connections business.

Hello Cherilyn, maybe I will take that and Bahir can jump in if he wants to add more to it. You know, the model in France is slightly different than what we have in the UK. The concept is the same though, in the sense that it's about providing a much higher quality service to residential customers. You know, what we've recently participated in was effectively a concession that was auctioned off by the government -- whereby you know we have some certainty around the cash flows that we receive for deploying the capital it's a limited concession and in this case it was a relatively small investment from an infrastructure perspective it will be in the tens of millions of dollars. Having said that, the government has indicated that they would do a number of types of concessions and I think the opportunity could be in the order of magnitude of minus 10 billion down the road. It's a very large initiative that is underway. The time of how that gets deployed I can't give you good visibility on at this time. Does that answer your question?

I think it does. Yes. And last one for me on the NTS still, have you got a pretty clear path to closing that in Q1 or are there still some things outside your control?

On NTS, we're hopeful that in the next little short while that we along with can provide a market update but what I can say at this stage is that most of the things listed the CPAs between ourselves and pitch class are pretty much done and that the only items that do remain relate to regulatory approval and in that regard we're working very closely with Kutcher to regulate matters. You, I'm hopeful that this will close relatively soon but that is something we will have to continue to give you updates as we go along.

Our next question is from Bert Powell with BMO Capital Markets. Please go ahead.

Sam, I just wanted to start off with in your letter you talk about focus of risk management and raising capital to enhance liquidity extending debt maturities are you incrementally more worried about the environment that is driving this and Brookfield made asset management similar kinds of comments in Q3 just wondering if you're in for mentally more cautious in the world.

You know I guess when we make comments like that it isn't really a reflection of any change in what we see as risk factors in the business. I think the recent -- I put that in the letter was more about ensuring that people and our investors are aware that were not just focused on new investments. That running our business is the number one think that we focus on day in day out, blocking and tackling and making sure we generate those sustainable cash flows. And that we also as Bahir los used the word bullet proof that maybe a bit of a strong work but we always want to bulletproof our balance sheet having lots of liquidity and disposition out those maturities as far as possible because we all know that there's cycles and you can never predict when they'll be a financial distress and we always want to make sure that were never the party that having to hunker down during those periods of time in fact we can be the ones that can be aggressively looking for assets. So when I talk about risk management is really about doing all the things that we think have made it successful and you know given that comfort to our unitholders.

And on the energy side and in GPL, Alisa think this relates to NGPL, EBITDA up 22% on 12% volume, is there even what happened with natural grass prices in the fourth quarter, can you help us understand how natural gas prices if at all affect the EBITDA or the FFO for this business.

So, we have to businesses in the energy sector, one is the gas storage and what is the gas transmissions, you know there is no direct linkage with natural gas prices and our results in the natural gas transmission business. There are at times cushioned sales that when they take place and if they take place when natural gas prices are higher and that obviously is a positive effect. But for the most part, higher natural gas prices -- just tend to mean that there is more demand and more demand means there is more volumes across our system that tends to push up spreads a bit. So, there is sort of that proportionate but not the direct link ends in our gas storage business -- there is some correlation between higher prices and spreads you know for our gas storage business probably the most important factor for us though is seeing a return to the differences between summer or winter prices and that, probably more occurs when there is a better equalization in supply demand which we're now seeing. So that was always our thesis on the gas storage business that we would see a reduction in supply with lower prices there's been lots of demand creation with the power plants and with exports to Ellen G into Mexico and with that coming in line that we would then see a more normalized spread between summer and winter gas, I know I probably went on a bit more than you ask for but hopefully that's helpful.

Also, just a note that we did have a partial contribution from the Chicago expansion that we did that came online in November so we had two months contributions from that contract and earlier, in the year you might recall a couple of other contracts like etc. had also, mind and so they would've had a full quarter of effect and the contribution from all of the year over year would have contributed to a big part to that increase as well.

And last question, maybe too early to talk about this, but just curious, you know doing a little bit of water but you've also made this investment in Poseidon quarter if you could just talk about that do sell opportunity and how imminent that may be and what you're thinking there.

The water sector is something we talked about for a number of years is one that we think a long term basis is going to grow considerably thank you then most the other sectors. Is just such an important resource and it's one that we want to make sure that we have a presence -- what we're trying to avoid in the projects we got involved with it some of the utilities where they tend to be and supposed to an attractive investment opportunity and so as you mentioned we focused on water recycling we recently just acquired the small irrigation PTP Stout business but one that we can grow in that country and lastly the water business that we picked up or in 2015 and on the water side first on the project, the good news is in many others is one of the top I think it was on the top 50 and we think that given the drought situation in California, that this would be a critical insurance policy to ensure that they have adequate water at all times. Having said all that, you know that is a very lengthy permitting process together in California -- were hopeful that we're nearing the end of it -- I think we have one permit or approval in particular that is left and our hope is that by for sure that is the share that will have that done and that we will start that project. And the project itself -- is probably the order of magnitude of you know customize $900 million in the equity investment in the fund will be probably $250 million in tips investment will be about 30% so that gives you a scale of the opportunity.

Our next question is from Robert Kwan with RBC Capital Markets. Please go ahead.

Just wondering as you look at potential transactions and to emphasize here the public to private side, just kind of wondering if you look back and where he thought there might of been some opportunities, what were some of the key reasons that you saw while we didn't see more activity in the public to private side?

I'll tackle that one. Some of it may have been because we were just too slow in tackling some of them and the market just far faster than we would have expected. I'll be the first one to tell you that we saw lots of interesting opportunities in the energy sector and have done a lot of work and were ready to pounce but unfortunately, the capital markets moved quicker than we could and we didn't get it done. So that's our mistake -- having said that, you know you can't always, they're not easy to do. And I think the other thing is despite you know omission that we're a bit slow, it also is the reality that you know companies don't want to engage in a public to private is the question is been for a fairly short period of time. Usually there has to be a feeling that the company is re-rated at a low level and at that time, they tend to be willing to have a discussion with parties like ourselves. So, I think there is a couple of factors, it's probably a bit of both but having said that, we're always looking for opportunities and we think that's one of the tools in our toolkit that we can use.

And I guess is we look forward in talking about the carve outs it has been something that you been quite successful with an you seeing more optimistic so I'm just wondering whether any trends in the market right now that you think has accelerated the likelihood of the corporate carve outs versus optimism maybe do a little bit more to something specific to some of the processes or negotiations that you are involved in right now.

Look, I think we're always in conversations with people around various forms of corporate carve outs. While we do find it here and we thought it made sense to describe it to our investors, this is a trend that has been going on for a number of years. The most pronounced sectors this is been done has been the energy sector with the whole creation of the MLP model, but we see it with the carve outs that have taken out with company-owned real estate and we see that in the real estate sector and of course you know our sister company has done a good job in buying power facilities from industrial company so, you know in our business, what we do see is just you know mining companies a telecommunication companies probably a bit slower to that to that phenomenon and we're trying to be at the forefront of that.

And if I can maybe just comes into NGPL, do you have some thoughts or early thoughts on the section five proceeding with potential impacts might be and then I guess wrapped up into all of that, if we do see lower corporate taxes that probably makes the achieved our we worse as you think about the section five.

On your first question, we're a little perplexed over the Secretary. five. I don't think our sales expected it and you know I probably just encourage everyone to just look at the releases from tender in that regard. We don't think that we're over earning or if it is it is relatively modest amount and so we're hopeful that when the opportunity arises to sit down and go through the numbers that will be happy correct in that regard so that's all I can really say at this stage. In relation to your comment on lower taxes, you know I think I'll just be speculating. I can't say I've done the analysis yet our team is that the analysis yet to assess what impact there might be. And I'm not sure we know exactly yet what the new tax code will look like. Why don't we part that one for another day and let's see how it unfolds.

And if I can just ask one last quick question just on the capital recycling program you have any process is underway?

No we don't.

Our next question is from Ryan Wong with National Bank Financial.

I just have a question here with competition increasing for infrastructure assets in the market, whether it's by a large utilities or private markets, are you seeing valuations kind of creep up year-over-year and as a follow-up to that which jurisdictions do believe are the most attractive at this point?

On the valuation front, that one is always ask in the I would say that there either steady or possibly going up a little still with the rising interest rates in the U.S. have seen any change or moderation of values just yet. I think in particular the most extensive market, continues to be Europe. And I have to assume that that has to do with the zero interest rate. And then, we tend to see Australian tends to be a fairly expensive market as well and that is probably more in relation to you know just the amount of capital for relatively small market. As far as your question is to which jurisdictions we see the best value, the best value for the last 24 months in our opinion has been in Brazil. That has been a market where we have been focused on. You know, the probably other interesting market that again we have been looking at has been India and that's less about the stress but more about just the growth in the economy and just the lack of local buyers somewhere wants there had been a lot of competition is probably less competition than in the past. Those are probably from a large-scale markets, those are probably the most interesting and then, the only thing I would say is -- we always need to be careful not to generalize too much because even within markets like Europe North America, Australia, there's always pockets of value and that's really what our teams are focused on servicing is those particular companies or situations where how to do the complexity or certain other factors we can generate good deals. So, don't give the impression that just because high valuations in certain markets that doesn't mean that we won't be doing deals in those markets.

And one last question for me. Can you provide a bit of additional color on why you think companies such as reliance selling their telecom towers and these types of transactions are they done through a public auction process or are they proprietary?

So, look, in the case of reliance, this is a dynamic I described earlier in the call which is they've got capital requirements and the best way for them to source capital is through selling non-core assets are these assets that they don't need to run their business they can contract them with us and achieve the same impact. And so, that's a phenomena and they don't have access to the public market at this stage so that's the issue there and what was your second question again in that regard?

Just whether it's a public auction process or--

So, our experience is that -- almost every situation there is some market test. That doesn't necessarily mean that it's a broad auction, it could just mean that they hire an advisor to you know canvas parties that have the capital and ability to do a transaction. They get a sense of where values are in level of interest and then they'll decide if they go with a party or whether or not they decide if there's lots of people they may go in a broad auction in the case of reliance, you know the pool of investors for that particular transaction were relatively few and given the scale and complexity they decided to work with us on an exclusive basis.

Our next question is from Frederic Bastien with Raymond James & Associates, Inc. Please go ahead.

Just one quick one for me and I would like to touch and get back on the topic of water. Just wondering if there are opportunities for you to gain scale fairly quickly in that sector or is the approach share similar to the one you been employed to grow your district energy business?

I'm hopeful that we could find scale quickly but we’re not building our business development efforts around that. I would say we're probably focused more on niche opportunities where we can buy for value and have further opportunities to expand those businesses and the three businesses I described earlier are examples of that. To the extent that we can buy our large water business for value we would definitely do it but we’re just not going to engage in a cost of capital issued out with other institutional investors. That may not have answered your question that well but that's sort of the reality.

No it does give me a good idea of how you are approaching the business. That's good, that's all I have. Thank you very much.

Okay. Thanks Richard.

The next question is from Andrew Kuske with Credit Suisse.

We appreciate the ongoing disclosure on just the FX hedging but I guess here's a question is maybe more conceptual in nature. And it relates to just talk in the U.S. of a border tax or a border tax adjustment that may happen as a tariff kind of regime. How do you think about BIP's positioning if there was a border tax adjustment in the U.S. and just the currency ramifications of that?

So, you picked a tough one. I'd say look in relation to our existing businesses I don't think it really has an impact. I don't think there's anything that we're involved with that would have a dramatic impact. I think there is -- we have our container terminals on the West Coast and you know our Oakland terminal is the largest export terminal I think in the United States, it's the largest terminal port in the country. So I guess it would benefit. LA, I guess in theory it's the largest import terminal and you might say well that could be impacted but it's also the most important port in the country so my gut tells me that if there was going to be a drop-off in imports that some of the more tertiary ports would be impacted first and we will be the last ones impacted, but there could be some modest affect their. As it relates to more broader opportunities though, there's no doubt that it's going to create some winners and losers and you know for some of the losers it may mean they need to raise capital and that could create an opportunity for us. So I'm trying to be positive about it. I think with change there's always opportunity.

I guess maybe on that line, if we saw the implementation of a border tax unless you say for argument sake it's 20%, there's a good argument that the dollar the U.S. dollar maybe up to that extent and then given your global platform would you see significantly better opportunities to effectively acquire assets elsewhere within your global model and how do you think that would sort of tilt the bias of BIPs asset base prospectively.

Look, I think it's tough to say. I realize being a U.S. functional currency that relative to loss of other foreign companies that gives us an advantage but my own gut feeling is that the U.S. would have a difficult time doing well if the currency gapped up another 20% and so I guess I'm a little skeptical that the administration despite all the things they are doing would let that happen. So, I guess the short answer is I don't at this stage have a thoughtful response for you. I think we just haven't planned for that in any of our scenarios.

And then, one final question if I may, just on the distribution growth. Is it fair to say that once we close off a few of the transactions that are coming like NTS, that is there prospect for say an out of cycle midyear distribution increase as we saw in I believe it's 2011 we saw something to that effect?

So, I guess the short answer is depending on how the business is doing. We could reevaluate the dividend mid-year and we thought that 11% was a pretty solid dividends so we thought we get a futures for that but maybe not, but nonetheless, you know I appreciate given the growth in the business, we may look back at the end of the year and realize that we could've done more. But at this stage, we thought it was a healthy distribution increase, it's in keeping with what we've done in the past and hopefully enough people recognize that maybe it is possibly at the conserve event [ph].

There are no more questions at this time. I would now hand the call back over to Mr. Pollock for closing comments.

Great. Thank you, Operator. And I would like to thank everyone who joined us on the call today. And we look forward to reporting our progress to you next quarter. Goodbye.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.