Brookfield Infrastructure Partners L.P. Annual Report - A Look Back at 2024

Brookfield Infrastructure Partners L.P. (BIP) delivered a strong performance in 2024, continuing its role as a global leader in essential infrastructure. This report dives into the company's fiscal year ended December 31, 2024, revealing how BIP's diverse assets – from the electricity powering your home to the data connecting your devices – form the backbone of modern economies.

Business Overview: Our Core Business and Strategy

BIP acquires and manages high-quality, long-life infrastructure assets designed to generate stable, predictable cash flows. Its strategy centers on four key pillars:

• Diversification: Spreading investments across various sectors and geographies to reduce risk.
• Inflation Protection: Inflation-indexed contracts protect a significant portion of its earnings from rising costs.
• Operational Excellence: Actively managing assets to improve efficiency and profitability.
• Capital Recycling: Continuously buying and selling assets to optimize its portfolio and fund new growth opportunities.

BIP organizes its extensive holdings into four main business segments:

• Utilities: Essential services like electricity transmission lines, natural gas pipelines, and residential infrastructure (water, heating) across North America, the UK, Brazil, and Colombia.
• Transport: Critical logistics assets including North American rail lines, Australian ports, and global intermodal logistics operations.
• Midstream: Energy infrastructure such as gas transmission in Brazil and India, North American gas storage, and U.S. refined products pipelines.
• Data: The infrastructure powering our digital world, including data centers in the U.S. and Australia, telecom towers in India, wireless infrastructure in the UK, fiber networks in the U.S., and hyperscale data centers in Europe.

This global footprint spans over a dozen countries, including the U.S., Canada, India, the UK, Brazil, Colombia, France, Germany, Australia, Switzerland, and Singapore, providing broad exposure to diverse economic cycles.

Competitive Position

BIP benefits from the inherent characteristics of its infrastructure assets: high barriers to entry, long-term contractual frameworks, and often operating as regulated monopolies or oligopolies. These factors contribute to stable and predictable cash flows. Its competitive advantages include:

• Scale and Diversification: BIP's extensive global footprint and diverse portfolio across multiple sectors provide resilience against regional economic downturns or sector-specific challenges.
• Operational Expertise: Brookfield's deep operational capabilities enhance the efficiency and profitability of acquired assets through active management and optimization strategies.
• Access to Capital: As part of the broader Brookfield Asset Management platform, BIP has significant access to capital, enabling it to pursue large-scale acquisitions and fund growth initiatives.
• Inflation-Linked Contracts: A substantial portion of BIP's revenues are indexed to inflation, hedging against rising costs and protecting real returns – a crucial differentiator in inflationary environments. These factors collectively reinforce BIP's strong market position within the global infrastructure landscape.

Financial Performance Highlights for Fiscal Year 2024

BIP delivered a strong performance in 2024, demonstrating its diversified portfolio's resilience and growth potential:

• Funds From Operations (FFO): FFO, a key measure of cash flow for infrastructure companies, grew a robust 12% to $3.20 per unit for the year, driven by organic growth and recent acquisitions.
• Revenue: Total revenue increased by 10% to $18.5 billion, reflecting solid operational performance across all segments.
• Net Income: BIP reported net income of $1.5 billion, or $2.50 per unit, compared to $1.2 billion in the prior year.
• Dividend Growth: Reflecting confidence in future cash flows, BIP increased its quarterly distribution by 6% to $0.40 per unit, marking its 15th consecutive year of dividend growth.

Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A Highlights)

Management views 2024 as a period of strong operational execution and strategic portfolio enhancement. The significant growth in FFO and revenue stemmed from several factors:

• Organic Growth: Existing assets delivered robust performance, driven by inflation indexation embedded in contracts, volume growth in segments like data transmission and transport, and capital expenditure programs that expanded the regulated asset base in utilities.
• Acquisitions: Strategic acquisitions completed in late 2023 and throughout 2024, particularly in the Data and Utilities segments, significantly increased FFO and revenue. BIP carefully selected these acquisitions to align with its strategy of investing in high-quality, essential infrastructure with predictable cash flows.
• Capital Recycling Program: The active capital recycling program generated substantial proceeds, which BIP strategically redeployed into higher-growth opportunities, optimizing the portfolio's return profile. This disciplined approach to capital allocation ensures continuous reinvestment of capital into assets meeting BIP's stringent investment criteria. The increase in net income reflects improved operational performance and the positive impact of the company's growth initiatives, partially offset by typical non-cash items like depreciation and amortization. Management remains focused on driving sustainable FFO per unit growth, directly supporting the company's long-standing commitment to increasing distributions to unitholders.

Strategic Portfolio Moves: Acquisitions & Dispositions in 2024

BIP's capital recycling program was highly active in 2024, with significant transactions enhancing portfolio quality and driving long-term value. These moves generated approximately $2.5 billion in net proceeds for future investments.

Key Acquisitions (Adding to Our Foundation):

• Early 2024: BIP expanded its Data segment by acquiring the Cyxtera Core Data Center Portfolio in the U.S. for approximately $600 million, adding critical capacity in key markets.
• Late 2024: BIP strengthened its Utilities segment by acquiring a Brazilian Electricity Transmission Operation for $450 million, enhancing its regulated asset base in a growing market.
• Late 2024: BIP further bolstered its Data segment by acquiring a U.S. Bulk Fiber Network for $300 million, expanding connectivity infrastructure.

Key Dispositions (Optimizing Our Portfolio):

• Mid-2024: BIP successfully divested an Australian Port Operation for $750 million, realizing significant value and reallocating capital to higher-growth opportunities.
• Late 2024: BIP completed the sale of an Indian Gas Transmission Operation for $400 million, aligning with its strategy to optimize its Midstream footprint.
• Throughout 2024: BIP progressed the sale of a Global Intermodal Logistics Operation, completing the first tranche in Q3 2024 for $800 million. The remaining portion is expected to close in early 2025.
• Announced in Late 2024: BIP initiated the process to sell a North American Gas Storage Platform, with an expected completion in early 2025, further streamlining its Midstream assets.

These strategic transactions underscore BIP's commitment to active portfolio management, ensuring capital deployment where it can generate the highest risk-adjusted returns.

Financial Health

BIP maintained a strong financial position with $4.5 billion in available liquidity at year-end 2024, including cash and undrawn credit facilities. This robust liquidity provides significant financial flexibility for ongoing operations, new investments, and debt management. The company's prudent debt-to-capitalization ratio of 45% (the proportion of debt used to finance assets) reflects a conservative approach to leverage, ensuring financial stability and an optimized capital structure. Management continues to prioritize maintaining a strong investment-grade credit rating, which facilitates access to capital markets on favorable terms.

Key Risks

While BIP's diversified portfolio offers resilience, investors should be aware of potential risks, including:

• Interest Rate Fluctuations: Rising interest rates can increase borrowing costs for variable-rate debt and impact the valuation of long-duration assets.
• Regulatory Changes: Government regulation often affects infrastructure assets, impacting tariffs, operating conditions, and profitability. Changes in regulatory frameworks could negatively impact financial performance.
• Geopolitical and Economic Instability: Global operations expose BIP to various political, economic, and social risks, including currency fluctuations, trade disputes, and civil unrest in its operating regions.
• Operational Risks: Managing large-scale infrastructure assets involves inherent complexities, including potential operational disruptions, natural disasters, cyber-attacks, and environmental liabilities.
• Competition: While barriers to entry are high, competition for attractive infrastructure assets can intensify, potentially impacting the prices paid for acquisitions and future returns.

Future Outlook

Looking ahead to 2025, BIP expects continued organic growth from its existing asset base, supplemented by strategic acquisitions funded through its robust capital recycling program. BIP remains focused on delivering consistent FFO per unit growth and increasing distributions to unitholders, leveraging its strong market position and disciplined investment approach. Management anticipates continued capital deployment into high-quality, essential infrastructure, particularly in the Data and Utilities segments, while also exploring other core sectors. The company's strategy emphasizes long-term value creation through active asset management and a prudent financial approach.

In summary, Brookfield Infrastructure Partners L.P. had a strong 2024, marked by solid financial performance, strategic portfolio enhancements, and a continued commitment to delivering growing returns for its investors.