CorEnergy Infrastructure Trust, Inc.

For the three months ended September 30, CorEnergy reported adjusted EBITDA of $4.8 million and an adjusted net loss of $3.3 million. Crimson transportation and distribution revenue increased slightly quarter-over-quarter, helped by rate increases on the Southern California pipeline and favorable PLA results, even as transported volumes declined. General and administrative costs were down approximately $800,000 quarter-over-quarter. Full-year 2023 guidance was maintained at adjusted EBITDA of $24 million to $26 million, inclusive of maintenance expense of $9 million to $10 million, and maintenance capital expenditures are now expected to be $11.5 million to $12.5 million.

CEO Dave Schulte said the quarter was in line with expectations, but emphasized that the company is still dealing with lower volumes and rising expenses. He framed the main priorities as closing the MoGas and Omega sale, deleveraging the balance sheet, and restoring Crimson to profitability. He also pointed to the accelerated rate filing as a necessary step to address negative cash flow, while noting energy-transition opportunities could contribute positive cash flow in three to five years.

CFO Chris Huffman said Crimson’s lower volumes were offset by rate increases and PLA activity, resulting in a slight revenue increase quarter-over-quarter. He highlighted that as of quarter-end the company was collecting 21% of its requested 35% total rate increase on the Southern California pipeline, 10% of its requested 36% increase on SPB, and 10% of its requested 128% increase on KLM; an additional 10% KLM increase is planned in Q4 and an additional 10% SPB increase in Q1 2024 if acceleration is not granted. He also said G&A was down about $800,000 quarter-over-quarter, but EBITDA was still insufficient to cover maintenance capex and accrued interest, supporting the board’s decision to keep dividends suspended.

Analysts focused on transaction costs tied to the MoGas sale, the status of FTC approval, and whether more expenses would follow; management said most FTC work was done in Q3 with only a small spillover expected into Q4 and that all requested materials are now with the FTC. They also asked about the California Fire Marshal’s increasing scrutiny and whether more regulatory costs are coming; management said it believes it has identified the required work and that higher maintenance expense in 2023, and likely into 2024, is tied to those fire-marshal-driven requirements and more audits. On the accelerated rate filing, management said the request is intended to bring SPB to full rate and partially advance KLM increases to reduce cash burn, with timing at the CPUC uncertain but management hoping for a fairly quick response.