03.11.2016, 15:10
InfraREIT Reports Third Quarter 2016 and Year-to-Date Results
OREANDA-NEWS. InfraREIT, Inc. (NYSE: HIFR) ("InfraREIT" or the "Company") today reported financial results for the third quarter and first nine months of 2016 and provided the Company's financial outlook.
InfraREIT reported the following third quarter 2016 financial highlights:
Net income was $23.6 million
Net income attributable to InfraREIT, Inc. common stockholders per share was $0.39 per share
Non-GAAP earnings per share ("Non-GAAP EPS") was $0.32 per share
Cash available for distribution ("CAD") was $19.4 million
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") was $39.7 million
Quarterly dividend declared of $0.25 per share of common stock, $1.00 per share annualized
Reaffirmed 2016 guidance:
Non-GAAP EPS range of $1.15 to $1.25
CAD range of $70 million to $76 million
Annualized dividend per share of $1.00
Updated guidance:
Net income range of $67 million to $73 million
Net income attributable to InfraREIT, Inc. common stockholders per share range of $1.10 to $1.20
Capital expenditure range of $470 million to $630 million for the period of 2016 through 2018
Expect to maintain the Company's current quarterly cash dividend of $0.25 per share, or $1.00 per share annualized, through the resolution of the rate case
Recent events:
In the ongoing rate case of the Company's sole tenant, Sharyland Utilities, L.P. ("Sharyland"), the Public Utility Commission of Texas ("PUCT") issued a preliminary order ("Preliminary Order") in October 2016 requiring the Company's regulated subsidiary, Sharyland Distribution & Transmission Services, L.L.C. ("SDTS") to file an amended rate filing package with Sharyland no later than January 1, 2017. Among other things, the Preliminary Order indicates that the PUCT will regulate the lease payments that Sharyland makes to SDTS as tariffs under applicable Texas regulatory law.
"We continued to advance on our growth strategy as demonstrated by our strong financial performance in the third quarter," said David A. Campbell, Chief Executive Officer of InfraREIT. "We remain comfortable with, and are reaffirming, our Non-GAAP EPS and CAD guidance ranges for 2016. We do not intend to update guidance beyond 2016 until after the conclusion of the rate case, primarily because the Preliminary Order creates potential uncertainty around the calculation of our lease payments and the mechanisms for updating lease payments to account for new assets placed in service. Over the course of the rate case, we will remain focused on achieving an outcome that includes an effective and efficient process for regulating Sharyland, SDTS, and the leases and is workable for our business.""The current economic environment in West Texas has also affected our planning," Campbell added. "Primarily due to reduced levels of commitments and follow-through in customer-identified projects and forecasts and the relative geographic concentration of recent and expected load growth, we are lowering our capital expenditure forecast for 2017 and 2018."Solid Results in Third Quarter 2016
Lease revenue increased 19 percent to $49.4 million for the three months ended September 30, 2016, compared to the same period in 2015. For the third quarter of 2016, base rent contributed $38.6 million and percentage rent contributed $10.8 million, compared to $31.3 million of base rent and $10.2 million of percentage rent for the third quarter of 2015.Net income was $23.6 million in the third quarter of 2016, compared to net income of $19.4 million in the third quarter of 2015. Net income attributable to InfraREIT, Inc. common stockholders was $0.39 per share during the third quarter of 2016 compared to $0.32 per share during the same period in 2015.Non-GAAP EPS was $0.32 per share for the third quarter of 2016 and $0.28 per share for the third quarter of 2015. In the third quarter of 2016, CAD was $19.4 million compared to $17.1 million for the third quarter of 2015. Adjusted EBITDA was $39.7 million for the third quarter of 2016, an increase of 19 percent, compared to $33.5 million for the same period in 2015. Funds from Operations ("FFO") was $35.4 million for the third quarter of 2016, compared to $29.7 million from the same period in 2015. For the third quarter of 2016, FFO on an adjusted basis ("AFFO") was $30.0 million, an increase of 13 percent, compared to $26.5 million for the same period in 2015.First Nine Months of 2016 Performance
Lease revenue increased 17 percent to $116.9 million for the nine months ended September 30, 2016, compared to the same period in 2015. Base rent contributed $106.1 million and percentage rent contributed $10.8 million for the first nine months of 2016, compared to base rent of $90.1 million and percentage rent of $10.2 million for the same period of 2015.Net income was $41.6 million for the first nine months of 2016, compared to a net loss of $7.6 million for the first nine months of 2015. Net income attributable to InfraREIT, Inc. common stockholders was $0.69 per share during the first nine months of 2016 compared to $(0.15) during the first nine months of 2015.Non-GAAP EPS was $0.93 per share for the first nine months of 2016 and $0.90 per share for the same period in 2015. Non-GAAP EPS during the nine months ended September 30, 2016 was based on 60.6 million weighted average shares outstanding compared to 58.8 million weighted average shares outstanding during the same period of 2015.During the first nine months of 2016, CAD was $57.0 million compared to $53.6 million during the same period in 2015. Adjusted EBITDA was $115.6 million for the first nine months of 2016, an increase of 14 percent, compared to $101.8 million for the same period in 2015. FFO was $75.9 million for the first nine months of 2016, compared to $21.8 million for the same period in 2015. For the first nine months of 2016, AFFO was $87.6 million, an increase of 9 percent, compared to $80.1 million for the same period in 2015.Liquidity and Capital Resources
As of September 30, 2016, the Company had $11.0 million of unrestricted cash and cash equivalents and $232.5 million of unused capacity under its revolving credit facilities.
Outlook and Guidance
Net income is projected in the range of $67 million to $73 million for 2016. Net income attributable to InfraREIT, Inc. common stockholders per share is estimated in the range of $1.10 to $1.20 for 2016. Non-GAAP EPS is estimated in the range of $1.15 to $1.25 for 2016. The estimated range for CAD for 2016 is $70 million to $76 million.The Company estimates footprint capital expenditures in the following ranges over the next three years: $220 million to $240 million for 2016; $175 million to $240 million for 2017; and $75 million to $150 million for 2018. During this quarter's review, the Company lowered its 2017 and 2018 forecasted capital expenditures range due primarily to lower levels of commitments and follow-through in customer-identified projects and forecasts, a slower pace of load growth, and the relative geographic concentration of recent and expected load growth in Sharyland's service territory.As part of the August 3, 2016 second quarter 2016 earnings report, the Company described that it anticipated that footprint capital expenditures would enable a projected compounded annual growth rate ("CAGR") range in dividends per share of 8 percent to 10 percent from 2015 to 2018, with a targeted payout ratio of 80 percent to 90 percent of CAD. As noted in the August 3rd report, this guidance assumed, and was subject to, continuity in lease treatment and a range of regulatory outcomes consistent with the rates Sharyland requested in its April 2016 rate case filing. The Company anticipates that, even given the change in the capital expenditure forecast (and subject to the other described factors), footprint capital expenditures would have enabled a projected CAGR range in dividends per share in the lower half of the 8 percent to 10 percent range from 2015 to 2018, if other conditions were unchanged. However, in light of the pending rate case and the potential uncertainty resulting from the Preliminary Order regarding the calculation of our lease payments and mechanisms for updating lease payments to account for new assets placed in service, the Company does not intend to provide or update guidance beyond 2016 until after the conclusion of the rate case.InfraREIT expects to maintain the Company's current quarterly cash dividend of $0.25 per share, or $1.00 per share annualized, through the resolution of the rate case.The Company's consolidated debt profile continues to target debt as a percentage of total capitalization at or below 60 percent and AFFO-to-debt of at least 12 percent.The guidance provided above constitutes forward-looking statements, which are based on current economic conditions and estimates, and the Company does not include other potential impacts, such as changes in accounting or unusual items. Supplemental information relating to the Company's financial outlook is posted in the Investor Relations section of the Company's Web site at www.InfraREITInc.com.Pending Rate CaseAs a result of a Preliminary Order issued by the PUCT in October 2016, SDTS and Sharyland are required to:
File amended rate filing packages no later than January 1, 2017;
Amend the rate case application to request PUCT approval of a tariff establishing terms and conditions for the leases between Sharyland and SDTS; and
Amend the rate case application to request the PUCT to issue SDTS its own certificate of convenience and necessity.
The Preliminary Order also contemplates that the Company will replace the five current leases between Sharyland and SDTS with two leases, one for transmission assets and one for distribution assets. The Preliminary Order provides that the PUCT's determinations in the rate case will supersede prior orders to the extent of any conflict, but will not rescind the PUCT's 2008 approval of the transfer of transmission and distribution assets from Sharyland to SDTS. As a result of the PUCT's regulation of the leases as part of a PUCT-approved tariff for SDTS, the rent that the Company is permitted to charge Sharyland under the leases will be established and approved by the PUCT.InfraREIT and Sharyland intend to work with the PUCT staff and other interested parties throughout the rate case to develop and implement an approach for regulating Sharyland, SDTS and the leases in a manner that is consistent with applicable laws and regulations, is constructive for customers, is workable for the Company's business and positions InfraREIT to continue to operate as a REIT. The Company expects other rate case issues, such as allowed return on equity, capital structure, cost of debt and income tax allowance, to be determined by the PUCT's final order at the conclusion of the rate case. The timing and outcome of the rate case is uncertain, although the Company currently expects it to be completed during 2017.Sharyland previously filed a system-wide rate case, PUCT Docket No. 45414, to review and set regulatory transmission and distribution delivery rates on April 29, 2016. Sharyland's April 2016 rate case filing addressed conditions required by its 2013 rate case; provided for the review of all invested capital since the year ended December 31, 2012 through the year ended December 31, 2015, and the consolidation of two existing tariffs (the tariff for the Stanton, Brady and Celeste service territories and the tariff for the McAllen service territory); and proposed "cost-based rates" for Sharyland's distribution customers.Supplemental information relating to the rate case can be found at www.InfraREITInc.com under the "About InfraREIT/Sharyland Utilities-Our Tenant" section of the Company's Web site. InfraREIT will also post updates to this section of the Company's Web site as new information becomes available.Hunt Project Quarterly Updates
InfraREIT's quarterly "Hunt Project Updates" (previously described as "ROFO Project Updates") can be found on the Company's Web site (www.InfraREITInc.com) under the "Hunt Transmission-Our Developer" and "Investor Relations" sections and in the "3Q 2016 Results & Supplemental Information" presentation posted on the Company's Web site.Dividends and Distributions
On September 1, 2016, InfraREIT's board of directors declared a cash distribution by InfraREIT's operating partnership to all unit holders of record, including InfraREIT, on September 30, 2016 of $0.25 per unit for a total distribution of $15.2 million ($10.9 million to InfraREIT). Also, on September 1, 2016, InfraREIT's board of directors declared a cash dividend to stockholders of record of InfraREIT on September 30, 2016, of $0.25 per share for a total of $10.9 million. The cash distribution and cash dividend were paid on October 20, 2016.Conference Call and Webcast
As previously announced, management will host a teleconference call November 3, 2016, at 10 a.m. U.S. Central time (11 a.m. U.S. Eastern time). David A. Campbell, Chief Executive Officer, and Brant Meleski, Chief Financial Officer, will discuss InfraREIT's results and financial outlook.Investors and analysts are invited to participate in the call by phone at 1-855-560-2576, or internationally at 1-412-542-4162, (access code: 10084188) or via the Internet at www.InfraREITInc.com. A replay of the call will be available on the Company's Web site or by phone at 1-877-344-7529, or internationally at 1-412-317-0088, (access code: 10084188) for a seven-day period following the call.Non-GAAP Measures
This press release contains certain financial measures that are not recognized under generally accepted accounting principles ("GAAP"). InfraREIT uses Non-GAAP EPS, CAD, EBITDA, Adjusted EBITDA, FFO and AFFO as important supplemental measures of the Company's operating performance. For example, management uses the CAD measurement when recommending dividends to its board of directors. The Company also presents non-GAAP performance measures because management believes they help investors understand InfraREIT's business, performance and ability to earn and distribute cash to its stockholders by providing perspectives not immediately apparent from net income. InfraREIT has a diverse set of investors, including investors that primarily focus on utilities, yieldcos, MLPs or REITs. InfraREIT's management believes that each of these different classes of investors focus on different types of metrics in their evaluation of InfraREIT. For instance, many utility investors focus on earnings per share and management believes the Company's presentation of Non-GAAP EPS enables a better comparison to other utilities. InfraREIT's management believes it is appropriate to calculate and provide these measures in order to be responsive to these investors. Including reporting on these measures in InfraREIT's public disclosures also ensures that this information is available to all of InfraREIT's investors. The non-GAAP measures presented in this press release are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, InfraREIT's method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures as calculated by other companies that do not use the same methodology as InfraREIT. Reconciliations of these measures to their most directly comparable GAAP measures are included in the Schedules to this press release.About InfraREIT, Inc.
InfraREIT is a real estate investment trust that owns rate-regulated electric transmission and distribution assets in the state of Texas. The Company is externally managed by Hunt Utility Services, LLC, an affiliate of Hunt Consolidated, Inc. (a diversified holding company based in Dallas, Texas, and managed by the Ray L. Hunt family). The Company's shares are traded on the New York Stock Exchange under the symbol "HIFR."
InfraREIT reported the following third quarter 2016 financial highlights:
Net income was $23.6 million
Net income attributable to InfraREIT, Inc. common stockholders per share was $0.39 per share
Non-GAAP earnings per share ("Non-GAAP EPS") was $0.32 per share
Cash available for distribution ("CAD") was $19.4 million
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") was $39.7 million
Quarterly dividend declared of $0.25 per share of common stock, $1.00 per share annualized
Reaffirmed 2016 guidance:
Non-GAAP EPS range of $1.15 to $1.25
CAD range of $70 million to $76 million
Annualized dividend per share of $1.00
Updated guidance:
Net income range of $67 million to $73 million
Net income attributable to InfraREIT, Inc. common stockholders per share range of $1.10 to $1.20
Capital expenditure range of $470 million to $630 million for the period of 2016 through 2018
Expect to maintain the Company's current quarterly cash dividend of $0.25 per share, or $1.00 per share annualized, through the resolution of the rate case
Recent events:
In the ongoing rate case of the Company's sole tenant, Sharyland Utilities, L.P. ("Sharyland"), the Public Utility Commission of Texas ("PUCT") issued a preliminary order ("Preliminary Order") in October 2016 requiring the Company's regulated subsidiary, Sharyland Distribution & Transmission Services, L.L.C. ("SDTS") to file an amended rate filing package with Sharyland no later than January 1, 2017. Among other things, the Preliminary Order indicates that the PUCT will regulate the lease payments that Sharyland makes to SDTS as tariffs under applicable Texas regulatory law.
"We continued to advance on our growth strategy as demonstrated by our strong financial performance in the third quarter," said David A. Campbell, Chief Executive Officer of InfraREIT. "We remain comfortable with, and are reaffirming, our Non-GAAP EPS and CAD guidance ranges for 2016. We do not intend to update guidance beyond 2016 until after the conclusion of the rate case, primarily because the Preliminary Order creates potential uncertainty around the calculation of our lease payments and the mechanisms for updating lease payments to account for new assets placed in service. Over the course of the rate case, we will remain focused on achieving an outcome that includes an effective and efficient process for regulating Sharyland, SDTS, and the leases and is workable for our business.""The current economic environment in West Texas has also affected our planning," Campbell added. "Primarily due to reduced levels of commitments and follow-through in customer-identified projects and forecasts and the relative geographic concentration of recent and expected load growth, we are lowering our capital expenditure forecast for 2017 and 2018."Solid Results in Third Quarter 2016
Lease revenue increased 19 percent to $49.4 million for the three months ended September 30, 2016, compared to the same period in 2015. For the third quarter of 2016, base rent contributed $38.6 million and percentage rent contributed $10.8 million, compared to $31.3 million of base rent and $10.2 million of percentage rent for the third quarter of 2015.Net income was $23.6 million in the third quarter of 2016, compared to net income of $19.4 million in the third quarter of 2015. Net income attributable to InfraREIT, Inc. common stockholders was $0.39 per share during the third quarter of 2016 compared to $0.32 per share during the same period in 2015.Non-GAAP EPS was $0.32 per share for the third quarter of 2016 and $0.28 per share for the third quarter of 2015. In the third quarter of 2016, CAD was $19.4 million compared to $17.1 million for the third quarter of 2015. Adjusted EBITDA was $39.7 million for the third quarter of 2016, an increase of 19 percent, compared to $33.5 million for the same period in 2015. Funds from Operations ("FFO") was $35.4 million for the third quarter of 2016, compared to $29.7 million from the same period in 2015. For the third quarter of 2016, FFO on an adjusted basis ("AFFO") was $30.0 million, an increase of 13 percent, compared to $26.5 million for the same period in 2015.First Nine Months of 2016 Performance
Lease revenue increased 17 percent to $116.9 million for the nine months ended September 30, 2016, compared to the same period in 2015. Base rent contributed $106.1 million and percentage rent contributed $10.8 million for the first nine months of 2016, compared to base rent of $90.1 million and percentage rent of $10.2 million for the same period of 2015.Net income was $41.6 million for the first nine months of 2016, compared to a net loss of $7.6 million for the first nine months of 2015. Net income attributable to InfraREIT, Inc. common stockholders was $0.69 per share during the first nine months of 2016 compared to $(0.15) during the first nine months of 2015.Non-GAAP EPS was $0.93 per share for the first nine months of 2016 and $0.90 per share for the same period in 2015. Non-GAAP EPS during the nine months ended September 30, 2016 was based on 60.6 million weighted average shares outstanding compared to 58.8 million weighted average shares outstanding during the same period of 2015.During the first nine months of 2016, CAD was $57.0 million compared to $53.6 million during the same period in 2015. Adjusted EBITDA was $115.6 million for the first nine months of 2016, an increase of 14 percent, compared to $101.8 million for the same period in 2015. FFO was $75.9 million for the first nine months of 2016, compared to $21.8 million for the same period in 2015. For the first nine months of 2016, AFFO was $87.6 million, an increase of 9 percent, compared to $80.1 million for the same period in 2015.Liquidity and Capital Resources
As of September 30, 2016, the Company had $11.0 million of unrestricted cash and cash equivalents and $232.5 million of unused capacity under its revolving credit facilities.
Outlook and Guidance
Net income is projected in the range of $67 million to $73 million for 2016. Net income attributable to InfraREIT, Inc. common stockholders per share is estimated in the range of $1.10 to $1.20 for 2016. Non-GAAP EPS is estimated in the range of $1.15 to $1.25 for 2016. The estimated range for CAD for 2016 is $70 million to $76 million.The Company estimates footprint capital expenditures in the following ranges over the next three years: $220 million to $240 million for 2016; $175 million to $240 million for 2017; and $75 million to $150 million for 2018. During this quarter's review, the Company lowered its 2017 and 2018 forecasted capital expenditures range due primarily to lower levels of commitments and follow-through in customer-identified projects and forecasts, a slower pace of load growth, and the relative geographic concentration of recent and expected load growth in Sharyland's service territory.As part of the August 3, 2016 second quarter 2016 earnings report, the Company described that it anticipated that footprint capital expenditures would enable a projected compounded annual growth rate ("CAGR") range in dividends per share of 8 percent to 10 percent from 2015 to 2018, with a targeted payout ratio of 80 percent to 90 percent of CAD. As noted in the August 3rd report, this guidance assumed, and was subject to, continuity in lease treatment and a range of regulatory outcomes consistent with the rates Sharyland requested in its April 2016 rate case filing. The Company anticipates that, even given the change in the capital expenditure forecast (and subject to the other described factors), footprint capital expenditures would have enabled a projected CAGR range in dividends per share in the lower half of the 8 percent to 10 percent range from 2015 to 2018, if other conditions were unchanged. However, in light of the pending rate case and the potential uncertainty resulting from the Preliminary Order regarding the calculation of our lease payments and mechanisms for updating lease payments to account for new assets placed in service, the Company does not intend to provide or update guidance beyond 2016 until after the conclusion of the rate case.InfraREIT expects to maintain the Company's current quarterly cash dividend of $0.25 per share, or $1.00 per share annualized, through the resolution of the rate case.The Company's consolidated debt profile continues to target debt as a percentage of total capitalization at or below 60 percent and AFFO-to-debt of at least 12 percent.The guidance provided above constitutes forward-looking statements, which are based on current economic conditions and estimates, and the Company does not include other potential impacts, such as changes in accounting or unusual items. Supplemental information relating to the Company's financial outlook is posted in the Investor Relations section of the Company's Web site at www.InfraREITInc.com.Pending Rate CaseAs a result of a Preliminary Order issued by the PUCT in October 2016, SDTS and Sharyland are required to:
File amended rate filing packages no later than January 1, 2017;
Amend the rate case application to request PUCT approval of a tariff establishing terms and conditions for the leases between Sharyland and SDTS; and
Amend the rate case application to request the PUCT to issue SDTS its own certificate of convenience and necessity.
The Preliminary Order also contemplates that the Company will replace the five current leases between Sharyland and SDTS with two leases, one for transmission assets and one for distribution assets. The Preliminary Order provides that the PUCT's determinations in the rate case will supersede prior orders to the extent of any conflict, but will not rescind the PUCT's 2008 approval of the transfer of transmission and distribution assets from Sharyland to SDTS. As a result of the PUCT's regulation of the leases as part of a PUCT-approved tariff for SDTS, the rent that the Company is permitted to charge Sharyland under the leases will be established and approved by the PUCT.InfraREIT and Sharyland intend to work with the PUCT staff and other interested parties throughout the rate case to develop and implement an approach for regulating Sharyland, SDTS and the leases in a manner that is consistent with applicable laws and regulations, is constructive for customers, is workable for the Company's business and positions InfraREIT to continue to operate as a REIT. The Company expects other rate case issues, such as allowed return on equity, capital structure, cost of debt and income tax allowance, to be determined by the PUCT's final order at the conclusion of the rate case. The timing and outcome of the rate case is uncertain, although the Company currently expects it to be completed during 2017.Sharyland previously filed a system-wide rate case, PUCT Docket No. 45414, to review and set regulatory transmission and distribution delivery rates on April 29, 2016. Sharyland's April 2016 rate case filing addressed conditions required by its 2013 rate case; provided for the review of all invested capital since the year ended December 31, 2012 through the year ended December 31, 2015, and the consolidation of two existing tariffs (the tariff for the Stanton, Brady and Celeste service territories and the tariff for the McAllen service territory); and proposed "cost-based rates" for Sharyland's distribution customers.Supplemental information relating to the rate case can be found at www.InfraREITInc.com under the "About InfraREIT/Sharyland Utilities-Our Tenant" section of the Company's Web site. InfraREIT will also post updates to this section of the Company's Web site as new information becomes available.Hunt Project Quarterly Updates
InfraREIT's quarterly "Hunt Project Updates" (previously described as "ROFO Project Updates") can be found on the Company's Web site (www.InfraREITInc.com) under the "Hunt Transmission-Our Developer" and "Investor Relations" sections and in the "3Q 2016 Results & Supplemental Information" presentation posted on the Company's Web site.Dividends and Distributions
On September 1, 2016, InfraREIT's board of directors declared a cash distribution by InfraREIT's operating partnership to all unit holders of record, including InfraREIT, on September 30, 2016 of $0.25 per unit for a total distribution of $15.2 million ($10.9 million to InfraREIT). Also, on September 1, 2016, InfraREIT's board of directors declared a cash dividend to stockholders of record of InfraREIT on September 30, 2016, of $0.25 per share for a total of $10.9 million. The cash distribution and cash dividend were paid on October 20, 2016.Conference Call and Webcast
As previously announced, management will host a teleconference call November 3, 2016, at 10 a.m. U.S. Central time (11 a.m. U.S. Eastern time). David A. Campbell, Chief Executive Officer, and Brant Meleski, Chief Financial Officer, will discuss InfraREIT's results and financial outlook.Investors and analysts are invited to participate in the call by phone at 1-855-560-2576, or internationally at 1-412-542-4162, (access code: 10084188) or via the Internet at www.InfraREITInc.com. A replay of the call will be available on the Company's Web site or by phone at 1-877-344-7529, or internationally at 1-412-317-0088, (access code: 10084188) for a seven-day period following the call.Non-GAAP Measures
This press release contains certain financial measures that are not recognized under generally accepted accounting principles ("GAAP"). InfraREIT uses Non-GAAP EPS, CAD, EBITDA, Adjusted EBITDA, FFO and AFFO as important supplemental measures of the Company's operating performance. For example, management uses the CAD measurement when recommending dividends to its board of directors. The Company also presents non-GAAP performance measures because management believes they help investors understand InfraREIT's business, performance and ability to earn and distribute cash to its stockholders by providing perspectives not immediately apparent from net income. InfraREIT has a diverse set of investors, including investors that primarily focus on utilities, yieldcos, MLPs or REITs. InfraREIT's management believes that each of these different classes of investors focus on different types of metrics in their evaluation of InfraREIT. For instance, many utility investors focus on earnings per share and management believes the Company's presentation of Non-GAAP EPS enables a better comparison to other utilities. InfraREIT's management believes it is appropriate to calculate and provide these measures in order to be responsive to these investors. Including reporting on these measures in InfraREIT's public disclosures also ensures that this information is available to all of InfraREIT's investors. The non-GAAP measures presented in this press release are not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, InfraREIT's method of calculating these measures may be different from methods used by other companies, and, accordingly, may not be comparable to similar measures as calculated by other companies that do not use the same methodology as InfraREIT. Reconciliations of these measures to their most directly comparable GAAP measures are included in the Schedules to this press release.About InfraREIT, Inc.
InfraREIT is a real estate investment trust that owns rate-regulated electric transmission and distribution assets in the state of Texas. The Company is externally managed by Hunt Utility Services, LLC, an affiliate of Hunt Consolidated, Inc. (a diversified holding company based in Dallas, Texas, and managed by the Ray L. Hunt family). The Company's shares are traded on the New York Stock Exchange under the symbol "HIFR."
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