UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 7, 2015
  
InfraREIT, Inc.
(Exact name of registrant as specified in its charter)

Maryland	001-36822	75-2952822	
(State or Other Jurisdiction
of Incorporation)	(Commission File Number)	(IRS Employer
Identification No.)	
 	 	 	
1807 Ross Avenue, 4 th Floor
Dallas, Texas	 	75201	
(Address of Principal Executive Offices)	 	(Zip Code)	
Registrant’s Telephone Number, Including Area Code: (214) 855-6700
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 

 
 
 Item 2.02 Results of Operations and Financial Condition
On August 7, 2015, InfraREIT, Inc. (the “Company”) announced its financial results for the three and six months ended June 30, 2015. A copy of the Company’s press release for the same periods is furnished as Exhibit 99.1 to this Current Report on Form 8-K. In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 2.02 and in the attached exhibit is deemed to be furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in the attached exhibit is deemed to be furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act.
 
Exhibit
Number	 	Description	
99.1	 	Press release, dated August 7, 2015	

 

1

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	 	 	 	 	
 	 	InfraREIT, Inc.	
 	 	 	
Date: August 7, 2015	 	 	/s/ Benjamin D. Nelson	
 	 	 	Benjamin D. Nelson	
 	 	 	Senior Vice President and General Counsel	

2

 

Exhibit
Number	 	Description	
99.1	 	Press release, dated August 7, 2015	

  
3

 
 Exhibit 99.1

 	 	 	
InfraREIT, Inc.
1807 Ross Avenue,
4 th Floor
Dallas, TX 75201	 		
 
PRESS RELEASE
InfraREIT Reports Second Quarter 2015 and Year-to-Date Results
DALLAS, TEXAS, August 7, 2015—InfraREIT, Inc. (NYSE: HIFR) (“InfraREIT” or the “Company”) today reported financial results for the second quarter and six-month period ended June 30, 2015 and the Company’s financial outlook.
InfraREIT reported the following second quarter 2015 financial highlights:
·	Cash available for distribution (CAD) of $18.3 million, or $0.30 per share	
·	Adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA) of $33.9 million	
·	Quarterly dividend declared of $0.225 per share of common stock, $0.90 per share annualized	
·	Net income of $8.8 million, or $0.15 per diluted share	
·	Raising guidance for 2015 CAD per share from $1.07 to a range of $1.07 to $1.12	
·	Reaffirming guidance of three-year cumulative annual growth in distributions per share of 10 percent to 15 percent through the end of 2018	
“Our solid performance continued into the second quarter as we consistently executed on our strategy ,” said David A. Campbell, Chief Executive Officer of InfraREIT.  “We continue to make investments to ensure reliable service and support growth in our service territories, enabling us to expand on our Footprint Projects.  Our growth is driven by placing needed transmission and distribution assets into service under our REIT structure.”
Solid Results in Second Quarter 2015
Lease revenue increased approximately 17 percent to $29.5 million for the three months ended June 30, 2015, compared to the same period in 2014.  Base rent contributed all of the lease revenue for the second quarter of 2015, compared to $24.5 million of base rent and $0.7 million of percentage rent for the second quarter of 2014.  The increase in base rent was driven by the addition of assets under lease.  As previously indicated, InfraREIT expects to recognize little to no percentage rent during the first or second quarters of each year and expects to recognize the largest amounts during the third and fourth quarters of each year.
General and administrative expense increased to $4.7 million in the second quarter of 2015, compared to $3.3 million for the second quarter of 2014, primarily as a result of higher management fees and increased professional services fees.  Depreciation expense was $9.7 million and $8.4 million for the second quarter of 2015 and 2014, respectively, and the increase was due to additional assets placed in service.
Net interest expense was $6.9 million and $8.0 million during the second quarters of 2015 and 2014, respectively.  The decrease resulted from lower interest expense due to the repayment of the outstanding amounts under InfraREIT’s revolving credit facilities in February 2015 with the proceeds received in connection with the initial public offering (IPO).
Other income, net was $0.8 million and $0.2 million during the second quarters of 2015 and 2014, respectively.  The increase resulted primarily from $0.5 million increase in allowance for funds used during construction (AFUDC) on other funds.
Net income was $8.8 million in the second quarter of 2015, or $0.15 per diluted share, compared to $5.5 million in the second quarter of 2014, or $0.12 per diluted share.  Diluted per share net income was based on 60.6 million weighted average diluted shares outstanding for the second quarter of 2015, compared to 45.6 million weighted average diluted shares outstanding during the second quarter of 2014.
In the second quarter of 2015, CAD was $18.3 million, or $0.30 per share, compared to $16.6 million, or $0.36 per share in the same period in 2014. CAD per share was based on 60.6 million shares outstanding as of June 30, 2015, compared to 45.5 million shares outstanding as of June 30, 2014.

1

 
 
 Adjusted EBITDA was $33.9 million in the second quarter of 2015, an increase of 5 percent, compared to $32.2 million in the same period in 2014.  Funds from Operations (FFO) was $18.5 million for the second quarter of 2015, an increase of 33 percent, compared to $13.9 million from the same period in 2014.  For the second quarter 2015, FFO on an adjusted basis (AFFO) was $26.8 million, an increase of 12 percent,  compared to $24.0 million in the same period in 2014.
First Half 2015 Performance
Lease revenue of $58.8 million for the six months ended June 30, 2015, increased $8.7 million, or approximately 17 percent, compared to the same period in 2014.  Base rent contributed all of the lease revenue for the first six months of 2015, compared to $49.4 million of base rent and $0.7 million of percentage rent for the first six months of 2014.  The increase in base rent was driven by the addition of assets under lease.  
General and administrative expense was $53.5 million in the first six months of 2015, compared to $6.7 million for the first six months of 2014.  Higher general and administrative expense resulted from the issuance of 1.7 million shares of common stock to Hunt-InfraREIT, L.L.C. (Hunt-InfraREIT) as a non-cash reorganization advisory fee, resulting in an expense of $44.9 million in the first quarter of 2015, $0.9 million of increased professional services fees and $0.8 million of increased management fees.  Depreciation expense increased 14 percent to $19.2 million for the first six months of 2015, from $16.8 million in the first six months of 2014 as additional assets were placed in service.
Net interest expense was $14.4 million and $15.7 million during the six months ended June 30, 2015 and 2014, respectively.  The decrease resulted from lower interest expense due to the repayment of the outstanding amounts under InfraREIT’s revolving credit facilities in February 2015 with the proceeds received in connection with the IPO.
Other income, net was $1.5 million and less than $0.1 million for the six months ended June 30, 2015 and 2014, respectively.  The increase in other income, net was due to an increase in AFUDC on other funds of $0.6 million and a $0.9 million charge related to a change in fair value of the Operating Partnership’s contingent consideration owed to Hunt-InfraREIT during the six months ended June 30, 2014.
Net loss was $27.0 million in the first six months of 2015, or $(0.47) per diluted share, including the effect of a $44.9 million non-cash expense incurred in connection with the IPO.  Net income for the first six months of 2014 was $10.5 million, or $0.23 per diluted share.  Diluted per share net (loss) income was based on 57.8 million weighted average diluted shares outstanding for the first six months of 2015, compared to 45.6 million weighted average diluted shares outstanding during the first six months of 2014.  
The first six months of 2015 CAD was $36.5 million, or $0.60 CAD per share, compared to $29.3 million, or $0.64 CAD per share in the same period in 2014.  CAD per share was based on 60.6 million shares outstanding as of June 30, 2015, compared to 45.5 million shares outstanding as of June 30, 2014.
Adjusted EBITDA was $68.3 million in the first six months of 2015, an increase of 13 percent, compared to $60.4 million in the same period in 2014.  In the first six months of 2015, FFO was $(7.9) million, compared to $27.3 million for the same period in 2014.  The Company also reported AFFO of $53.6 million for the first six months of 2015, an increase of 21 percent, compared to $44.3 million for the same period in 2014.
Liquidity and Capital Resources
As of June 30, 2015, the Company had $50.5 million of unrestricted cash and cash equivalents. The Company primarily utilizes its cash for the payment of capital expenditures, operating expenses, debt service and dividend payments. InfraREIT also had $1.7 million of restricted cash and $325.0 million of unused capacity under its revolving credit facilities as of June 30, 2015.
Outlook and Guidance Update
InfraREIT is updating its previously provided guidance for 2015. CAD per share for the full year of 2015 is estimated at a range of $1.07 to $1.12 per share. The Company continues to expect its three-year cumulative annual growth in distributions per share to be in the range of 10 percent to 15 percent through December 31, 2018.  InfraREIT expects to achieve the lower half of this growth range solely through Footprint Projects, and to exceed the midpoint of the range through the acquisition of the Cross Valley Line and Golden Spread Interconnection from Hunt. The Company believes it could achieve the top of the range through additional Footprint Projects or acquisitions. Regarding InfraREIT’s consolidated debt profile, the Company targets 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 represents 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 .
2

 
Monthly ROFO Project Updates
Generally, InfraREIT’s monthly “ROFO Project Updates” will be provided after the closing of trading on the New York Stock Exchange on or about the 15 th day of each month. These 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.  InfraREIT has also provided a ROFO Project Update in its “2Q 2015 Results & Supplemental Information” presentation posted on the Company’s Web site as of today.  The next ROFO Project Update will be issued on September 15, 2015.
Dividends and Distributions
On June 5, 2015, InfraREIT’s Board of Directors declared a cash distribution by the Operating Partnership to all unit holders of record, including InfraREIT, on June 30, 2015 of $0.225 per unit for a total distribution of $13.6 million, $9.8 million of which was allocated to InfraREIT. Also, on June 5, 2015, the Company’s board of directors declared a cash dividend to shareholders of record on June 30, 2015, of $0.225 per share for a total of $9.8 million. The cash distribution and cash dividend were paid on July 23, 2015.
Conference Call and Webcast
As previously announced, management will host a teleconference call August 7, 2015, at 10 a.m. U.S. Central (11 a.m. U.S. Eastern). 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: 10068113) or via the Internet at www.InfraREITInc.com . A replay of the call will be available on the Company Web site or by phone at 1-877-344-7529, or internationally at 1-412-317-0088, (access code: 10068113) 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). These non-GAAP measures are presented because InfraREIT’s management believes these non-GAAP measures 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. These measures are also measures frequently used by securities analysts, investors and other interested parties. The presentation of CAD, EBITDA, Adjusted EBITDA, FFO and AFFO 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.” Additional information on InfraREIT is available at www.InfraREITInc.com .
Forward-Looking Statements
 This press release contains forward-looking statements within the meaning of the federal securities laws. These statements give InfraREIT management’s current expectations, and contain projections of results of operations or financial condition or forecasts of future events. Words such as “could,” “will,” “may,” “assume,” “forecast,” “strategy,” “guidance,” “outlook,” “target,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or “project” and similar expressions are used to identify forward-looking statements. Without limiting the generality of the foregoing, forward-looking statements contained in this press release include InfraREIT’s expectations regarding its anticipated financial and operational performance, including projected or forecasted financial results, project timing, distributions to stockholders, dividend growth, capital expenditures, lease payments, CAD growth, AFFO-to-debt ratios and capitalization matters. Forward-looking statements can be affected by assumptions used or known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed and actual results may differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause actual results to differ materially from those indicated in the forward-looking statements include, among others, the following: (a) risks that the capital expenditures the Company expects will not materialize for a variety of reasons, including as a result of lower oil and gas drilling and related midstream and service company activities in the Permian Basin relative to the Company’s current expectations, (b) the Company’s ability to acquire ROFO Projects from Hunt, (c) the Company’s current reliance on its tenant for all of its revenues and, as a result, its dependency on the tenant’s solvency and financial and operating performance, (d) defaults on or non-renewal or early termination of leases by the Company’s tenant, (e) changes in the regulated rates the tenants of the Company’s assets may charge their customers and (f) defaults
3

 
on or non-renewal or early termination of leases by the Company’s tenant. These and other applicable uncertainties, factors and risks are described more fully in the Company’s filings with the Securities and Exchange Commission.
Any forward-looking statement made by the Company in this press release is based only on information currently available to InfraREIT and speaks only as of the date on which it is made. InfraREIT undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
 
4

 
  
 InfraREIT, Inc.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share amounts)
(Unaudited)
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Lease revenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Base rent	 	$	29,458	 	 	$	24,542	 	 	$	58,830	 	 	$	49,379	 	
Percentage rent	 	 	—	 	 	 	683	 	 	 	—	 	 	 	683	 	
Total lease revenue	 	 	29,458	 	 	 	25,225	 	 	 	58,830	 	 	 	50,062	 	
Operating costs and expenses	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
General and administrative expense	 	 	4,728	 	 	 	3,284	 	 	 	53,461	 	 	 	6,696	 	
Depreciation	 	 	9,671	 	 	 	8,366	 	 	 	19,179	 	 	 	16,827	 	
Total operating costs and expenses	 	 	14,399	 	 	 	11,650	 	 	 	72,640	 	 	 	23,523	 	
Income (loss) from operations	 	 	15,059	 	 	 	13,575	 	 	 	(13,810	)	 	 	26,539	 	
Other (expense) income	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense, net	 	 	(6,939	)	 	 	(7,984	)	 	 	(14,361	)	 	 	(15,665	)	
Other income, net	 	 	847	 	 	 	172	 	 	 	1,473	 	 	 	39	 	
Total other expense	 	 	(6,092	)	 	 	(7,812	)	 	 	(12,888	)	 	 	(15,626	)	
Income (loss) before income taxes	 	 	8,967	 	 	 	5,763	 	 	 	(26,698	)	 	 	10,913	 	
Income tax expense	 	 	124	 	 	 	250	 	 	 	332	 	 	 	408	 	
Net income (loss)	 	 	8,843	 	 	 	5,513	 	 	 	(27,030	)	 	 	10,505	 	
Less: Net income (loss) attributable to noncontrolling interest	 	 	2,481	 	 	 	1,278	 	 	 	(6,519	)	 	 	2,425	 	
Net income (loss) attributable to InfraREIT, Inc.	 	$	6,362	 	 	$	4,235	 	 	$	(20,511	)	 	$	8,080	 	
Net income (loss) attributable to InfraREIT, Inc. common
    shareholders per share:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.15	 	 	$	0.12	 	 	$	(0.48	)	 	$	0.23	 	
Diluted	 	$	0.15	 	 	$	0.12	 	 	$	(0.48	)	 	$	0.23	 	
Cash dividends declared per common share	 	$	0.225	 	 	$	—	 	 	$	0.625	 	 	$	—	 	
Weighted average common shares outstanding (basic shares)	 	 	43,565	 	 	 	35,053	 	 	 	42,391	 	 	 	35,053	 	
Redemption of operating partnership units	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	
Weighted average dilutive shares outstanding (diluted shares)	 	 	43,565	 	 	 	35,053	 	 	 	42,391	 	 	 	35,053	 	
Due to the anti-dilutive effect, the computation of diluted
    earnings per share does not reflect the following adjustments:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income (loss) attributable to noncontrolling interest	 	$	2,481	 	 	$	1,278	 	 	$	(6,519	)	 	$	2,425	 	
Redemption of operating partnership units	 	 	17,028	 	 	 	10,562	 	 	 	15,424	 	 	 	10,523	 	

5

 
  
 InfraREIT, Inc.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
 
 	 	June 30,
2015	 	 	December 31,
2014	 	
 	 	(Unaudited)	 	 	 	 	 	
Assets	 	 	 	 	 	 	 	 	
Current Assets	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	50,495	 	 	$	15,612	 	
Restricted cash	 	 	1,682	 	 	 	1,682	 	
Due from affiliates	 	 	21,776	 	 	 	27,822	 	
Inventory	 	 	6,938	 	 	 	7,393	 	
Assets held for sale	 	 	—	 	 	 	41,211	 	
Prepaids and other current assets	 	 	1,409	 	 	 	4,897	 	
Total current assets	 	 	82,300	 	 	 	98,617	 	
Electric Plant, net	 	 	1,325,582	 	 	 	1,227,146	 	
Goodwill	 	 	138,384	 	 	 	138,384	 	
Deferred Assets and Other Regulatory Assets, net	 	 	36,277	 	 	 	37,948	 	
Investments	 	 	2,519	 	 	 	2,519	 	
Total Assets	 	$	1,585,062	 	 	$	1,504,614	 	
Liabilities and Equity	 	 	 	 	 	 	 	 	
Current Liabilities	 	 	 	 	 	 	 	 	
Accounts payable and accrued liabilities	 	$	28,167	 	 	$	25,295	 	
Short-term borrowings	 	 	—	 	 	 	219,000	 	
Current portion of long-term debt	 	 	19,430	 	 	 	19,234	 	
Dividends and distributions payable	 	 	13,634	 	 	 	14,130	 	
Contingent consideration	 	 	—	 	 	 	27,378	 	
Accrued taxes	 	 	2,691	 	 	 	2,359	 	
Total current liabilities	 	 	63,922	 	 	 	307,396	 	
Long-Term Debt	 	 	600,757	 	 	 	610,522	 	
Regulatory Liability	 	 	6,177	 	 	 	1,242	 	
Total liabilities	 	 	670,856	 	 	 	919,160	 	
Commitments and Contingencies	 	 	 	 	 	 	 	 	
Equity	 	 	 	 	 	 	 	 	
Members' capital - 35,053,186 shares issued and outstanding as of December 31, 2014	 	 	—	 	 	 	440,387	 	
Common stock, $0.01 par value; 450,000,000 shares authorized; 43,565,495
   issued and outstanding as of June 30, 2015	 	 	436	 	 	 	—	 	
Additional paid-in capital	 	 	702,213	 	 	 	—	 	
Accumulated deficit	 	 	(38,698	)	 	 	—	 	
Accumulated other comprehensive loss	 	 	—	 	 	 	—	 	
Total InfraREIT, Inc. equity	 	 	663,951	 	 	 	440,387	 	
Noncontrolling interest	 	 	250,255	 	 	 	145,067	 	
Total equity	 	 	914,206	 	 	 	585,454	 	
Total Liabilities and Equity	 	$	1,585,062	 	 	$	1,504,614	 	

6

 
  
 InfraREIT, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
 	 	Six Months Ended June 30,	 	
 	 	2015	 	 	2014	 	
Cash flows from operating activities	 	 	 	 	 	 	 	 	
Net (loss) income	 	$	(27,030	)	 	$	10,505	 	
Adjustments to reconcile net (loss) income to net cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation	 	 	19,179	 	 	 	16,827	 	
Amortization of deferred financing costs	 	 	1,824	 	 	 	1,659	 	
Allowance for funds used during construction - equity	 	 	(1,481	)	 	 	(930	)	
Change in fair value of contingent consideration	 	 	—	 	 	 	895	 	
Reorganization structuring fee	 	 	44,897	 	 	 	—	 	
Realized gain on sale of marketable securities	 	 	(66	)	 	 	—	 	
Equity based compensation	 	 	308	 	 	 	120	 	
Changes in assets and liabilities:	 	 	 	 	 	 	 	 	
Due from affiliates	 	 	6,046	 	 	 	13,865	 	
Inventory	 	 	455	 	 	 	(391	)	
Prepaids and other current assets	 	 	(855	)	 	 	(1,337	)	
Accounts payable and accrued liabilities	 	 	7,683	 	 	 	4,789	 	
Net cash provided by operating activities	 	 	50,960	 	 	 	46,002	 	
Cash flows from investing activities	 	 	 	 	 	 	 	 	
Additions to electric plant	 	 	(115,627	)	 	 	(112,063	)	
Proceeds from sale of assets	 	 	41,211	 	 	 	—	 	
Sale of marketable securities	 	 	1,065	 	 	 	—	 	
Cash paid to InfraREIT, L.L.C. investors in the merger, net of cash assumed	 	 	(172,400	)	 	 	—	 	
Net cash used in investing activities	 	 	(245,751	)	 	 	(112,063	)	
Cash flows from financing activities	 	 	 	 	 	 	 	 	
Net proceeds from issuance of common stock upon initial public offering	 	 	493,722	 	 	 	—	 	
Proceeds from short-term borrowings	 	 	33,000	 	 	 	82,000	 	
Repayments of short-term borrowings	 	 	(253,000	)	 	 	—	 	
Proceeds from borrowings of long-term debt	 	 	—	 	 	 	11,000	 	
Repayments of long-term debt	 	 	(9,569	)	 	 	(5,056	)	
Net change in restricted cash	 	 	—	 	 	 	(1	)	
Deferred financing costs	 	 	(153	)	 	 	(715	)	
Dividends and distributions paid	 	 	(34,326	)	 	 	—	 	
Net cash provided by financing activities	 	 	229,674	 	 	 	87,228	 	
Net increase in cash and cash equivalents	 	 	34,883	 	 	 	21,167	 	
Cash and cash equivalents at beginning of period	 	 	15,612	 	 	 	7,746	 	
Cash and cash equivalents at end of period	 	$	50,495	 	 	$	28,913	 	

7

 
  
Non-GAAP Measures
Schedule 1
InfraREIT, Inc.
Explanation and Reconciliation of CAD
CAD
The Company’s definition of CAD includes a deduction of the portion of capital expenditures needed to maintain its net assets which equals depreciation expense within the applicable period. The portion of the capital expenditures in excess of depreciation, which the Company refers to as growth capital expenditures, will increase its net assets. Also included in CAD are various other adjustments from net income, as outlined below and described in more detail on Schedules 2 and 3.
The following sets forth a reconciliation of net income (loss) to CAD:
 
 	 	Three Months Ended June 30,	 	 	 	Six Months Ended June 30,	 	 	
(In thousands)	 	2015	 	 	 	2014	 	 	 	2015	 	 	 	2014	 	 	
Net income (loss)	 	$	8,843	 	 	 	$	5,513	 	 	 	$	(27,030	)	 	 	$	10,505	 	 	
Depreciation	 	 	9,671	 	 	 	 	8,366	 	 	 	 	19,179	 	 	 	 	16,827	 	 	
FFO	 	 	18,514	 	 	 	 	13,879	 	 	 	 	(7,851	)	 	 	 	27,332	 	 	
Non-cash reorganization structuring fee	 	 	—	 	 	 	 	—	 	 	 	 	44,897	 	 	 	 	—	 	 	
Percentage rent adjustment (1)	 	 	6,095	 	 	 	 	6,729	 	 	 	 	12,559	 	 	 	 	13,056	 	 	
Base rent adjustment (2)	 	 	3,068	 	 	 	 	3,548	 	 	 	 	5,131	 	 	 	 	3,984	 	 	
Amortization of deferred financing costs	 	 	912	 	 	 	 	830	 	 	 	 	1,824	 	 	 	 	1,659	 	 	
Reorganization expenses	 	 	—	 	 	 	 	—	 	 	 	 	333	 	 	 	 	—	 	 	
Non-cash equity compensation	 	 	185	 	 	 	 	120	 	 	 	 	308	 	 	 	 	120	 	 	
Other income, net (3)	 	 	(847	)	 	 	 	(172	)	 	 	 	(1,473	)	 	 	 	(39	)	 	
Capital expenditures to maintain net assets	 	 	(9,671	)	 	 	 	(8,366	)	 	 	 	(19,179	)	 	 	 	(16,827	)	 	
CAD	 	$	18,256	 	 	 	$	16,568	 	 	 	$	36,549	 	 	 	$	29,285	 	 	
Shares outstanding (mm of shares)	 	 	60.6	 	(4)	 	 	45.5	 	(5)	 	 	60.6	 	(6)	 	 	45.5	 	(7)	
CAD per share	 	$	0.30	 	 	 	$	0.36	 	 	 	$	0.60	 	 	 	$	0.64	 	 	
CAD payout ratio	 	 	74.7	%	(8)	 	N/A	 	 	 	 	74.5	%	(9)	 	N/A	 	 	
 
1)	Represents the amount of percentage rent owed to the Company related to the applicable period. The amount related to the first quarter of each year is paid in May while the second quarter amount for each year is due in August. Although the Company receives percentage rent payments related to the first half of each year, it does not recognize lease revenue related to these percentage rent payments until its tenant’s annual gross revenues exceed minimum specified breakpoints in the leases.	
2)	This adjustment relates to the difference between the timing of cash based rent payments made under the Company’s leases and when the Company recognizes base rent revenue under GAAP. The Company recognizes base rent on a straight-line basis over the applicable term of the lease commencing when the related assets are placed in service, which is frequently different than the period in which the cash rent becomes due.	
3)	Includes AFUDC on equity of $0.9 million and $0.5 million for the three months ended June 30, 2015 and 2014, respectively, and $1.5 million and $0.9 million for the six months ended June 30, 2015 and 2014, respectively.	
4)	Calculated based on outstanding shares of 60.6 million as of June 30, 2015, which consists of 43.6 million outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2015. Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 43.6 million weighted average shares outstanding during the three months ended June 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.	
5)	Calculated based on outstanding shares of 45.5 million as of June 30, 2014, which consists of 35.1 million outstanding shares of common stock of InfraREIT and 10.5 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2014. Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 35.1 million weighted average shares outstanding during the three months ended June 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.	
8

 

6)	Calculated based on outstanding shares of 60.6 million as of June 3 0 , 2015, which consists of 43.6 million outstanding shares of common stock of InfraREIT and 17.0 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 3 0 , 2015. Net loss attributable to InfraREIT, Inc. common shareholders per share was calculated based on 42.4 million weighted average shares outstanding during the six months ended June 30, 2015, which excludes any OP Units and is calculated on a weighted average basis.	
7)	Calculated based on outstanding shares of 45.5 million as of June 30, 2014, which consists of 35.1 million outstanding shares of common stock of InfraREIT and 10.5 million outstanding OP Units held by the limited partners of the Operating Partnership as of June 30, 2014. Net income attributable to InfraREIT, Inc. common shareholders per share was calculated based on 35.1 million weighted average shares outstanding during the six months ended June 30, 2014, which excludes any OP Units and is calculated on a weighted average basis.	
8)	Reflects the distributions of $13.6 million divided by CAD of $18.3 million.	
9)	Reflects the post-IPO distributions of $22.1 million divided by the post-IPO CAD of $29.7 million (based on a pro-rata calculation from the IPO date).	
 
9

 
  
 Schedule 2
InfraREIT, Inc.
Explanation and Reconciliation of EBITDA and Adjusted EBITDA
EBITDA and Adjusted EBITDA
InfraREIT defines EBITDA as net income (loss) before interest expense, net; income tax expense; depreciation and amortization. Adjusted EBITDA is defined as EBITDA adjusted in a manner the Company believes is appropriate to show its core operational performance, including: (a) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and the amount of percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the difference between the amount of base rent payments that the Company receives with respect to the applicable period and the amount of straight-line base rent recognized under GAAP, (d) adding back the one-time reorganization expenses related to the Company’s IPO and related reorganization transactions, and (e) adjusting for other income (expense), net.
The following table sets forth a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA:
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
(In thousands)	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Net income (loss)	 	$	8,843	 	 	$	5,513	 	 	$	(27,030	)	 	$	10,505	 	
Interest expense, net	 	 	6,939	 	 	 	7,984	 	 	 	14,361	 	 	 	15,665	 	
Income tax expense	 	 	124	 	 	 	250	 	 	 	332	 	 	 	408	 	
Depreciation	 	 	9,671	 	 	 	8,366	 	 	 	19,179	 	 	 	16,827	 	
EBITDA	 	 	25,577	 	 	 	22,113	 	 	 	6,842	 	 	 	43,405	 	
Non-cash reorganization structuring fee	 	 	—	 	 	 	—	 	 	 	44,897	 	 	 	—	 	
Percentage rent adjustment (1)	 	 	6,095	 	 	 	6,729	 	 	 	12,559	 	 	 	13,056	 	
Base rent adjustment (2)	 	 	3,068	 	 	 	3,548	 	 	 	5,131	 	 	 	3,984	 	
Reorganization expenses	 	 	—	 	 	 	—	 	 	 	333	 	 	 	—	 	
Other income, net (3)	 	 	(847	)	 	 	(172	)	 	 	(1,473	)	 	 	(39	)	
Adjusted EBITDA	 	$	33,893	 	 	$	32,218	 	 	$	68,289	 	 	$	60,406	 	
 
1)	See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD	
2)	See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD	
3)	See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD	
10

 
  
Schedule 3
InfraREIT, Inc.
Explanation and Reconciliation of FFO and AFFO
FFO and AFFO
The National Association of Real Estate Investment Trusts (NAREIT) defines FFO as net income (computed in accordance with GAAP), excluding gains and losses from sales of property (net) and impairments of depreciated real estate, plus real estate depreciation and amortization (excluding amortization of deferred financing costs) and after adjustments for unconsolidated partnerships and joint ventures. Applying the NAREIT definition to the Company’s consolidated financial statements, which is the basis for the FFO presented in the press release and the reconciliation below, results in FFO representing net (loss) income before depreciation, impairment of assets and gain (loss) on sale of assets. FFO does not represent cash generated from operations as defined by GAAP and it is not indicative of cash available to fund all cash needs, including distributions.
AFFO is defined as FFO adjusted in a manner the Company believes is appropriate to show its core operational performance, including: (a) adding back the non-cash reorganization structuring fee, (b) an adjustment for the difference between the amount of percentage rent payments that the Company expects to receive with respect to the applicable period and the amount of percentage rent the Company recognizes under GAAP during the period, (c) an adjustment for the difference between the amount of base rent payments that the Company receives with respect to the applicable period and the amount of straight-line base rent recognized under GAAP, (d) adding back the one-time reorganization expenses related to the Company’s IPO and related reorganization transactions, and (e) adjusting for other income (expense), net.
The following table sets forth a reconciliation of net income (loss) to FFO and AFFO:
 
 	 	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
(In thousands)	 	2015	 	 	2014	 	 	2015	 	 	2014	 	
Net income (loss)	 	$	8,843	 	 	$	5,513	 	 	$	(27,030	)	 	$	10,505	 	
Depreciation	 	 	9,671	 	 	 	8,366	 	 	 	19,179	 	 	 	16,827	 	
FFO	 	 	18,514	 	 	 	13,879	 	 	 	(7,851	)	 	 	27,332	 	
Non-cash reorganization structuring fee	 	 	—	 	 	 	—	 	 	 	44,897	 	 	 	—	 	
Percentage rent adjustment (1)	 	 	6,095	 	 	 	6,729	 	 	 	12,559	 	 	 	13,056	 	
Base rent adjustment (2)	 	 	3,068	 	 	 	3,548	 	 	 	5,131	 	 	 	3,984	 	
Reorganization expenses	 	 	—	 	 	 	—	 	 	 	333	 	 	 	—	 	
Other income, net (3)	 	 	(847	)	 	 	(172	)	 	 	(1,473	)	 	 	(39	)	
AFFO	 	$	26,830	 	 	$	23,984	 	 	$	53,596	 	 	$	44,333	 	
 
1)	See footnote (1) on Schedule 1 on Explanation and Reconciliation of CAD	
2)	See footnote (2) on Schedule 1 on Explanation and Reconciliation of CAD	
3)	See footnote (3) on Schedule 1 on Explanation and Reconciliation of CAD	
 For additional information, contact:
		
For Investors:	Brook Wootton	
 	Director, Investor Relations	
 	InfraREIT, Inc.	
 	214-855-6748	
For Media:	Jeanne Phillips	
 	Senior Vice President, Corporate Affairs & International Relations	
 	Hunt Consolidated, Inc.	
 	214-978-8534	
 
# # #
 
11