Good day, and thank you for joining us. Welcome to the Brookfield Infrastructure Partners Q4 Results Conference Call for 2022. It is now my pleasure to introduce Chief Financial Officer, David Krant.

Thank you, Andrew, and good morning, everyone. Welcome to Brookfield Infrastructure Partners' Fourth Quarter 2022 Earnings Conference Call. As introduced, my name is David Krant, and I'm the Chief Financial Officer of Brookfield Infrastructure Partners. I'm also joined today by our Chief Executive Officer, Sam Pollock. I'll begin with the discussion of our fourth quarter financial and operating results, as well as touch on our balance sheet strength and robust liquidity position. I'll then turn the call over to Sam, who will reiterate the merits of owning infrastructure investments throughout market cycles and provide an outlook for the year ahead. Following our commentary, we will be joined by Ben Vaughan, our Chief Operating Officer, for a question-and-answer period. At this time, I would like to remind you that in our remarks today, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. For further information on known risk factors, I would encourage you to review our annual report on Form 20-F, which is available on our website. With that, I'll now move on to a discussion of our record results. 2022 was another successful year for Brookfield Infrastructure. The essential nature of our assets showcased their attractiveness by continuing to generate predictable and growing cash flows. Funds from operations, or FFO, for the year was $2.71 per unit, representing a 12% increase over the prior year. We ended 2022 with our highest quarterly FFO to date of $0.72 per unit, which exceeded the prior year by 11% and resulted in a payout ratio for the fourth quarter of 64%. We're entering the new year in a solid position to expand the company organically and through acquisitions, driven by the significant momentum in a number of our operating businesses. This momentum is further supported by our long-term debt maturity profile and significant liquidity. Taking into account the strong results for the year and a favorable outlook for the business, the Board of Directors has proposed a quarterly distribution increase of 6% to $1.53 per unit on an annualized basis. This marks the 14th consecutive year of distribution increases. I'll now go through the key drivers behind our strong financial and operating results for the year. FFO totaled $2.1 billion, reflecting a 20% increase compared to 2021. Results benefited from organic growth for the year of 10%, capturing elevated inflation in the countries where we operate and volume growth across the majority of our critical infrastructure networks. During the year, we commissioned over $1 billion of new capital projects that are now contributing to earnings, as well as deployed a further $1 billion into new acquisitions that favorably impacted results. Starting with the Utility segment, we generated FFO of $739 million, an increase of 5% over the prior year. This growth reflects an average inflation indexation of 8% that positively impacted almost our entire asset base and the contribution associated with $485 million of capital commissioned into our rate base. Results also improved from the contribution of 2 Australian utility acquisitions completed in the first half of the year. Partially offsetting these results were the impact of higher borrowing costs at our Brazilian utilities, as well as the sale of our North American district energy platform completed during 2021. Our U.K. regulated distribution operation recorded another strong quarter of sales activity, ending the year with a total of 339,000 connection sales and a record order book of 1.5 million connections. This was the company's best year of sales and was 5% higher than our record set last year. Performance was solid across all utility offerings with notable outperformance in the sale of water connections, which increased by over 40% relative to the prior year. In Australia, our regulated utility business recently secured an agreement to build greenfield electrical infrastructure to support a blue-chip customer's construction of 3 new hyperscale data centers. The project will help connect new utility-scale renewable power generation and highlights the attractiveness of building greenfield utility infrastructure to support Australia's transition to net zero. We're continuing to grow our global residential infrastructure platform that has a presence in 5 countries and offers a range of heating, cooling and energy storage solutions. Most notably, in Australia, our smart metering business signed a contract with one of the largest energy retailers to deploy up to 1 million smart meters over the next 10 years. This opportunity will require total capital expenditures of over AUD 600 million and is additive to the contracted growth profile we acquired with the business. Across the residential platform, we continue to see exciting opportunities to launch new product offerings and help provide homeowners with decarbonization solutions, a trend that will be further accelerated with the integration of the recently completed acquisition of HomeServe. Moving to our Transport segment. FFO was $794 million, an increase of 13% compared to the prior year. Results primarily benefited from inflationary tariff increases across all our businesses. Higher volumes supported by strong economic activity surrounding our networks and the commissioning of approximately $400 million in capital expansion projects during the year. Our rail networks realized an average annual rate increase of 6% and benefited from strong demand for bulk goods and commodities that underpin the global economy. Our global toll road portfolio, annual traffic levels and tariffs increased 4% and 10%, respectively, compared to the prior year. And finally, at our diversified terminals operations, rates have been strong, and volumes for the year were up 8% compared to the prior year. This was driven primarily by robust demand for U.S. LNG export through our terminal as well as the commissioning of the fixed liquefaction train earlier in the year. Within our Midstream segment, FFO for the year was $743 million compared to $492 million in the prior year. This step change is primarily a result of the acquisition of Inter Pipeline that we completed in the second half of last year. Results were further aided by elevated commodity prices, which led to increased utilization and higher market-sensitive revenues across our base businesses. Our North American Gas Storage business had its best fourth quarter on record as we captured the benefit of higher natural gas prices along the U.S. West Coast, stemming from curtailed gas supply and volatile winter weather conditions. The reliable energy supply provided by our gas storage infrastructure is playing a critical role in the shift toward intermittent energy sources that need to be matched to elevated demand usage during periods of extreme temperatures. At Inter Pipeline, the conventional system saw a 6% increase in volumes compared to the fourth quarter of last year, reaching record levels since 2018. We continue to progress the ramp-up of the Heartland Petrochemical Complex as the PDH unit achieved initial production of polymer-grade propylene, leveraging our experience of large start-up activities. Production of propylene will increase in a staged manner over the coming months. We expect to reliably achieve high levels of integrated polypropylene production by mid-2023, with full run rate contribution to financial results by the second half of this year. Finally, our Data segment generated FFO of $239 million, which was consistent with the prior year. Our underlying data businesses performed well as they continue to benefit from increasing customer utilization and network densification requirements. This year's growth was driven by additional points of presence and inflationary tariff escalators across our portfolio. These positive effects were partially offset by the impact of foreign exchange on our euro and Indian rupee-denominated cash flows. In November, our U.K. wireless infrastructure operator completed the purchase of a portfolio of approximately 1,100 towers from a strategic investor who sold as part of competition approval requirements. The transaction required approximately $70 million of equity, of which BIP funded $20 million. The acquisition is expected to increase EBITDA by over 30% and will double the existing tower portfolio in the U.K. to solidify our position as the largest pure-play tower company in the region. This excellent operational finish to the year combined with the strength of our financial position gives us optimism as we enter 2023. Our corporate balance sheet remains well capitalized as reflected in our investment-grade credit profile. During the quarter, we further derisked our maturity profile by raising $700 million in the Canadian debt capital markets. The issuance had an average term of 7 years and proceeds were used to refinance existing debt. With respect to our asset-level nonrecourse borrowings, we proactively refinanced several near-term debt maturities. This includes refinancing that Inter Pipeline and our U.K. port operation. We also completed the initial debt funding associated with the U.S. Semiconductor joint venture. As a result, less than 2% of our borrowing base is maturing over the next 12 months. This, combined with the largely fixed-rate balance sheet that has an average term to maturity of 7 years, provides us with tremendous financial flexibility. Finally, we ended the year with corporate liquidity of $3.4 billion. During the fourth quarter, we completed the sale of 2 previously announced transactions as part of our capital recycling program. With the closing of the telecom tower portfolio in New Zealand and the first tranche of our recently constructed electricity transmission lines in Brazil, we raised nearly $400 million net to BIP. Our liquidity position will be further enhanced by the proceeds from the sale of our Indian toll road portfolio and our 50%-owned freehold landlord in Victoria, Australia. After the previous sales did not receive regulatory approval, we signed a binding agreement to sell the port to a reconstituted consortium for AUD 1.2 billion, which was a 30x EBITDA multiple. Closing of these transactions is anticipated to occur in the first half of 2023, with net proceeds to BIP of approximately $260 million. Finally, we are progressing several advanced-stage sale processes and we recently launched the next round of asset sales that we expect will garner significant interest considering the current economic environment. Together, these processes should generate over $2 billion of net proceeds for the partnership this year. I'd like to thank you all for your time this morning, and I'll now turn the call over to Sam.

Thank you, David, and good morning, everyone. I'm going to begin my comments today with a few words on why infrastructure assets are an attractive choice for investors during this economic environment. And I'll follow that with a summary of our strategic initiatives and conclude with an outlook for our business. This past year, the global macroeconomic environment was characterized by elevated levels of inflation and corresponding interest rate increases that created market uncertainty and volatility. Although inflation appears to be cresting in most countries, it is possible that certain structural dynamics prove hard to abate such as the effect of deglobalization, energy security, and a tight skilled labor supply. This may result in continued near-term market volatility and downward pressure on corporate earnings with cyclical exposure. Investments in infrastructure assets, such as utilities, pipelines, ports, and telecom towers are essential for the function of the economy and society. While not agnostic to the macro environment, they typically perform well through all parts of the market cycle and notably outperformed during economic troughs. This ability to generate steady long-term returns is driven by several key characteristics. Now first, their highly contracted or regulated revenue is generally long duration, and therefore, provide sustainable cash flow predictability. Second is their embedded inflation indexation, which expands our lease maintaining margins during periods of elevated inflation. And third is their ability to grow during all economic cycles due to their essential nature and role in promoting economic growth. Combined, these attributes make the asset class an appealing investment choice in all market conditions. Now there are many views on what lies ahead for the economy. The optimist or glass-half-full market participant could argue that inflation has peaked and will come back within the target rates by the end of the year, implying that fiscal policy today has been effective where you could be in the skeptic or glass-half-empty investor camp, which might be the view that a tight labor market and continued wage pressures will make inflation tougher to abate in 2023 and that central banks will continue to raise interest rates higher than currently projected. Now we lean towards a more optimistic view of the year ahead, but we expect market volatility to persist until the direction of interest rates is more settled. More importantly, Brookfield Infrastructure has a highly contracted inflation-protected and well-financed infrastructure setup that should perform well in either scenario. In terms of our strategic initiatives, we had a successful year for capital deployment that builds upon 2021's record deployment. Over this 2-year period, we invested over $5 billion into new assets. During 2022, we secured $2.9 billion of investments that are now closed and will begin contributing to results right away. We also entered into a partnership to construct a state-of-the-art semiconductor foundry in the U.S. This innovative transaction has added approximately $4 billion to our capital backlog and pioneered a new investment structure to deploy our large-scale and flexible capital. With the recent closings of HomeServe and DFMG, which are part of that $2.9 billion, and the ramp-up of the Heartland facility over the next several quarters and elevated inflation levels, visibility into our cash flow growth has rarely been stronger. This growth should be sustainable over the longer term, given our large capital backlog of organic projects and our proven ability to grow the business through accretive new investments. Favorable sector trends, which have been the catalyst for our recent acquisition activity, continue to support our investment pipeline. In addition to evaluating several corporate carve-outs, a large component of our deal pipeline is comprised of public to private opportunities. As we stated in the past, the infrastructure supercycle is creating long-term investment opportunities that will require trillions of dollars. This is generating large-scale opportunities for well-capitalized players that can invest in growing operating platforms or be a partner of choice for government or corporate entities that have less access to the capital markets. That concludes my remarks for today, and I'll now pass it back to the operator to open the line for questions.

And our first question comes from Cherilyn Radbourne with TD Securities.

I wanted to start with a question on the M&A pipeline. In terms of the corporate carve-outs and take-private opportunities currently in that pipeline, maybe you could give us a bit of color on those life sectors and by geography and comment on whether the year-to-date market rally has made any of the take-private less attractive? And if you were able to establish tollhold positions at lower prices?

Cherilyn, I'll take that question. So as you can appreciate, I'll probably be somewhat vague in my answer to those questions. But what I can say is that there are situations where we've taken modest tollholds. So I can confirm that. That is part of our strategy to mitigate costs and to give ourselves a competitive advantage. But as far as the balance between the two, I'd say it's equally balanced. There are a number of companies, strategics, who don't have the same access to the capital markets or have seen their share prices drop. And as a result, in order to raise capital to continue to grow their businesses, they are looking to private investors to either buy whole businesses or to invest on a partnership basis on certain elements of their business. So that is definitely a source of opportunities for us. Similarly, despite the market rally, which you mentioned that took place in January, the market rally wasn't even across all companies or sectors. And so there still remains a number of situations which we think remain priced at an interesting level. There's still a discrepancy between where those valuations lie and where we think they would sit from a private market perspective. So we continue to progress those situations. As far as sectors and geographies, they're fairly well balanced between North America and Europe, I'd say. That's where the largest percentage lies. And sector-wise, I think we have opportunities across all the sectors that we pursue, so it isn't really concentrated per se in one sector.

That's very helpful. And then David, this one is probably for you. On the record CapEx backlog, which is always nice to see. Maybe you can help us better understand the duration of the backlog? And how much of it relates to the Intel partnership where it appears that you've already deployed about 1/3 of the expected outlay?

Hey Cherilyn, I'm happy to answer that for you. So in terms of our backlog, you highlighted, obviously, Intel was the big contribution or addition to it in the fourth quarter. And that's a $14 billion capital project. So our share of that CapEx would be about $3.7 billion, $3.6 billion, $3.7 billion that we've added to our backlog in Q4, Cherilyn. So that's on a net to BIP basis. The spend to date figure that we referenced in our materials of $1.1 billion, that's at a 100%. So our share of that is roughly $250 million. So we're not near the same completion percentage that you may have inferred. We're probably closer to somewhere in the 5% to 10% completion on construction. So it's still pretty early days on that construction project. It's likely to span several years. So our backlog still remains over that next 3-year period that we plan on completing and commissioning. I'd say that's the biggest large-scale project we have in the backlog. The rest are smaller type rollout additions like we had at the U.K. at EnerCare, some of the installations. So much smaller, shorter duration projects that we replenish quarterly with new sales as well. So that's kind of a bit of color around the composition as well.

I see. Okay. So you've invested $250 million to date at BIP share. And over the next 3 years, it's $500 million, which is where I was sort of getting the 1/3 figure, but that's kind of the near- to medium-term outlook for it.

Yes. And just for the one the $500 million is the equity component. Of the $3.5 billion. So there will be additional capital, obviously.

One moment, please. And our next question comes from the line of Robert Qwan with RBC Capital Markets.

Just wondering, as you think about funding, and so you've got the self-funded kind of strategy around the organic plan. But in terms of highlighting the $2 billion of potential asset sales for this year, how does that size up versus what you're seeing on the acquisition front? And I guess the other avenue of financing, when you look at the deals in front of you, is there a reasonable opportunity to use a share exchange as a viable financing product...

Robert, it's Samuel. I'll take that one. So we get this question a lot about how we size the amount of capital that we look to recycle during the year. And I would say a lot of it has to do with just the natural maturity of our investments. We typically look to buy businesses, grow and derisk them over a 7- to 10-year time frame. And then at that point in time, look to monetize them and start the process all over again. We're at a stage in our evolution now that we've been growing the business for 15 years, where we have a steady stream of businesses. And on average, we have businesses that would generate every year for us, probably forever now, $2 billion to $3 billion annually of proceeds from sale. And so it's a rough guesstimate, $2 billion is probably at the bottom end of that number. It could be higher. And so we just bring to market the ones we think are the most derisked would generate the proper value and obviously take into account what the market is looking for the most. So we do do a bit of a high grading for whatever we think is appropriate. So there's a lot of thought that goes into that. But we feel really good about the assets we bring that we'll get good value. As far as your question about other levers that we have available, that is something that we take a lot of pride in. I think what makes us unique is the fact that we are able to invest alongside lots of institutional investors, which gives us a lot more firepower. We do have the ability to use shares in transactions like we did with IPL, and we've proven that those are well received and people, particularly in the Canadian market who know us well, in fact, seek them out. And then we have other levers that we can pull on just being part of the Brookfield complex. So long story short, depending on the amount of transactions in front of us and depending on if there's a really large transaction that we want to execute, we will look at all these different components and draw on them as needed to get a transaction done. So there's no one right answer, but we have the whole collection of alternatives in front of us and using shares definitely is something that if we think the shareholders want to stay invested, we have the currency to do that with them.

Got it. Appreciate that color. If I can just finish just on some color from you on the rationale for where you decided to increase the distribution, 6% there. Organic growth in '22, as you know, it was 10%, and then FFO was even higher. And then you had the Investor Day with the forecast for 12% to 15% asset growth and unit growth into 2023. So just what was some of the reasons for selecting that 6% kind of below the growth rate of those 2 other numbers...

We had a productive discussion at the Board meeting, and we are fortunate to be operating from a position of strength with ample liquidity and a positive outlook for FFO, along with a solid year behind us. Additionally, we are considering the capital we are reinvesting into the business for growth. After evaluating our business, the capital backlog, and the potential for smaller acquisitions, we decided it was prudent to retain some capital for these purposes rather than increase the distribution as much as we possibly could. It's a matter of balancing various capital allocation decisions; while there isn’t a definitive answer, we believe that a 6 percent increase remains attractive in this market and would be well received.

And our next question comes from the line of Frederic Bastien with Raymond James...

Could you provide more details about the recent agreement regarding the electrical infrastructure you secured in Australia? I found that quite intriguing. You mentioned that the greenfield project would support some hyperscale clients. Can you elaborate on that and discuss how those data centers will be allocated?

Yes. Regarding the contract in Australia, this represents a victory for deploying smart meters there. I initially misunderstood; we were actually discussing the rollout of smart meter centers. The AZNet contract we mentioned this quarter involves a large hyperscaler that wanted to construct a substantial asset within our area, and they approached us to create the transmission access for that. This arrangement with these clients is quite favorable for us, as it poses minimal risk. Essentially, the counterparty takes on the project's cost risk, and we follow a stage-gate process for construction. Our contract guarantees a full return on and return of our capital, resembling a rate-regulated rate base setup despite being a bilateral agreement. This is a highly appealing project, and the counterparty engaged us with this framework because they needed timely completion. We anticipate this to be one of many similar projects in the future, supporting large loads like this hyperscaler, as well as facilitating renewable energy efforts in the region.

Okay, that’s helpful, thank you. I apologize if my question wasn’t clear. Moving on to Europe, I’m curious if you are seeing any opportunities to expand your tower portfolio into other European countries or if you’re currently busy with the transactions you just completed in Germany and the smaller one in the U.K.

I’ll address that. There are two ways we can expand our portfolio: entering new countries or making acquisitions within existing ones. Recently, we expanded our U.K. tower business significantly. In France, due to its size, we are likely more focused on organic growth than inorganic growth. Similarly, in Germany, we have a large presence but are also more inclined toward organic growth. We do operate a business in our Super Core Fund outside of the Scandinavian countries, which gives us some presence there. However, we have limited opportunities for expansion since many other countries have experienced mergers and acquisitions, with businesses becoming more consolidated, like LagVantage and Cellnex. It seems unlikely they would sell. While expansion is not completely out of the question for the future, most of our growth moving forward is expected to come from organic sources.

Our next question comes from the line of Robert Hope with Scotiabank.

I want to circle back on the asset divestitures. Can you maybe just add a little bit of color on what the environment is right now, where we are in these processes? Are we in price discovery? And have we seen any change in the expected valuations of these divestments, just...

Robert, I’ll make a couple of comments. First, we have transactions at all stages of a transaction cycle, with some being more advanced and others in early stages. We are active participants on both the buying and selling sides. I would say our views on market valuations are likely quite accurate. Generally, valuations have been stable and haven't changed significantly over the last year, even with rising interest rates. Some businesses that have been acquired using higher leverage are likely the most affected, as the cost of debt has increased. However, many of our infrastructure assets aren't highly leveraged, so the impact of leverage is more limited. One of the biggest changes in the market over the last year has been the reduction in the number of participants. This change isn't primarily due to infrastructure managers or strategic groups, who still have substantial capital and remain active. We've noticed some pension funds and endowment funds pull back a bit in response to declining equity prices, affecting their portfolio allocations. The denominator effect that people mention was likely more noticeable in the latter half of last year. However, as the new year has begun, we've certainly observed a shift in market tone. Although activity may not have reached the levels we saw at the start of last year, there is definitely more engagement in the market now. What’s different with infrastructure compared to other asset classes is that the credit markets play a significant role for private equity and real estate. While there was a decline in activity in those sectors, infrastructure did not experience the same extent of decline. Infrastructure remains highly attractive, particularly in times of market volatility, making it a desirable area for investment. In summary, valuations are still strong. Different perspectives exist on value, but we find our assessments of asset worth to be very reasonable, with little change. The overall market remains robust and supportive of infrastructure investment.

Thank you for that comprehensive response. Reflecting on your 2022 Investor Day and the forecast for FFO per unit growth of 12% to 15%, considering the current environment and the various challenges and opportunities, what trends are you observing that might influence this outlook? It appears that the commodity-exposed business continues to show significant strength.

Hey Rob, it's David here. I can start and feel free to jump in. During our Investor Day, we had similar insights to our current position in the market. I would say the market hasn't changed much. As you mentioned, the commodity environment remains strong, benefiting not only our midstream businesses but also many of our transportation networks that handle bulk commodities. Therefore, both the transport and midstream sectors are performing well at the beginning of the year, which will positively impact our outlook. Additionally, we have committed to and already deployed $2 billion in new investments in HomeServe and DFMG, which will fully contribute to our results. These are the main tailwinds that are informing us and shaping our guidance. We maintain the same outlook as appropriate.

And our next question comes from the line of Rob Catellier with CIBC.

I'm wondering if you could give some indication of how the markets received the semiconductor joint venture and what other industries might seem most suited to similar structure...

Rob, it's Sam here again. Let me start with the reaction. I think in my many years at Brookfield, I haven't seen as much interest in a single transaction as I have in this one. It was clearly viewed as innovative, the scale was significant, and its connection to a very relevant and critical industry garnered a lot of attention. Various stakeholders, including governments, other sectors, and our competitors' investment banks, are analyzing how they can apply this model to other semiconductor facilities or industries. To put it simply, it's under active study, and I would be surprised if we don't see it replicated multiple times across different sectors. We would certainly aim to pursue that ourselves. In terms of applicability, this approach requires a few key elements: substantial funding, a long-life asset to support, and a reliable counterparty or a robust commercial framework to sustain a low cost of capital, making the transaction appealing for us and for capital usage. This could apply to battery manufacturers and additional semiconductor facilities. Many energy companies are already using this structure, and we can look to transactions in the Middle East involving ADNOC or Saudi Aramco, which utilize similar arrangements for financing. I believe we'll witness much more activity in this area, and given our position in arranging capital from alternative private sources and packaging it for investors, we anticipate being able to pursue many more opportunities.

Okay. That's very helpful. And then just one more here, sort of getting into the weeds on Heartland, but maybe you can elaborate on the process, the start-up process there, how it's tracking versus expectations? And if there's been any need for major rework or component replacements.

Yes, Rob, it's Ben here. I'll take that one. To revisit the commissioning goals we've set for Heartland over time, the first phase was to commission the central utilities hub, which was completed some time ago to ensure we had the power and steam required to operate the plant. The second phase involved achieving full production of the polypropylene section, specifically producing PP pellets, and that has now been successfully completed. The third phase focused on getting the front end of the plant operational, specifically the PGP section where we convert propane to PGP, and that is now running and progressing towards full production. With the completion of phases two and three, we also launched our full sales and marketing function, developing relationships with customers and receiving approval for our products. We currently have over 100 customer relationships and inventory in place to effectively serve those clients, which is also behind us. We are now in the final phase, working on the systematic ramp-up of the fully integrated facility to reach full capacity. As Sam mentioned in his opening remarks, we anticipate this will occur in the upcoming quarters. Regarding surprises, Heartland is a large and complex operation. Given its size, I would say there were no significant surprises. The usual process involved optimizations and some minor initial challenges as we began the plant operations, but nothing substantial in the context of such a start-up.

And our next question comes from the line of Devin Dodge with BMO Capital Markets.

Various points over the last couple of years, you were highlighting opportunities with ocean carriers, either partnering or carving out some assets. Are you still optimistic about opportunities in that sector? It just seems like there could be maybe a bit more motivation from these companies just given the rapid pullback of freight rates.

That's an interesting question. During COVID, charter rates reached all-time highs, allowing shipping companies to earn capital in a time frame that typically would have taken them 10 to 20 years. This shifted their business models significantly, and they became aggressive asset buyers, often without needing much assistance from us. However, that situation has reverted to normal. While many companies remain well-capitalized, our current level of interaction with them is only typical. There are still opportunities for collaboration, but as I've mentioned before, our primary strategy focuses on following capital flows to groups that require funding. At this moment, I wouldn't place these companies in that urgent need category as there are others with greater capital requirements that need our support more. Nonetheless, the landscape can change quickly, and we will keep fostering those relationships.

Okay. That makes sense. And maybe just a modeling question here for David. But hedged currency rates in 2023? Is it much different than what we saw in 2022?

Hey Devin. No, looking into 2023, I think the guidance we provided at Investor Day is 1% to 2% below current levels. So there's nothing significant. If you consider the currencies, we have some challenges with the GBP. So no, we don’t see that as significant.

And our next question comes from the line of Naji Baydoun with Industrial Alliance.

Just wanted to set off on the guidance for 2023. I think in the past, you've talked about a bit of a lag getting inflation adjustments in your tariffs and in your existing businesses to flow through results. Can you maybe give us a bit more detail about what is built into the guidance for this year in terms of the inflationary impacts?

Hey Naji, I can begin with that. This is David. As we mentioned, inflation remains above targeted levels in nearly all the regions where we operate, which will continue to support our business into 2023. We can't precisely predict where that number will settle for the year. However, regarding your point, some of our U.K. and Australian regulated utilities do experience a lag in relation to local inflation levels. In the U.K., for instance, RPI typically lags by 12 months. We're seeing inflation at around 4% for 2022, which should continue to rise as it reflects the previous 12 months, given that current inflation in the area exceeds 10%. These will be some of the sectors where we will consistently see that support, while others, particularly in our transport and data businesses, are usually fixed at a specific time during the year and do not experience much lag. So that's the outlook for inflation as we see it today.

Okay. That's helpful. I wanted to maybe get your thoughts on capital recycling. I think in the past, you've targeted a 2% to 4% investment spread from asset sales to new acquisitions. There have also been periods where you've been able to take advantage of market dislocations and beat that spread or realize a higher spread. Do you see the potential to do that again today? Do you think we're in that market environment again today?

Hey Naji, it's Sam here. That's a tough question to answer. We're always looking for the highest return opportunities that align with our risk tolerance, and it's hard to predict what will come up. In today's environment, we believe we have a solid chance to invest for better value compared to other points in the cycle because there are fewer market participants, especially with some institutional investors currently on the sidelines, which may not last long. For now, this means that entities like us with significant capital are uncommon, and there are a few higher-level transactions we can negotiate directly. So yes, we're trying, but I can't make any guarantees.

No problem. Maybe just a quick final question for Ben. You've been able to achieve a lot of positive things we see a lot of developments with the residential infrastructure business. I'm just wondering if you can give us a bit of color on sort of the key initiatives and the integration plan for HomeServe for this year.

Yes, certainly. On the demand side, we are now regionally focusing our carbonization businesses within residential infrastructure. We have a strong presence in Europe, a dedicated team in the United States, and one now established in Canada. Each region has focused management teams in place. We have several businesses involved, with some generating effective leads and others servicing those leads. Our main strategic priorities are to maximize the servicing of the leads we gather and to ensure we have effective dealer networks for those we cannot service directly. Over time, our goal is to develop a strong base of attractive long-term contracts, converting sales into long-term rentals to build up our rate base. We will work on integrating the diverse operations of several companies over the coming years to achieve this. I hope that provides some clarity.

And our next question comes from the line of Andrew Kuske with Credit Suisse.

I guess the first question is for David. And you mentioned a little bit of what Brookfield has done from a debt market perspective. How do you think about the upcoming maturities and just the functionality of the debt markets? And I ask the question in part because when we look at the term structure and we've seen some higher quality credits place longer-term debt at pretty attractive spreads in the market. But how do you think about the upcoming maturities in this year and then next year?

Yes, I’m happy to provide some insights, Andrew. First and foremost, we believe we are in a strong position for the maturities we have coming up in the next 24 months. The team has been concentrated over the past 12 months on managing these, and we’ve mentioned some of this in our materials throughout the year, particularly in terms of extending maturities to enhance our financial flexibility while interest rates are still high. As Sam pointed out, the infrastructure sector has benefited from the openness of debt capital markets this year, especially in investment-grade markets, which finance over 90% of our businesses. At the asset level, our access to capital has been strong, and we have demonstrated this at the corporate level as well. Overall, we feel very well positioned. Looking at our maturity profile for 2023, we have less than 2% of actual maturities; the rest consist of normal amortization, which we will cover with our operating cash flows. Therefore, we believe 2023 is mostly managed. There are a few maturities in 2024 that we are currently working on. As you mentioned, spreads and activity in the capital markets are quite favorable, and we plan to address those in the first half of this year as needed. We feel confident at these levels, which remain beneficial for our business returns. In summary, we believe we are well positioned.

I appreciate the insight. On the other hand, some may have overshot their targets. Are you observing any notable discrepancies that are particularly interesting to you, whether related to specific markets or industries?

The short answer is that we're focusing on companies that either have balance sheets with insufficient liquidity or face immediate maturities, particularly those with significant capital commitments. While we recognize some distress, it's not comparable to what we experienced during the financial crisis, and the infrastructure sector remains accessible. For some public companies, this situation has presented opportunities, and for others, it has necessitated slowing down or halting growth initiatives to manage their financial health. They view these adjustments as detrimental to their businesses and are eager to revive their growth, which allows us to form unique partnerships or acquire certain assets to help them get back on track. Overall, we're actively seeking opportunities where we can assist in improving financial situations.

Thank you. I will now turn the call back over to CEO, Sam Pollock for any closing remarks.

Thank you, operator, and thank you to everyone who listened to the call and joined us this morning. I hope your new year is off to a great start. Ours has been, and we appreciate your support and look forward to talking to you again next quarter. Thank you.

Ladies and gentlemen, this concludes today's conference call and webcast. Thank you for participating, and you may now disconnect.