TCLP Profit Up but Misses Estimate - Analyst Blog
29 7월 2011 - 8:30PM
Zacks
Pipeline operator TC
PipeLines L.P. (TCLP) announced
weaker-than-expected second-quarter 2011 results, reflecting higher
costs. The Calgary, Alberta-based master limited partnership
(“MLP”) – with stakes in 5,560 miles of federally regulated U.S.
interstate natural gas pipelines that cater to domestic and Eastern
Canadian markets – reported earnings per unit (EPU) of 69 cents,
below the Zacks Consensus Estimate of 75 cents.
However, compared to the
year-earlier period, TC PipeLines’ earnings per unit rose 17.0%
(from 59 cents to 69 cents) due to higher equity income from Great
Lakes and Northern Border pipeline systems. Results were also
helped by contributions from the recently acquired 25% interests in
two other major U.S. gas pipelines – Gas Transmission Northwest LLC
and Bison Pipeline LLC – bought from parent TransCanada
Corp. (TRP) in May.
Distribution & Cash
flows
Prior to the earnings release, TC
PipeLines raised its second quarter 2011 cash distribution to 77
cents per unit ($3.08 per unit annualized), representing an
increase of approximately 2.7% sequentially and 5.5% year over
year. The cash distribution is the 49th consecutive quarterly
distribution paid by it. TC PipeLines’ new distribution is payable
on August 12 to unitholders of record as on July 31, 2011.
Total partnership cash flows during
the quarter was up 3.3% from the year-earlier level to $47.7
million, mainly due to the increase in cash distributions from
Northern Border and the Great Lakes, somewhat negated by higher
costs. TC PipeLines paid distributions of $35.4 million during the
quarter, up 2.9% from the year-earlier level, driven by a rise in
the quarterly distribution starting in the third quarter of
2010.
Pipeline Systems
Performance
Great Lakes: The
partnership’s equity income from the Great Lakes increased 29.8%
year-over-year to $17.0 million in the quarter, reflecting
depreciation expense reductions following the settlement with
Federal Energy Regulatory Commission (FERC) in May 2010 as well as
the cumulative impact of a Michigan tax law amendment that
eliminates Michigan business tax at the partnership level.
Northern Border
Pipeline: Equity income from Northern Border Pipeline
(“NBPL”) was up 32.8% year over year from $12.2 million to $16.2
million, primarily due to improved demand for transportation
services.
Other Pipes (Tuscarora
& North Baja): Net income from Tuscarora and North
Baja was up 11.1% year over year to $10.0 million, driven by
healthy cash flows from long term contracts.
Liquidity
As of June 30, 2011, TC PipeLines
had $14.0 million outstanding on the $250.0 million revolver
portion of its senior credit facility and $300.0 million
outstanding under the term loan portion of the senior credit
facility. The partnership recently amended and increased its
revolving credit facility from $250.0 million to $500.0 million,
while extending the tenure to July 2016.
Our
Recommendation
TC PipeLines units currently retain
a Zacks #3 Rank, which translates into a short-term Hold rating. We
are also maintaining our long-term Neutral recommendation on the
stock.
TC PIPELINES (TCLP): Free Stock Analysis Report
TRANSCDA CORP (TRP): Free Stock Analysis Report
Zacks Investment Research
TC Pipelines, LP - Common Units Representing Limited Partnership Interests (MM) (NASDAQ:TCLP)
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