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TC PipeLines (TCP) Q1 Earnings Top Estimates, Sales Up Y/Y

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TC PipeLines, LP reported first-quarter 2018 earnings of $1.32 per unit, surpassing the Zacks Consensus Estimate of $1.08. The addition of equity earnings from Iroquois and higher earnings from Great Lakes on the back of lower pipeline integrity costs drove the results. Further, the bottom line witnessed an increase from $1.05 per unit recorded in the year-ago quarter.

Quarterly transmission revenues of $115 were also nominally higher than $112 million recorded in the first quarter of 2017.

TC PipeLines, LP Price, Consensus and EPS Surprise

 

TC PipeLines, LP Price, Consensus and EPS Surprise | TC PipeLines, LP Quote

Distribution & Cash Flow

TC PipeLines announced first-quarter 2018 cash distribution of 65 cents per unit, lower than the year-ago quarter level of 94 cents. The cash distribution also dipped 35% from the prior-quarter figure of $1.00 per unit. The cutback in the distribution seeks to enable the partnership to strengthen its balance sheet by utilizing the cash to repay debts.

Notably, this is the 76th consecutive quarterly distribution paid by the partnership and is payable on May 15, 2018 to its unit holders of record at the close of business on May 9.

The partnership's total distributable cash flow increased more than 21.7% year over year to $112 million, primarily driven by the addition of equity interest in Iroquois.

TC PipeLines distributed $76 million in the reported quarter compared with $68 million in the year-ago quarter.

Pipeline Systems' Performance

Great Lakes: The partnership generated earnings of $24 million from equity investment, higher than the prior-year quarter’s earnings of $17 million.

Northern Border Pipeline: Equity earnings at this pipeline totaled $17 million, lower than the prior-year quarter’s earnings of $19 million.

Iroquois: Equity earnings at this pipeline amounted to $18 million. TC PipeLines completed the acquisition of 49.3% interest in Iroquois from TransCanada Corporation (TRP - Free Report) on Jun 1, 2017.

Expenses

Operation and maintenance expenses increased to $16 million in the quarter compared with $14 million in the prior-year quarter. The general/administrative and property charges came in at $1 million compared with the year-ago figure of $2 million. The property taxes and depreciation charges remained unchanged from the year-ago quarter levels at $7 million and $24 million, respectively. Financial charges in the quarter came in at $23 million, witnessing a year-over-year increase of 35.3%.

Balance Sheet

As of Mar 31, 2018, TC PipeLines had cash and cash equivalents of $68 million. The partnership had long-term debt of $2,332 million, representing a debt-to-capitalization ratio of 67.5%.  

Zacks Rank & Key Picks

TC PipeLines carries a Zacks Rank #3 (Hold).

Some better-ranked players in the same industry include Energy Transfer Equity, L.P. and Enable Midstream Partners, LP , both holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Energy Transfer Equity’s 2018 earnings are expected to witness year-over-year growth of 54.55%.

Enable Midstream topped earnings estimates in each of the trailing four quarters, with an average positive earnings surprise of 15.9%.

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