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TC PipeLines (TCP) Stock Up 4.6% Following Q3 Earnings Beat

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Shares of TC PipeLines (TCP - Free Report) have gained 4.6% ever since third-quarter 2020 results were reported on Nov 10. Investors are pleased about the firm’s better-than-expected earnings as well as revenues.

TC PipeLines delivered earnings of 90 cents a unit, beating the Zacks Consensus Estimate of 72 cents and also increasing 18.4% from the year-ago quarter’s 76 cents, attributable to higher revenues of PNGTS on the back of its extension projects, and lower operating and maintenance expenses.

Also, quarterly transmission revenues of $99 million surpassed the Zacks Consensus Estimate of $91 million and also improved from $93 million in third-quarter 2019.

Distribution & Cash Flow        

TC PipeLines announced third-quarter cash distribution of 65 cents per unit, in line with the year-ago figure. Notably, this marks the 86th quarterly distribution by the partnership.

The firm's distributable cash flow (DCF) decreased to $36 million in the quarter under review from $78 million in the year-ago period due to weak adjusted EBITDA and higher normal-course maintenance capital expenditures at GTN Xpress. Moreover, the coverage ratio for the third quarter came in at 0.8X. A coverage ratio lower than 1 implies that the partnership is not generating enough cash in any given period (in this case, third quarter) to cover its distribution.

In the reported quarter, TC PipeLines distributed $47 million in cash, same as the year-ago level.

TC PipeLines, LP Price, Consensus and EPS Surprise

TC PipeLines, LP Price, Consensus and EPS Surprise

TC PipeLines, LP price-consensus-eps-surprise-chart | TC PipeLines, LP Quote

Pipeline Systems' Performance

Great Lakes:  Earnings of $10 million generated from equity investment increased 25% from the prior-year quarter’s figure of $8 million.

Northern Border Pipeline: Equity earnings totaled $22 million, up 46.6% from the prior-year level of $15 million.

Iroquois: Equity earnings amounted to $7 million, down 12.5% from the prior-year figure.

Expenses

Operation and maintenance expenses were $16 million in the quarter, lower than the year-ago number of $18 million. General/administrative expenses summed $1 million, lower than the year-ago number of $2 million. Property taxes increased to $7 million from $6 million a year ago. Depreciation costs came in at $29 million, higher than the year-ago level of $19 million. Financial and other charges fell to $17 million from $20 million in the corresponding period of 2019.

Balance Sheet

As of Sep 30, TC PipeLines’ cash and cash equivalents were worth $253 million. The partnership had a long-term debt of $1.76 billion, representing total debt to total capital of 68.7%.

Zacks Rank & Key Picks

TC Pipelines currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are Oasis Petroleum Inc , Antero Resources Corporation (AR - Free Report) and Matador Resources Company (MTDR - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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