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Why is Cheniere (CQP) Down 1.6% Since Q1 Earnings Beat?

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Cheniere Energy Partners, L.P.’s (CQP - Free Report) units fell 1.6%, even though the company delivered an earnings beat on May 4. The number of cargoes declined in the first quarter despite the global economy’s recovery in energy demand. This might have concerned investors.

The partnership reported first-quarter 2021 earnings per unit of 64 cents, beating the Zacks Consensus Estimate by a penny. However, the earnings figure declined from 84 cents per unit in the year-ago period.

Revenues of $1,963 million were higher than the year-ago level of $1,718 million but missed the Zacks Consensus Estimate of $2,013 million.

The better-than-expected quarterly earnings were supported by reduced operating and maintenance expenses as well as decreased interest expenses. This was partially offset by lower cargoes sent and total LNG volumes loaded.

Distribution Hike

The partnership increased quarterly cash distribution from 65.50 cents per unit to 66 cents. The distribution hike amid the current market volatility signals its operational strength to investors.

Operations

The partnership sent 89 cargoes in the first quarter, down from 92 in the year-ago period. Total LNG volumes loaded in the quarter was recorded at 317 trillion British thermal units (TBtu), lower than the year-ago level of 327 TBtu.

Adjusted EBITDA for the first quarter was recorded at $779 million, down from the year-ago level of $792 million. Profits decreased for the first quarter due to reduced total margins and increased loss on debt modification. The negatives were partially offset by reduced interest expenses.

Costs and Expenses

Cost of sales for the quarter was $948 million, up from the year-ago period’s $699 million. However, operating and maintenance expenses decreased to $149 million from $152 million in first-quarter 2020.

Total costs and expenses for the quarter were recorded at $1,345 million, significantly up from $1,054 million in the March quarter of 2020. 

Cash Flow

The partnership generated operating net cash flow of $588 million for first-quarter 2021, higher than the year-ago level of $535 million.

Balance Sheet

As of Mar 31, 2021, the partnership had only $1,219 million in cash and cash equivalents, up from $1,210 million at fourth quarter-end. Cheniere Partners had a net long-term debt of $16,732 million, lower than $17,580 million in the fourth quarter. Also, its current debt stands at $850 million. It had a massive debt to capitalization of 96.9%.

Guidance

The partnership reiterated its full-year 2021 guidance for distribution per unit in the range of $2.60-$2.70, indicating an increase from the 2020 figure of $2.59. It expects current distributable cash flow per unit in the range of $3.75-$3.95.

The SPL Project Train 6 was 83% complete at first quarter-end. Full work on the train is now expected to be completed by first-half 2022, ahead of the previous schedule of completion in the second half.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space include National Energy Services Reunited Corp. (NESR - Free Report) , NOW Inc. (DNOW - Free Report) and Hess Corporation (HES - Free Report) , each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Energy’s bottom line for 2021 is expected to rise 49.2% year over year.

NOW Inc.’s bottom line for 2021 is expected to rise 50.8% year over year.

Hess’ bottom line for 2021 is expected to surge 150.9% year over year.

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