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Cheniere (LNG) Q3 Earnings Lag by a Cent, Sales Top, View Up

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Cheniere Energy, Inc. (LNG - Free Report) reported third-quarter 2018 net earnings per share of 26 cents, marginally missing the Zacks Consensus Estimate of 27 cents. The weaker-than-expected results can be attributed to high costs incurred during the quarter. However, the bottom line turned around from the year-ago quarter’s net loss of $1.09 on the back of increased operations from the additional trains in the Sabine Pass project.

The U.S. gas exporter’s quarterly revenues increased 29.6% to $1,819 million from $1,403 million recorded in the year-ago quarter. As such, its adjusted EBITDA rose to $569 million from $442 million in third-quarter 2017. Further, the top line surpassed the Zacks Consensus Estimate of $1,497 million in the quarter under review.

During the quarter, the company shipped 65 cargoes from the Sabine Pass liquefied natural gas terminal in Louisiana, reflecting an increase of 48% from a year ago. Total volumes of LNG exported in the reported quarter were 228 trillion British thermal units (TBtu) compared with 160 TBtu in the year-ago quarter.

Cheniere Energy, Inc. Price, Consensus and EPS Surprise

 

Cheniere Energy, Inc. Price, Consensus and EPS Surprise | Cheniere Energy, Inc. Quote

Costs & Expenses

Overall costs and expenses rose 26% to $1,394 million from the same quarter last year. The increase is mainly attributed to higher cost of sales that jumped to $1,027 million from $824 million in the prior-year quarter, along with a rise in operating and maintenance expenses by 49% year over year to $170 million. Depreciation and amortization expenses also increased from $92 million a year ago to $113 million in the reported quarter.

Balance Sheet

As of Sep 30, 2018, Cheniere had approximately $989 million in cash and cash equivalents. It recorded $27,438 million in net long-term debt compared with the prior-year level of $25,336. The debt-to-capitalization ratio of the company now stands at 93.7%.

2018 Guidance Up, 2019 View Initiated

Cheniere raised its EBITDA guidance for full-year 2018 and provided preliminary guidance for 2019. Adjusted EBITDA is now expected in the band of $2,450-$2,550 million compared with the prior forecast of $2,300-$2,500 million. Distributable cash flow is now projected between $500 million and $600 million vis a vis the previous guided range of $400-$550 million.

For 2019, the company anticipates its adjusted EBITDA within $2,900-$3,200 million, with distributable cash flow expected between $600 million and $800 million.

Progress Report

Sabine Pass Liquefaction Project (SPL): Sabine Pass is North America’s first large-scale liquefied gas export facility. Altogether, Cheniere intends to construct up to six trains at the Sabine Pass, with each train expected to have a capacity of about 4.5 million tons per annum (Mtpa). Notably, expected run-rate LNG production is up from 4.3-4.6 Mtpa per train to 4.4-4.9 Mtpa. While Trains 1, 2, 3 and 4 are functional; Train 5 is currently undergoing commissioning. Train 6 is being commercialized and has secured the necessary regulatory approvals. The company expects the fifth train to come online in the first quarter of 2019.

Corpus Christi Liquefaction Project (CCL): Cheniere’s Corpus Christi LNG project, under which the company intends to develop three trains, is expected to come online in 2019. Each train is expected to have a nominal production capacity of 4.5 Mtpa of LNG. Train 1 is undergoing commissioning, whereas Train 2 and 3 are under construction.

Corpus Christi Expansion Project: Cheniere intends to develop seven midscale liquefaction trains adjacent to the CCL Project. The total production capacity of these trains is expected to be approximately 9.5 Mtpa.

Zacks Rank & Key Picks

Currently, Cheniere carries a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks like Bonanza Creek Energy, Inc. , Hess Corporation (HES - Free Report) and Murphy Oil Corporation (MUR - Free Report) . While Bonanza Creek and Hess currently sport a Zacks Rank #1 (Strong Buy), Murphy Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bonanza Creek delivered average positive earnings surprise of 12.93% in the last four reported quarters.

Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.

Murphy Oil recorded a positive earnings surprise in each of the trailing four quarters, with average beat of 76.16%.

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