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SemGroup (SEMG) Reports In-Line Loss & Revenue Miss in Q3
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SemGroup Corporation’s adjusted loss of 25 cents per share in third-quarter 2019 was in line with the Zacks Consensus Estimate on strong contribution from its Canadian business.
However, the reported loss came in against the year-ago earnings of 5 cents a share on weaker profit from U.S. Gas and Liquids units.
Further, total revenues of $562.4 million missed the Zacks Consensus Estimate of $609 million. The top line also declined from the prior-year sales of $634 million.
Segmental Information
U.S. Liquids: This segment earned a profit of $67.5 million, down 10.6% from the year-ago quarter due to lower White Cliffs volumes and decline in crude marketing margins. In particular, White Cliffs pipeline volumes of 93 thousand barrels per day (Mbbl/d) were notably lower than the year-ago figure of 112 Mbbl/d.
U.S. Gas: Profit of $13.7 million was generated from this segment, lower than the prior-year income $19.8 million on account of reduced total average processing volumes in Oklahoma.
Canada: This unit’s profit in the quarter under review rose to $34.9 million from $20.5 million in the corresponding quarter of last year. The improvement can be driven by higher average gas processing volumes owing to incremental contribution from new plants namely, Patterson Creek and Wapiti.
Balance Sheet & Dividend
As of Sep 30, the company had long-term debt of $2.5 billion. Its debt-to-capitalization ratio was 54.4%.
Earlier this month, SemGroup’s board of directors declared a quarterly cash dividend of 47.25 cents per share to its common shareholders of record on Nov 14, 2019. The amount will be paid out on Nov 21.
SemGroup Corporation Price, Consensus and EPS Surprise
SemGroup recently announced that it has signed a $5.1-billion contract by dint of which it will be acquired by pipeline giant Energy Transfer (ET - Free Report) .
The deal, which includes an estimate of debt and liabilities, comprises $6.8 in cash and 0.7275 units of Energy Transfer for each outstanding share of SemGroup, which also implies 40% cash and 60% equity. The transaction values SemGroup’s shares at $17, accounting for 65% premium to the closing price prior to announcement.
This buyout agreement is expected to unlock significant value for shareholders of the combined entity, generating anticipated annual run-rate synergies of approximately $170 million consisting of $80 million of commercial and operational synergies, $50 million of financial savings and $40 million of Expense savings.
SemGroup is set to organize a special meeting for its shareholders in relation to its proposed merger with Energy Transfer. The meeting, scheduled on Dec 4, will see the stockholders vote in favor or against approving the earlier-announced SemGroup’s takeover deal with Energy Transfer.
Zacks Rank & Key Picks
SemGroup currently carries a Zacks Rank #4 (Sell).
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SemGroup (SEMG) Reports In-Line Loss & Revenue Miss in Q3
SemGroup Corporation’s adjusted loss of 25 cents per share in third-quarter 2019 was in line with the Zacks Consensus Estimate on strong contribution from its Canadian business.
However, the reported loss came in against the year-ago earnings of 5 cents a share on weaker profit from U.S. Gas and Liquids units.
Further, total revenues of $562.4 million missed the Zacks Consensus Estimate of $609 million. The top line also declined from the prior-year sales of $634 million.
Segmental Information
U.S. Liquids: This segment earned a profit of $67.5 million, down 10.6% from the year-ago quarter due to lower White Cliffs volumes and decline in crude marketing margins. In particular, White Cliffs pipeline volumes of 93 thousand barrels per day (Mbbl/d) were notably lower than the year-ago figure of 112 Mbbl/d.
U.S. Gas: Profit of $13.7 million was generated from this segment, lower than the prior-year income $19.8 million on account of reduced total average processing volumes in Oklahoma.
Canada: This unit’s profit in the quarter under review rose to $34.9 million from $20.5 million in the corresponding quarter of last year. The improvement can be driven by higher average gas processing volumes owing to incremental contribution from new plants namely, Patterson Creek and Wapiti.
Balance Sheet & Dividend
As of Sep 30, the company had long-term debt of $2.5 billion. Its debt-to-capitalization ratio was 54.4%.
Earlier this month, SemGroup’s board of directors declared a quarterly cash dividend of 47.25 cents per share to its common shareholders of record on Nov 14, 2019. The amount will be paid out on Nov 21.
SemGroup Corporation Price, Consensus and EPS Surprise
SemGroup Corporation price-consensus-eps-surprise-chart | SemGroup Corporation Quote
Acquisition
SemGroup recently announced that it has signed a $5.1-billion contract by dint of which it will be acquired by pipeline giant Energy Transfer (ET - Free Report) .
The deal, which includes an estimate of debt and liabilities, comprises $6.8 in cash and 0.7275 units of Energy Transfer for each outstanding share of SemGroup, which also implies 40% cash and 60% equity. The transaction values SemGroup’s shares at $17, accounting for 65% premium to the closing price prior to announcement.
This buyout agreement is expected to unlock significant value for shareholders of the combined entity, generating anticipated annual run-rate synergies of approximately $170 million consisting of $80 million of commercial and operational synergies, $50 million of financial savings and $40 million of Expense savings.
SemGroup is set to organize a special meeting for its shareholders in relation to its proposed merger with Energy Transfer. The meeting, scheduled on Dec 4, will see the stockholders vote in favor or against approving the earlier-announced SemGroup’s takeover deal with Energy Transfer.
Zacks Rank & Key Picks
SemGroup currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the energy space are NuStar Energy L.P. (NS - Free Report) and World Fuel Services Corporation , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
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