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Why Is TC PipeLines, LP (TCP) Up 8.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for TC PipeLines, LP . Shares have added about 8.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is TC PipeLines, LP due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

TC PipeLines’ Earnings and Revenues Decline Y/Y in Q1

TC PipeLines witnessed disappointing earnings in first-quarter 2020. The firm reported earnings of $1.21 a unit, down 5.46% from $1.28 in the year-ago quarter due to a drop in PNGTS' net income, mainly resulting from lower revenues.

Also, quarterly transmission revenues of $101 million compared unfavorably with $113 million recorded in first-quarter 2019.

Distribution & Cash Flow

TC PipeLines announced first-quarter cash distribution of 65 cents per unit, in line with the year-ago figure. Notably, this marks the 84thquarterly distribution by the partnership.

The firm's distributable cash flow (DCF) decreased to $88 million in the quarter under review from $116 million in the year-ago period due to reduced net cash flow from operations at the company’s consolidated subsidiaries, thanks to soft revenues. However, the coverage ratio for the first quarter came in at impressive 1.9 times. A coverage ratio in excess of 1 implies that the partnership is generating more than enough cash in the given period to cover its distribution.

In the reported quarter, TC PipeLines distributed $55 million in cash, lower than the year-ago level.

Pipeline Systems' Performance

Great Lakes:  Earnings of $20 million generated from equity investment matched the prior-year quarter’s figure.

Northern Border Pipeline: Equity earnings totaled $22 million, marginally higher than the prior-year level.

Iroquois: Equity earnings amounted to $13 million, flat with the prior-year figure.


Operation and maintenance expenses were $16 million in the quarter, unchanged from the year-ago number. General/administrative expenses summed $1 million, slightly lower than the year-ago number. Property taxes declined to $6 million from $7million a year ago. Depreciation costs came in at $20 million, same as the year-ago level. Financial and other charges also fell to $19 million from $22 million in the corresponding period of 2019.

Balance Sheet

As of Mar 31, TC PipeLines’ cash and cash equivalents were worth $134 million. The partnership had a long-term debt of $1.9 billion, representing total debt to total capital of 70.8%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

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