have been with atlas since 15 bucks a share....they screwed up the coal deal which cost us money and now it appears the new aquisitions aren't paying either. div was .63 but eps is down to .47 this quarter and thats when fees are at an all time high.....how long can they sustain the div? am i missing something here?? would like to hear from others on this subject.
Here are 2 paragraphs from the 2003 10-K that I have found useful in thinking through this question of distributions relative to cash flow and earnings for APL. It works for me to follow the language here and to think of various 'reserves' (see below) that are replenished with cash flow before any distributions are made. I like to keep in mind that depreciation expenses are non-cash charges that do not impact cash flow.
In general, I think LPs are a little more tricky than straight stock or straight bonds. They may not offer as much appreciation potential as straight stock, and their distributions may not be as secure as straight bond interest payments.
Has anybody heard anything relating to the SEMCO deal coming to a halt?
From 2003 10-K for APL:
'Our parntership agreement requires that we distribute 100% of available cash to our partners within 45 days following the end of each calendar quarter in accordance with their respective percentage interests. Available cash consists generally of all of our cash receipts, less cash disbursements and net additions to reserves, including any reserves required under debt instruments for future principal and interest payments.'
'Our general partner is granted discretion by our partnership agreement to establish, maintain and adjust reserves for future operating expenses, debt service, maintenance capital expenditures, rate refunds and distributions for the next four quarters. These reserves are not restricted by magnitude, but only by the type of future cash requirements with which they can be associated. When our general partner determines our quarterly distributions, it considers current and expected reserve needs along with current and expected cash flows to identify the appropriate sustainable distribution level.'
Its simply the truth, I think all of these newbies that are trying to rate MLP's based on EPS ought to do some investigation and look at these MLPs: APL, BPL, EEP, EPD, ETP, GEL, GTM, KSL, KPP,KMP, MMLP, MMP, MWE, NBP, PAA, PPX, SXL, TCLP, TPP, VLI, XTEX. Most of them have distributions exceeding "EPS" but does this mean the distribution is in danger of being cut? No, in fact, many of these MLP's have raised their distributions...its all based on cash flow. The differences often arise in the diffence in the the real life of an asset and the depreciable life span......
I expect APL to increase the distribution by a pretty good chunk, maybe .12
With MLP's, eps is very misleading. Its the distributable cash flow after capex and maintenance and debt servicing that matters. Distribution will indeed be raised. EPS are hit hard when they do a unit offering and they haven't operated the assets long enough for the earnings to cover the new units...basically a timing issue. Like paying for an asset on December 1 but only getting 1 months earnings from Dec 1 to Dec 31.....