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Crestwood (CEQP) Falls 8.1% Since Q2 Earnings Miss Estimates

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Crestwood Equity Partners LP’s CEQP units have declined 8.1% since it reported weaker-than-expected second-quarter results on Jul 27. The firm reduced 2021 adjusted EBITDA expectation, primarily due to the Stagecoach divestiture.

It incurred second-quarter 2021 adjusted loss per unit of 49 cents versus the Zacks Consensus Estimate of earnings of a penny. The bottom line improved from the year-ago adjusted loss of 68 cents per unit.

Total revenues surged to $929.6 million from $352.7 million in the prior-year quarter. However, the top line missed the consensus mark of $1,053 million.

Weaker-than-expected second-quarter results were caused by decreased contribution from storage and transportation as well as marketing, supply and logistics businesses. Also, the Stagecoach divestment played a spoilsport. The negatives were partially offset by higher gas gathering and processing along with decreased operating expenses.

Crestwood Equity Partners LP Price, Consensus and EPS Surprise

Crestwood Equity Partners LP Price, Consensus and EPS Surprise
Crestwood Equity Partners LP Price, Consensus and EPS Surprise

Crestwood Equity Partners LP price-consensus-eps-surprise-chart | Crestwood Equity Partners LP Quote

Segmental Performance

Gathering and Processing: The segment generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $123.5 million, up from $83.6 million in the year-ago quarter. Operating and maintenance expenses decreased to $14.7 million from the year-ago level of $19.3 million.

Total gas gathering volumes for the quarter were 902.2 million cubic feet per day (MMcf/d), up from 888.3 MMcf/d a year ago. Gathering volumes declined in Marcellus and Barnett, while rose in Delaware, Bakken - Arrow and Powder River Basin. Total processing volumes increased to 377.6 MMcf/d from the year-ago level of 304 MMcf/d. Yet, compression volumes declined to 249.1 MMcf/d from 336.6 MMcf/d in the year-ago period.

Storage and Transportation: The unit generated operating loss of $23.6 million against a profit of $14.1 million in the year-ago quarter, primarily due to the Stagecoach divestment. Operating and maintenance expenses increased to $1 million from the year-ago level of $0.7 million.

Firm storage services in the Gulf Coast storage declined to 273.6 MMcf/d from 313.9 MMcf/d in the prior-year quarter. Nevertheless, rail loading at the COLT hub increased to 46.1 thousand barrels per day (MBbls/d) from 40.7 MBbls/d a year ago.

Marketing, Supply and Logistics: It generated a loss of $20.1 million against a $2.3 million profit in the year-ago quarter, primarily due to limited storage opportunities for all products and market backwardation. Operating and maintenance expenses decreased to $10.1 million from the year-ago level of $11.6 million.

NGL volumes sold or processed in the second quarter came in at 114 MBbls/d, up from 59.7 MBbls/d in the year-ago period.

Expenses

Total operating expenses and others decreased to $107.1 million from $125.9 million in the year-ago period.

Operations and maintenance costs decreased to $25.8 million from $31.6 million a year ago. General and administrative expenses declined to $22.8 million for the June quarter from $29.5 million in second-quarter 2020.

Cash Flow

Distributable cash flow for the second quarter was recorded at $85.8 million, up from $74.4 million in the year-ago period.

Free cash flow after distributions was recorded at $40.1 million for the June quarter versus an outflow of $21.5 million in the year-ago period.

Balance Sheet

As of Jun 30, 2021, the partnership had $16.6 million in cash, up from $16.3 million at first quarter-end. Total debt of $2,621.8 million at second quarter-end increased from $2,588.4 million at first quarter-end. The partnership had a long-term debt to capitalization of 62%.

Guidance

The partnership reduced 2021 adjusted EBITDA expectation to the $570-$600 million range from the prior guidance of $575-$625 million, primarily due to the Stagecoach divestiture. Net income is now expected within a loss of $25 million and profit of $5 million. The partnership now estimates free cash flow after paying distributions within $150-$180 million, higher than the previous projection of $130-$180 million.

Furthermore, it expects capital spending related to growth projects of $35-$45 million. Maintenance capital is expected within $20-$25 million. Crestwood anticipates volumes from Bakken, Powder River Basin, Delaware and Barnett to increase in the second half of the year.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #4 (Sell). Some better-ranked stocks from the energy space include Range Resources Corporation RRC, NOW Inc. DNOW and Summit Midstream Partners, LP SMLP, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Range Resources’ earnings for 2021 is pegged at $1.53 per share, indicating a massive improvement from the year-ago loss of 9 cents.

NOW’s profits for 2021 are expected to jump 100% year over year.

Summit Midstream’s bottom line has witnessed two upward estimate revisions and no downward movement in the past 30 days.


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Range Resources Corporation (RRC) : Free Stock Analysis Report

Summit Midstream Partners, LP (SMLP) : Free Stock Analysis Report

Crestwood Equity Partners LP (CEQP) : Free Stock Analysis Report

NOW Inc. (DNOW) : Free Stock Analysis Report

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