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Crestwood's (CEQP) Units Resilient Despite Q1 Earnings Miss

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Crestwood Equity Partners LP’s CEQP units — which witnessed a 3.5% decline after the announcement of weak first-quarter 2021 earnings on Apr 27 — have risen 4.1% since then. Investors are impressed by the revised guidance that it provided after carrying out several strategic transactions during March-end.

The partnership reported first-quarter 2021 adjusted loss per unit of 86 cents versus the Zacks Consensus Estimate of earnings of 37 cents. The bottom line also deteriorated from the year-ago loss of 66 cents per unit.

However, revenues surged to $1,032.7 million from $727.9 million in the prior-year quarter. Moreover, the top line beat the consensus mark of $956 million.

The weak first-quarter earnings were caused by lower gathering, processing and compression volumes. Moreover, decreased COLT Hub rail loading volumes added to the negatives. The negatives were partially offset by increased natural gas liquids (NGL) volumes sold or processed.

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 $119.5 million, up from $39.1 million in the year-ago quarter. Operating and maintenance expenses decreased to $21.4 million from the year-ago level of $27 million.

Total gas gathering volumes for the quarter were 833.4 million cubic feet per day (MMcf/d), down from 1,029.6 MMcf/d a year ago. Gathering volumes declined in Marcellus, Barnett, Delaware and Powder River Basin. Total processing volumes decreased to 357 MMcf/d from the year-ago level of 408.3 MMcf/d. Moreover, compression volumes declined to 278.3 MMcf/d from 377.1 MMcf/d in the year-ago period.

Storage and Transportation: The unit generated operating loss of $99.5 million against profit of $9.2 million in the year-ago quarter. Operating and maintenance expenses decreased to $0.6 million from the year-ago level of $1.4 million.

Interruptible services in the Gulf Coast storage declined to 49.9 MMcf/d from 76.3 MMcf/d in the prior-year quarter. Also, rail loading at the COLT hub declined to 51.5 thousand barrels per day (MBbls/d) from 61 MBbls/d a year ago.

Marketing, Supply and Logistics: It generated EBITDA of $61 million, up from $31.8 million in the year-ago quarter. Operating and maintenance expenses increased to $10.8 million from the year-ago level of $9.2 million.

NGL volumes sold or processed in the first quarter came in at 151.5 MBbls/d, up from 105.8 MBbls/d in the year-ago period.

Expenses

Total operating expenses and others decreased to $112.1 million from $189.9 million in the year-ago period.

Operations and maintenance costs decreased to $32.8 million from $37.6 million a year ago. General and administrative expenses, however, rose to $18.7 million for the March quarter from $14.9 million in first-quarter 2020.

Cash Flow

Distributable cash flow for the first quarter was recorded at $108.4 million, up from $94 million in the year-ago period.

Free cash flow after distributions was recorded at $63.6 million for the March quarter versus an outflow of $28.7 million in the year-ago period.

Balance Sheet

As of Mar 31, 2021, the partnership had $16.3 million in cash, up from $14 million at fourth quarter-end. Total debt of $2,588.4 million at first quarter-end increased from $2,484 million at fourth quarter-end. The partnership has a long-term debt to capitalization of 60.3%.

Guidance

Following several strategic transactions in the first quarter, the partnership revised 2021 adjusted EBITDA expectation to the $575-$625 million range, higher than the previous guidance of $550-$610 million. Net income is now expected within $100-$150 million. Markedly, the partnership now estimates free cash flow after paying distributions within $130-$180 million, higher than the previous projection of $90-$160 million. Furthermore, the board of directors authorized a $175-million common and preferred unit buyback program through Dec 31, 2022.

Zacks Rank & Stocks to Consider

The partnership currently has a Zacks Rank #4 (Sell). Some better-ranked players in the energy space include National Energy Services Reunited Corp. NESR, NOW Inc. DNOW and Hess Corporation HES, each having a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Energy’s bottom line for 2021 is expected to rise 49.2% year over year.

NOW Inc.’s bottom line for 2021 is expected to rise 50.8% year over year.

Hess’ bottom line for 2021 is expected to surge 150.9% year over year.

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Hess Corporation (HES) : Free Stock Analysis Report

NOW Inc. (DNOW) : Free Stock Analysis Report

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

NATIONAL ENERGY (NESR) : Free Stock Analysis Report

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