Must-know: An investor’s guide to MarkWest Energy Partners (Part 2 of 5)
MarkWest Energy released its earnings report on May 7, 2014. The company reported total revenues of $512 million which didn’t meet the consensus estimate of $543 million. On a year-over-year (or YoY) basis, the revenue increased by 37% from $373 million a year ago. On a sequential basis, the revenue increase by 13%. Earnings per share for the quarter were $0.07 per share which again missed the consensus estimate of $0.24. Earnings per share for the same period last year were $0.12 per share. The adjusted EBITDA for the quarter was $188 million compared to $141 million during the same period last year—an increase of 33%. On a quarter-over-quarter (or QoQ) basis, EBITDA increased by 21% from $155 million.
Despite the decline in revenues, processing volumes for the company increased by 41% on a YoY basis and 10% on a QoQ basis. Results were driven by the Marcellus segment and the Utica segment. Processed volumes in the Marcellus segment exceeded 1.6 billion cubic feet per day during the first quarter, which was an increase of 17% from last quarter and almost 100% from the first quarter of last year. Utica’s processed volumes increased by 50% from last quarter. Total processed volumes increased by 60% compared to the previous year.
The increase in volumes was the primary reason for the EBITDA growth, and also for the growth in the distributable cash flow (or DCF).
Fee-based margins for the quarter were 66%—an increase of 13% over the first quarter of 2013. For the remaining portion of commodity-exposed income, MWE has a hedging program. It is currently hedged at 62% for 2014 and approximately 15% for 2015.
MarkWest Energy generated distributable cash flow of $148.5 million—35.2% higher on a YoY basis and 15% higher than the previous quarter. On April 23, 2014, MarkWest Energy raised its first quarter 2014 cash distribution to $0.87 per common unit. This was an increase of 1.2% sequentially and 4.8% YoY. On an annualized basis, the distribution was $3.48 per unit and represents a coverage ratio of 1.05x for the first quarter. The distribution was paid on May 15.
ETFs that hold MWE include the Alerian MLP ETF (AMLP), the Global X MLP ETF (MLPA), the Alerian Energy Infrastructure ETF (ENFR), and the Global X MLP & Energy Infrastructure ETF (MLPX).
The next part of this series covers the MWE’s segment-wise performance and growth plans for 2014.
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