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TC PipeLines (TCP) Q1 Earnings Top, Sales & Profit Down Y/Y

Zacks Equity Research

TC PipeLines, LP TCP has kept earnings beat streak alive in the first quarter of 2019, surpassing estimates for the fifth consecutive quarter. The midstream partnership reported earnings of $1.28 per unit, surpassing the Zacks Consensus Estimate of $1.12. Lower costs and higher earnings from Northern Border and PNGTS pipelines led to the outperformance.

However, the bottom line decreased from $1.32 per unit recorded in the year-ago quarter. Lower equity earnings, especially from the Great Lakes and Iroquois, impacted the results.

Quarterly transmission revenues of $113 million compared unfavorably with $115 million recorded in the first quarter of 2018 amid lower contribution from Bison Pipelines.

TC PipeLines, LP Price, Consensus and EPS Surprise

 

TC PipeLines, LP Price, Consensus and EPS Surprise

TC PipeLines, LP price-consensus-eps-surprise-chart | TC PipeLines, LP Quote

Distribution & Cash Flow

TC PipeLines announced first-quarter 2019 cash distribution of 65 cents per unit, in line with fourth-quarter 2018 and the year-ago figure. Notably, this marks the 80th consecutive quarterly distribution paid by the partnership. The distribution was paid on May 13, 2019 to its unitholders of record as of May 3.

The partnership's distributable cash flow increased to $116 million in the quarter under review from $112 million in the year-ago period, primarily driven by higher contribution from PNGTS and Northern Border pipelines.

In the reported quarter, TC PipeLines distributed $47 million in cash compared with $76 million in the year-ago period.

Pipeline Systems' Performance

Great Lakes: The partnership generated earnings of $20 million from equity investment, lower than the prior-year quarter’s 24 million.

Northern Border Pipeline: Equity earnings at this pipeline totaled $21 million compared with the prior-year level of $17 million.

Iroquois: Equity earnings at this pipeline amounted to $13 million, lower than the prior-year figure of $18 million. TC PipeLines had completed the acquisition of a 49.3% interest in Iroquois from TC Energy TRP on Jun 1, 2017.

Expenses

Operation and maintenance expenses were $16 million in the quarter, in line with the year-ago period. General/administrative expenses totaled $2 million compared with the year-ago figure of $1 million. Property taxes remained unchanged from the year-ago level of $7 million. Depreciation costs declined to $20 million from $24 million in the year ago period. Financial and other charges in the quarter also reduced to $22 million from $23 million in the corresponding period of 2018.

Balance Sheet

As of Mar 31, TC PipeLines had cash and cash equivalents of $52 million. The partnership had a long-term debt of $2,040 million, representing debt-to capital ratio of 75%.

Zacks Rank and Key Picks

TC Pipelines currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, investors interested in the same industry can consider some better-ranked players like Oasis Midstream Partners LP OMP and Enterprise Products Partners L.P. EPD. While Oasis Midstream carries a Zacks Rank #2 (Buy), Enterprise Products flaunts a Zacks Rank #1.

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