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TC PipeLines (TCP) Q3 Earnings Beat Estimates, Fall Y/Y

Zacks Equity Research

TC PipeLines TCP delivered better-than-expected earnings in third-quarter 2019. The firm reported earnings of 76 cents a unit, beating the Zacks Consensus Estimate of 59 cents. Continued strong natural gas flows, primarily from the Western Canadian Sedimentary Basin led to this outperformance. However, the bottom line fell from 79 cents per unit in the year-ago quarter due to higher maintenance capital expenditures along with lower contribution from the Great Lakes and Iroquois pipelines.

Also, quarterly transmission revenues of $93 million compared unfavorably with $103 million recorded in third-quarter 2018 amid lower rates of many of its pipelines induced by the 2018 FERC actions.

Distribution & Cash Flow

TC PipeLines announced third-quarter cash distribution of 65 cents per unit, in line with third-quarter 2019 and the year-ago figure. Notably, this marks the 82nd quarterly distribution by the partnership.

The partnership's distributable cash flow decreased to $78 million in the quarter under review from $83 million in the year-ago period due to higher system utilization resulting in higher maintenance and operating expenses.

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

Pipeline Systems' Performance

Great Lakes:  Earnings of $8 million generated from equity investment were lower than the prior-year quarter’s 9 million.

Northern Border Pipeline: Equity earnings totaled $15 million compared with the prior-year level of $16 million.

Iroquois: Equity earnings amounted to $8 million, below the prior-year figure of $9 million.

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


Operation and maintenance expenses were $18 million in the quarter, higher than the year-earlier period’s $15 million. General/administrative expenses totaled $2 million, unchanged from the year-ago number. Property taxes came in at $6 million, lower than the year-ago level of $7 million. Depreciation costs declined to $19 million from $25 million a year ago. Financial and other charges also decreased to $20 million from $23 million in the corresponding period of 2018.

Balance Sheet

As of Sep 30, TC PipeLines’ cash and cash equivalents summed $90 million. The partnership had a long-term debt of $1,871 million, representing a debt-to-capital ratio of 72.04%.

Zacks Rank & Key Picks

TC Pipelines currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the energy space include Phillips 66 PSX, World Fuel Services Corporation INT and PBF Logistics LP PBFX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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