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TC Pipelines' (TCP) Q4 Earnings Beat, Sales Up 102% Y/Y

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Bringing in pleasant news for investors, TC PipeLines, LP TCP kept its earnings beat streak alive in the fourth quarter of 2018. The midstream partnership reported fourth-quarter 2018 earnings of $1.06 per unit, surpassing the Zacks Consensus Estimate of 83 cents. Further, the bottom line increased from 77 cents per unit recorded in the year-ago quarter. Higher equity earnings, especially from the Great Lakes, and increased revenues drove the results.

Quarterly transmission revenues of $220 million were 101.8% higher than $109 million recorded in the fourth quarter of 2017. The increase can be attributed to higher contribution from PNGTS, GTS and Bison Pipelines.

Distribution & Cash Flow

TC PipeLines announced fourth-quarter 2018 cash distribution of 65 cents per unit, in line with the prior-quarter figure but lower than the year-ago level of $1.00. The lowered distribution will enable the partnership to strengthen its balance sheet by utilizing the cash to repay debts.

Notably, this marks the 79th consecutive quarterly distribution paid by the partnership. The distribution was paid on Feb 11, 2019 to its unitholders of record as of Feb 1, 2018.

The partnership's total distributable cash flow increased 31.9% year over year to $95 million, primarily driven by higher earnings, along with contribution from PNGTS and Great Lakes pipelines.

In the reported quarter, TC PipeLines distributed $47 million in cash compared with $74 million in the year-ago period.

Pipeline Systems' Performance

Great Lakes: The partnership generated earnings of $14 million from equity investment, higher than the prior-year quarter’s $7 million.

Northern Border Pipeline: Equity earnings at this pipeline totaled $19 million compared with the prior-year level of $17 million.

Iroquois: Equity earnings at this pipeline amounted to $11 million, lower than the prior-year figure of $13 million. TC PipeLines completed the acquisition of 49.3% interest in Iroquois from TransCanada on Jun 1, 2017.


Operation and maintenance expenses were $19 million in the quarter, in line with the year-ago period. General/administrative expenses totaled $2 million compared with the year-ago figure of $3 million. Property taxes and depreciation charges remained unchanged from the year-ago level at $7 million and $24 million, respectively. Financial and other charges in the quarter came in at $23 million, flat with the year-ago period.

Balance Sheet

As of Dec 31, 2018, TC PipeLines had cash and cash equivalents of $33 million. The partnership had a long-term debt of $2,072 million, representing a decline from the year-ago figure of $2,211 million.

Zacks Rank and Stocks to Consider

TC Pipelines currently carries a Zacks Rank #3 (Hold).

Meanwhile, investors interested in the energy space may opt for some better-ranked players that include Repsol SA REPYY, Jones Energy, Inc. JONE and YPF Sociedad Anonima YPF, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Repsol’s 2019 earnings are expected to increase 13.69% on a year-over-year basis.

Jones’ 2019 earnings are expected to grow 18.95% on a year-over-year basis.

YPF Sociedad delivered average positive earnings surprise of 210.38% in the trailing four quarters.

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