ONEOK Inc. (OKE) reported third-quarter 2014 adjusted earnings of 40 cents per share, surpassing the Zacks Consensus Estimate of 38 cents by 5.3%. Quarterly earnings per share surged 14.3% from 35 cents a year ago, primarily on the back of lower cost of sales and fuel.
Including a non-cash impairment charge of 9 cents per share in the gathering and processing segment at ONEOK Inc.’s subsidiary ONEOK Partners, L.P. (OKS), net income per share in the third quarter stood at 31 cents compared with 30 cents a year ago.
Total Revenue
In the quarter under review, ONEOK Inc.’s total revenues of $3.12 billion fell short of the Zacks Consensus Estimate by 15.9%. On a year-over-year basis, the top line edged down 0.5% primarily due to a decline in commodity sales.
Operating Highlights
In the third quarter, ONEOK Inc. spent $2,583.2 million as cost of sales and fuel, which was 4.7% lower than the prior-year level.
The company’s total operating expenses in the quarter were $247.1 million compared with $192.9 million a year ago. The 28.1% year-over-year rise was driven by higher operations and maintenance, and depreciation and amortization expenses, and general taxes.
Operating income came in at $291.4 million in the third quarter, up 25.9% year over year primarily due to increase in natural gas volumes gathered, processed and sold as well as natural gas liquids (NGL) volumes sold due to the completion of capital-growth projects. In addition, increased margin of NGL volumes delivered from connections with new natural gas processing facilities in the Williston Basin and Mid-Continent regions and a rise in natural gas pipeline transportation revenues also boosted operating income.
In the quarter, the company incurred $86.1 million as interest expense, up 30% year over year.
Financial Condition
As of Sep 30, 2014, ONEOK Inc. had cash and cash equivalents of $151.4 million versus $145.6 million as of Dec 31, 2013.
The company’s long-term debt (excluding current maturities) was $7,195 million as of Sep 30, 2014 compared with $7,753.7 million as of Dec 31, 2013.
In the first nine months of 2014, the company’s cash flow from operating activities was $870.5 million, lower than $1,021.5 million in the year-ago period.
In the third quarter, capital expenditures were $382.2 million versus $537.5 million in the prior-year period.
Guidance
ONEOK Inc. increased its guidance for 2014 net income to $316 million from the previous estimate of $285 million.
ONEOK Inc. lifted the lower end of its guidance for 2014 cash flow available for dividends to the range of $590–$640 million from the previous projection of $560–$640 million. The company also increased its 2014 free cash flow guidance to the range of $120–$140 million from earlier estimate in the range of $100–$130 million.
Other Company Releases
MDU Resources Group Inc. (MDU) reported third-quarter 2014 earnings per share of 44 cents, missing the Zacks Consensus Estimate of 46 cents by 4.35%.
Sempra Energy’s (SRE) third-quarter 2014 earnings per share came in at $1.39, ahead of the Zacks Consensus Estimate of $1.23 by 13%.
Zacks Rank
ONEOK Inc. currently has a Zacks Rank #3 (Hold).
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