Following the earnings beat reported by the oil and gas operator, Buckeye Partners, L.P. BPL, its units showed an upward movement of nearly 0.6% in the last trading session. The increase in cash distribution could also have been a driver of positive sentiments.
The partnership reported first-quarter 2015 earnings from continuing operations of 88 cents per unit, exceeding the Zacks Consensus Estimate of 79 cents by 11.4%. On a year-over-year basis, earnings increased by a penny.
Total Revenue
In the quarter under review, Buckeye Partners’ total revenues were $1,088.1 million, way below the Zacks Consensus Estimate of $1,548.2 million by 29.7%. The top line also tanked 45.4% year over year.
Total revenues declined primarily due to a weak contribution from the Merchant Services segment, partially offset by higher contributions from Global Marine Terminals, Development & Logistics and Pipeline and Terminals.
Operational Highlights
In the first quarter, the partnership’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations increased 12.9% year over year to $212.9 million.
Total costs and expenses were $936.3 million, almost half of prior year’s expenses. The partnership managed to cut overall costs primarily due to cost savings at Merchant Services.
The partnership’s operating income increased 7.5% to nearly $151.8 million from $141.3 million a year ago.
Interest and debt expenses during the quarter edged up 1.2% year over year to $41.7 million.
Financial Screening
As of Mar 31, 2015, Buckeye Partners had cash and cash equivalents of $2.2 million, considerably down from $8.2 million as of Dec 31, 2014.
Long-term debt, as of Mar 31, 2015, was $3.5 billion, almost flat with $3.4 billion as of Dec 31, 2014.
During the quarter, total capital expenditures surged 21.9% to $134 million from $109.9 million in the prior year.
Cash Distribution Update
The partnership has announced a first-quarter 2015 cash distribution of $1.15 per limited partner unit, up 4.5% from the prior-year payout of $1.10 and 1.1% higher than the fourth-quarter payout of $1.1375. This will be paid on May 18, 2015, to unitholders of record as of May 11.
Upcoming Peer Releases
Delek Logistics Partners, LP DKL is expected to report first-quarter 2015 results on May 5, 2015. The Zacks Consensus Estimate is at 78 cents per share.
Plains All American Pipeline, L.P. PAA is expected to report first-quarter 2015 results on May 5. The Zacks Consensus Estimate is at 50 cents per share.
Valero Energy Partners LP VLP is expected to report first-quarter 2015 results on May 5. The Zacks Consensus Estimate is pegged at 32 cents per share.
Our View
Buckeye Partners’ quarterly earnings surpassed the Zacks Consensus Estimate and increased year over year. The partnership stayed put in this stormy price environment due to its diverse assets. Strong pipeline and terminal throughput volumes and decent crude oil demand also helped in negating the volatile price effect.
The partnership is on track with a number of organic projects in the New York Harbor, the Caribbean and Gulf Coast. Once completed, these projects will augment distributable cash flow through long-term customer commitments.
However, demand for services that Buckeye provides through its pipeline and terminal & storage operations depends on the demand in the regions it serves. The partnership experienced somewhat subdued demand for distillate volumes on account of reduced drilling activity in the Marcellus and Utica shale plays.
Going forward, Buckeye Partners like other oil and gas players is expected to continue to be affected by declining crude oil prices.
Buckeye Partners currently carries a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment