PVR Partners L.P. (PVR) reported fourth-quarter 2013 adjusted earnings of 3 cents per unit, missing the Zacks Consensus Estimate by 70%. The partnership posted break-even result in the year-ago quarter. Improvement in earnings was primarily due to higher top line and an increase in average daily natural gas throughput volumes.
On a GAAP basis, the partnership’s quarterly loss per unit was 16 cents versus a loss of 7 cents a year ago.
Total Revenues
In fourth-quarter 2013, PVR Partners posted total revenues of $0.29 billion, surpassing the Zacks Consensus Estimate by 5.3%. The top line also increased 8.2% year over year primarily due to higher natural gas liquids (“NGL”) sales and increases in gathering and trunkline fees.
For 2013, the partnership’s total operating revenues were $1.1 billion, surpassing the Zacks Consensus Estimate by 1.4%. Reported revenues increased 10.9% from the prior-year figure.
Segment Results
In the fourth quarter of 2013, PVR Partners’ Eastern Midstream and Midcontinent Midstream segments’ sales increased 48.1% and 3.3% year over year, respectively. This was partially offset by a 12.9% year-over-year drop in Coal and Natural Resource Management segment’s revenues.
Operational Update
In the quarter under review, PVR Partners’ total expenses climbed 5.4% year over year to $267.3 million, primarily due to a rise in cost of gas purchased, general and administrative expenses and depreciation expenses.
Quarterly operating income was $24.4 million, up 51.6% from the prior-year figure of $16.1 million.
PVR Partners’ adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) surged 21.5% year over year to $82.4 million.
The partnership’s average daily natural gas throughput volumes increased 42.9% year over year to 2.0 billion cubic feet per day ("Bcfd"), mainly on the back of steady growth at the gathering and trunkline systems and completion of organic projects.
In the quarter, coal royalty volume was 6.1 million tons, down 7.7% year over year primarily due to lower contribution from Central and Northern Appalachia, and Illinois Basin.
Financial Condition
PVR Partners’ cash and cash equivalents as of Dec 31, 2013, were $7.3 million, down from $14.7 million as of Dec 31, 2012 primarily due to payment of debt.
For 2013, the partnership’s net cash flow from operating activities was $203.4 million, higher than $145.3 million in the year-ago comparable period.
Other Company Releases
MPLX LP (MPLX) reported fourth-quarter 2013 operating earnings of 27 cents per common limited partner unit, beating the Zacks Consensus Estimate by 8%.
Our Take
Despite beating the revenue projection, PVR Partners’ bottom line again missed the Zacks Consensus Estimate like last quarter mainly due to a rise in total expenses and units outstanding.
We appreciate PVR Partners’ steady effort towards expansion of its midstream operations. In 2013, the partnership spent $338.4 million, including $286.2 million allotted in the Eastern Midstream division. We believe improvement and expansion of operations will enable the partnership to serve more upstream players.
In addition, PVR Partners steady cash distribution payment record will help to retain investors’ attention on the stock.
PVR Partners currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include DCP Midstream Partners LP (DPM) and American Midstream Partners, LP (AMID), each with a Zacks Rank #2 (Buy).
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