Buckeye Partners L.P.
) third quarter 2013 operating earnings of 72 cents per unit were
17.2% lower than the year-ago number. Earnings also trailed the
Zacks Consensus Estimate of 82 cents per unit by 12.2%.
The year-over-year decline in earnings was primarily due to an
increase in total costs and expenses. Total outstanding units
also rose year over year thereby diluting earnings per unit.
Buckeye Partners' total revenue at the end of the quarter was
$1,088.8 million, up 12.7% year over year to $965.9 million.
Quarterly revenue also surpassed the Zacks Consensus Estimate of
$1,041.0 million by 4.6%.
Top-line growth continued to be modest and was largely
attributed to higher contribution from Pipeline & Terminal,
Energy Services and International Operations, partially offset by
low returns from the Development & Logistics Energy Service
and Natural Gas Storage divisions.
Pipeline and Terminal
operations increased 1.9% year over year to $198.3 million in the
third quarter. The planned capital expenditure increased the
segment's service capabilities and helped it to deliver another
Operations came out with another impressive performance, posting
revenue of $154.6 million, up a whopping 199.0% from the
corresponding year-ago quarter. This was mainly due to the
successful execution of the Bahamas Oil Refinery Company
International Limited (BORCO) program.
evelopment & Logistics
revenue increased 39.3% year over year to $16.4 million in the
However, the upswing was partially offset by a 26.3% decline
in Buckeye Partners'
Natural Gas Storage
In the third quarter, total costs and expenses increased by
14.1% to $977.4 million from $852.1 million in the year-ago
period. This was due to a 16.6% increase in cost of product sales
and natural gas storage services.
Buckeye Partners' adjusted Earnings Before Interest, Tax,
Depreciation and Amortization (EBITDA) moved up marginally by
0.8% year over year to $153.8 million.
Interest and debt expenses during the quarter were $34.3
million versus $28.7 million reported in the year-ago
Total cash and cash equivalents as of Sep 30, 2013, were $4.9
million versus $6.8 million as of Dec 31, 2012.
Buckeye Partners' long-term debt as of Sep 30, 2013, was $2.67
billion compared with $2.73 billion as of Dec 31, 2012.
The partnership spent $109.1 million on capital expenditure
during the quarter compared with $85.0 million in the prior-year
quarter. Nearly 79.6% of the capital expenditure in the reported
quarter was directed towards developing its Pipeline and
Buckeye Partners' current distribution rate at the end of Sep
30, 2013, stands at $1.075 per unit, which reflects a 3.6%
increase from the third quarter 2012 cash distribution of $1.0375
per unit and 1.2% from $1.0625 per unit paid during the second
quarter of 2013.
Other Earnings Releases
Magellan Midstream Partners LP
) reported third quarter earnings of 54 cents per unit, lagging
the Zacks Consensus Estimate of 58 cents by 6.9%.
El Paso Pipeline Partners
) posted third quarter earnings of 40 cents per unit, falling
behind the Zacks Consensus Estimate of 47 cents by 14.9%.
Buckeye's recent decision to purchase 20 liquid petroleum
product terminals from
) for $850 million is likely to benefit the partnership's
terminal business. The partnership expects this acquisition to be
immediately accretive to earnings on closure by the end of
The expansion work at the BORCO facility has helped the
company to register strong top-line results. In addition,
Buckeye's systematic capital investment will allow it to generate
organic growth and make strategic purchases going forward.
Having said that, the partnership will need to control its
operating costs for the top-line benefits to percolate down to
the bottom line.
Buckeye Partners presently retains a Zacks Rank #3 (Hold).
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