PVR Partners Misses 3Q Earnings Est - Analyst Blog


PVR Partners L.P. ( PVR ) reported third-quarter 2013 pro forma earnings per unit of 5 cents, missing the Zacks Consensus Estimate by 3 cents. Quarterly earnings also declined by 4 cents year over year.

The disappointing result was primarily due to higher units outstanding and a rise in interest expenses as well as total expenses.

On a GAAP basis, the partnership's earnings per unit were 18 cents. A 13 cents difference between GAAP and pro forma earnings was due to a combined effect of a derivative gain, cash receipts from derivatives settlement and a gain on sale of assets.

Operational Update

PVR Partners posted revenues of $289.0 million, surpassing the Zacks Consensus Estimate by $14.0 million. The top line also increased by 7.5% year over year.

The improvement in revenues was primarily due to a 93% and 2.1% rise at the partnership's Eastern Midstream and Midcontinent Midstream segments' sales, respectively, on the back of an increase in trunkline and gathering fees. The positives were partially offset by a 26.5% year-over-year drop in Coal and Natural Resource Management segment's revenues due to weak performance from coal royalties and coal services businesses.

The partnership's average daily natural gas throughput volumes increased 80% year over year to 1.8 billion cubic feet per day ("Bcfd").

Total expenses jumped 16.1% year over year to $241.9 million due to a rise in cost of gas purchased, general and administrative expenses and depreciation expenses.

In the quarter under review, the partnership's adjusted earnings before interest, tax, depreciation and amortization ("EBITDA") surged 30.6% year over year to $79.9 million.

Financial Condition

PVR Partners' cash and cash equivalents as of Sep 30, 2013, were $7.9 million, down from $14.7 million as of Dec 31, 2012.

Net cash flow from operating activities in the third quarter was $74.1 million, higher than $66.2 million in the year-ago comparable period.

During the quarter, PVR Partners invested $76.9 million in its internal growth projects for the midstream activities, including an investment of $64.8 million at the Eastern Midstream Segment.

Business Highlights

PVR Partners recently completed a couple of projects, including two new compressor facilities in the Eastern Midstream segment and an added phase of the Lycoming gathering system.

In addition, the partnership entered into an agreement with Hess Corporation ( HES ) to provide trunkline plus gathering and compression services.

During the third quarter, the partnership connected 144 new wells, including 39 wells in the Midcontinent Midstream segment.

Acquisition Update

On Oct 10, 2013, both PVR Partners and Regency Energy Partners LP ( RGP ) approved the deal, where the former will be acquired by Regency Energy for $5.6 billion in first-quarter 2014. The transaction is expected to be a unit-for-unit transaction, with a one-time cash payment to the PVR unitholders.

Other Company Releases

MPLX LP ( MPLX ) is slated to release its third-quarter earnings on Oct 31. The Zacks Consensus Estimate is 31 cents.

Our Take

Despite beating  revenues, PVR Partners' bottom line again missed the Zacks Consensus Estimate like last quarter mainly due to a rise in units outstanding. In the last six months, the partnership issued both common units and senior notes, which will increase its debt level as well as the cost of funding.

We are also concerned about PVR Partners' current cash position. In the last couple of quarters, the cash position is declining continuously. If this trend prevails, then the partnership will face challenge to service debts.

However, we appreciate the partnership's steady effort toward expansion of its growth projects. The partnership currently has a Zacks Rank #4 (Sell).

HESS CORP (HES): Free Stock Analysis Report

MPLX LP (MPLX): Free Stock Analysis Report

PVR PARTNERS LP (PVR): Free Stock Analysis Report

REGENCY ENERGY (RGP): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: HES , MPLX , PVR , RGP



More from Zacks.com:

Related Videos




Most Active by Volume

  • $16.69 ▼ 1.48%
  • $8.29 ▲ 1.10%
  • $5.62 ▲ 0.18%
  • $18.20 ▼ 0.66%
  • $125.69 ▼ 0.25%
  • $17.25 ▼ 3.31%
  • $107.97 ▲ 0.25%
  • $29.90 ▼ 0.47%
As of 7/7/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Data Provided by BankRate.com