TC PipeLines LP
), announced weaker-than-expected second-quarter earnings. The
results were impacted by a significant increase in general and
administrative expenses along with decreased equity earnings from
The Calgary, Alberta-based master limited partnership (MLP)
reported earnings per unit (EPU) of 40 cents, missing the Zacks
Consensus Estimate of 52 cents. Comparing year over year,
earnings fell 33.3% from a profit of 60 cents.
Distribution & Cash Flows
TC PipeLines announced second-quarter 2013 cash distribution of
81 cents per unit ($3.24 per unit annualized), which has
increased 3.8% from both the previous quarter as well as the
year-ago period. This will be paid on Aug 14, 2013 to unitholders
of record as of Aug 5, 2013.
The total partnership cash flows during the quarter was down
19.2% to $42.0 million as compared to the year-ago period. The
decrease was mainly on account of lower cash distributions from
TC PipeLines' interests in the Northern Border and the Great
TC PipeLines distributed $43.0 million during the quarter, up
2.4% from the year-ago level, driven by a rise in the quarterly
distribution relative to the second quarter of 2012.
Great Lakes' Performance
The partnership had no equity earnings from Great Lakes in this
quarter in comparison with $8.0 million in the year-ago period.
The decline is due to the sale of the capacity of the Great Lakes
at a lower rate compared to the second quarter of the previous
General and administrative Expenses
TC PipeLines reported general and administrative expenses of $4.0
million, representing 100% increase from $2.0 million in the
As of Jun 30, 2013, TC PipeLines had no balance outstanding on
the $500.0 million revolver portion of its senior credit
facility. The partnership has long-term debt (including current
portion) of $376.0 million, representing a debt-to-capitalization
ratio of 18.6%.
The partnership currently retains a Zacks Rank #3 (Hold). This
implies that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
With investments in low-risk energy infrastructure assets, TC
PipeLines has been able to provide stable cash distributions.
PIONEER SW EGY (PSE): Free Stock Analysis
TC PIPELINES (TCP): Free Stock Analysis
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Moreover, TC PipeLines' acquisition of additional 45% interests
in each of the two major U.S. gas pipelines - Gas Transmission
Northwest LLC and Bison Pipeline LLC from parent TransCanada
Corp. - is expected to help TC Pipelines to earn significant
distributable cash flows in the near future.
However, MLPs (like TC PipeLines) typically depend on equity and
debt markets for financial growth. Thus, market issues such as
the recent subprime crisis, which hindered access to the
debt/equity markets, will impact the MLPs' growth prospects.
Meanwhile, there are certain oil and gas production pipeline MLPs
in the energy sector that are expected to perform well in the
coming one to three months. These include
Delek Logistics Partners LP
Pioneer Southwest Energy Partners LP
Summit Midstream Partners LP
). All three stocks currently sport a Zacks Rank #2 (Buy).