TC PipeLines L.P. (
announced weak fourth-quarter 2011 results, reflecting lower equity
income from Great Lakes and Northern Border pipeline systems, as
well as higher financing charges. These were partially offset by
higher earnings from 'Other Pipes', together with contributions
from the recently acquired 25% interests in two other major U.S.
gas pipelines - Gas Transmission Northwest LLC (
) and Bison Pipeline LLC - bought from parent
TransCanada Corp. (
in May last year.
The Calgary, Alberta-based master limited partnership ("MLP") -
with stakes in over 5,550 miles of federally regulated U.S.
interstate natural gas pipelines that cater to domestic and Eastern
Canadian markets - reported earnings per unit (
) of 70 cents, below the Zacks Consensus Estimate of 72 cents and
the year-ago profit of 79 cents.
Distribution & Cash flows
Prior to the earnings release, TC PipeLines announced its fourth
quarter 2011 cash distribution of 77 cents per unit ($3.08 per unit
annualized), representing a 2.7% increase over the year-earlier
quarter and equal to the third quarter 2011 distribution.
The cash distribution is the 51st consecutive quarterly
distribution paid by it. TC PipeLines' new distribution was paid on
February 14 to unitholders of record as on January 31, 2012.
Total partnership cash flows during the quarter was up 61.1%
from the year-earlier level to $83.3 million, mainly due to the
receipt of cash distributions from TC PipeLines' interests in the
GTN and Bison pipeline systems. These were somewhat negated by
higher costs, as well as the decrease in cash distributions from
Northern Border and the Great Lakes.
TC PipeLines paid distributions of $42.0 million during the
quarter, up 18.6% from the year-earlier level, driven by an
increase in the number of common units outstanding and a rise in
the quarterly distribution starting relative to the fourth quarter
Pipeline Systems Performance
The partnership's equity income from the Great Lakes decreased
30.6% year-over-year to $10.2 million in the quarter, reflecting
lower transmission revenues stemming from un-contracted long haul
capacity and unseasonal weather.
Northern Border Pipeline:
Equity income from Northern Border Pipeline ("NBPL") was down 2.1%
year over year from $19.5 million to $19.1 million, primarily due
to the low gas price environment and weak basis spreads across
Other Pipes (Tuscarora & North Baja):
Net income from Other Pipes that include results from Tuscarora and
North Baja was up 9.7% year over year to $10.2 million, driven by
higher North Baja revenues.
GTN and Bison:
TC PipeLines' equity income from the GTN and Bison pipeline systems
came in at $4.4 million and $3.3 million, respectively.
As of December 31, 2011, TC PipeLines had $363.0 million
outstanding on the $500.0 million revolver portion of its senior
credit facility. During the December quarter, the partnership
repaid the $300.0 million senior term loan, which was refinanced
with a withdrawal on its senior revolving credit facility. In July
last year, TC PipeLines amended and increased its revolving credit
facility from $250.0 million to $500.0 million, while extending the
tenure to July 2016.
Rating & Recommendation
TC PipeLines units currently retain a Zacks #3 Rank, which
translates into a short-term Hold rating. We are also maintaining
our long-term Neutral recommendation on the stock.
TC PIPELINES (
): Free Stock Analysis Report
TRANSCDA CORP (
): Free Stock Analysis Report
To read this article on Zacks.com click here.