TC PipeLines Beats Q2 Earnings Estimates, Ups Distribution - Analyst Blog

Pipeline operator, TC PipeLines LP (TCP) reported strong second-quarter 2014 results on the back of robust performance by all of its pipeline assets.

The Calgary, Alberta-based master limited partnership (MLP) posted second-quarter earnings per unit (EPU) of 58 cents, 45% higher than the prior-year quarter level of 40 cents and also above the Zacks Consensus Estimate of 55 cents.

Distribution & Cash Flows

TC PipeLines announced second-quarter cash distribution of 84 cents per unit ($3.36 per unit annualized). The new distribution – 3.7% higher sequentially – is the 15th consecutive yearly distribution increase for the partnership. The distribution will be paid on Aug 14, to unitholders of record as of Aug 5.

The partnership's total cash flow during the reported quarter increased about 83.3% from the year-ago quarter to $77.0 million. The rise came on the back of additional cash distributions from TC PipeLines' extra 45% interest in GTN and Bison each, acquired during the third quarter of 2013.

TC PipeLines distributed $52.0 million during the quarter, up almost 21.0% from the year-ago level, as a result of the rise in the quarterly distribution in July last year. An increase in outstanding common units following the May 2013 equity offerings, also aided the results.

Pipeline Systems' Performance

Great Lakes: The partnership's equity income from the Great Lakes was $2 million.

Northern Border Pipeline: Equity income from the Northern Border Pipeline was $16.0 million, compared with $15 million in the year-ago quarter.

Liquidity

As of Jun 30, 2014, TC PipeLines had $135.0 million outstanding on the $500.0 million senior credit facility. The partnership had long-term debt (including current portion) of $1,484.0 million, representing a debt-to-capitalization ratio of 45.6%.   

Zacks Rank & Other Stock Picks

TC PipeLines currently carries 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.

Meanwhile, one can consider better-ranked players from the same industry such as Magellan Midstream Partners LP (MMP), NuStar Energy L.P. (NS) and Enterprise Products Partners L.P. (EPD). All these stocks sport a Zacks Rank #1 (Strong Buy).

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