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TC Pipelines (TCP) Misses Q3 Earnings and Revenue Estimates


Pipeline operator TC PipeLines, LP TCP reported third-quarter 2017 earnings of 61 cents per unit, missing the Zacks Consensus Estimate of 64 cents. Higher expenses and lower-than-expected revenues led to weaker results. However, results were partly offset by higher equity earnings from Iroquois Gas Transmission System, LP.

The bottom line also deteriorated from 65 cents per unit recorded in the year-ago quarter.

Quarterly transmission revenues of $100 million missed the Zacks Consensus Estimate of $127 million. Further, the top line was also below the prior-year quarter level of $103 million. Revenues were lower due to lower discretionary revenues on short-term services sold by PNGTS.

TC PipeLines, LP Price, Consensus and EPS Surprise

TC PipeLines, LP Price, Consensus and EPS Surprise | TC PipeLines, LP Quote

Distribution & Cash Flow

Last month, TC PipeLines announced third-quarter 2017 cash distribution of $1.00 per unit, in line with the prior quarter figure but 6% higher from the year-ago quarter. This is the 74th consecutive quarterly distribution paid by the partnership and is payable on Nov 14 to unit holders of record at the close of business on Nov 3.

The partnership's total distributable cash flow decreased about 5.8% year over year to $65 million.

TC PipeLines distributed $210 million in the reported quarter compared with $184 million in the year-ago quarter.

Pipeline Systems' Performance

Great Lakes: The partnership received earnings of $2 million from equity investment, lower than the prior-year quarter earnings of $4 million.

Northern Border Pipeline: Equity earnings at this pipeline totaled $16 million,lower than the prior-year quarter earnings of $18 million.

Iroquois: Equity earnings at this pipeline totaled $9 million. TC PipeLines completed the acquisition of 49.3% interest in the Iroquois from TransCanada Corporation TRP on Jun 1.


Operation and maintenance expenses increased to $16 million in the quarter compared with $15 million in the prior-year quarter. General/administrative and property charges remained unchanged from the year-ago figure of $1 million and $7 million respectively. Depreciation costs increased to $25 million in the reported quarter, compared with $24 million in the year-ago quarter. Financial charges in the quarter came at $23 million, up by 27.7%.

Balance Sheet

As of Sep 30, 2017, TC PipeLines — which counts Boardwalk Pipeline Partners, LP BWP and Delek Logistics Partners, LP DKL as its peers — had cash and cash equivalents of $73 million. The partnership had long-term debt of $2,427 million, representing a debt-to-capitalization ratio of 72.6%.

The partnership currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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