TC PipeLines L.P. (TCLP), a master limited partnership (MLP), announced better-than-expected second-quarter 2010 results, reflecting strong contributions from the Northern Border and North Baja pipeline systems.
The partnership reported earnings per unit (EPU) of 59 cents, comfortably ahead of the Zacks Consensus Estimate of 41 cents and the year-ago profit of 31 cents.
Distribution Maintained
TC PipeLines maintained its quarterly distribution of 73 cents per unit ($2.92 per unit annualized), unchanged from the previous quarter and the year-ago period. Payable on August 13 to unit-holders of record on July 31, 2010, it is the 45th successive quarterly distribution offered by the partnership.
Great Lakes
The partnership’s equity income from the Great Lakes increased slightly year-over-year (by 1.6%) to $13.1 million in the quarter, reflecting depreciation expense reductions following the settlement with Federal Energy Regulatory Commission (FERC) in May and lower operating expenses. These were partially offset by lower transmission revenues on the back of subdued demand for short-term transportation services.
Northern Border Pipeline
Equity income from Northern Border Pipeline (NBPL) rose significantly year-over-year (from $6.8 million to $12.2 million, primarily due to improved transmission revenues (as a result of its strong competitive position, reduced supplies from other supply sources, together with warm temperatures), and lower financial charges (on the back of reduction in effective interest rates and average debt outstanding).
Tuscarora & North Baja
Net income from Tuscarora and North Baja were up 8.4% year-over-year to $9.0 million, driven by contributions from the North Baja Pipeline acquisition of July 2009.
Total Cash Distributions
Total cash distributions received was up 24.5% from the year-earlier level to $46.2 million, mainly due to the favorable impact of the North Baja acquisition, a decrease in general partner distributions, and a reduction in the partnership’s general and administrative costs. TC PipeLines paid distributions of $34.4 million during the quarter, up 23.7% from the year-earlier level.
Liquidity
As of June 30, 2010, TC PipeLines had approximately $7.0 million as outstanding balance on its revolving credit facility, with $243.0 million available for future borrowings.
Our Recommendation
TC PIPELINES (TCLP): Free Stock Analysis Report
Zacks Investment Research
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