Crestwood Equity Partners (CEQP) Misses Q2 EPS by 52c, Miss on Revenues

Crestwood Equity Partners (NYSE: CEQP) reported Q2 EPS of ($0.57), $0.52 worse than the analyst estimate of ($0.05). Revenue for the quarter came in at $840.5 million versus the consensus estimate of $902.94 million.

Management Commentary

“Crestwood continued to build strong momentum during the second quarter, with better-than-consensus quarterly performance, timely completed capital projects and contracts, newly announced growth projects and non-core asset sales, while maintaining a strong balance sheet and self-funding model through 2018 and 2019 based on current plans, said Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “Solid execution of our strategic plan continues to position Crestwood to deliver on improved 2018 guidance, our 3-year 15% growth forecast and provides investors with increased visibility to the backlog of new expansion opportunities which fit our investment parameters in the Bakken, Delaware Basin and Powder River Basin.”

Mr. Phillips continued, “In the recent quarter, improved results from our Gathering and Processing and Marketing, Supply and Logistics segments drove Adjusted EBITDA to $103 million, up 6% from second quarter 2017. Additionally, with a leverage ratio of 4.0x and a coverage ratio of 1.3x, we continue to maintain balance sheet strength and meaningful excess DCF during an active capital deployment period for the partnership. Quarterly results were supported by strong market fundamentals as crude oil and natural gas prices averaged approximately $67.00 per barrel and $2.90 per Mcf, respectively, exceeding breakeven economics in all of our active growth basins and resulting in higher net-backs for our G&P customers. Our MS&L segment benefited from the recent widening of the Mont Belvieu-Conway NGL basis differential, due largely to increased NGL supplies coming to market and regional pipeline disruptions, and increased output from our downstream refinery and fractionation customers.”

“Crestwood’s long-term plan is built around our core growth positions in the Bakken, Delaware Basin and Powder River Basin as fundamentals drive continued producer development activity and the need for midstream infrastructure in the areas that we operate. In the Bakken, we are on-track to complete our Arrow system de-bottlenecking projects in 2018 and expect to experience meaningful volume growth in the fourth quarter 2018 and full-year 2019. The addition of the Bear Den Phase-2 plant in 2019 will add significantly to our integrated Bakken business model and earnings growth. In the Delaware Basin, with our partner First Reserve, the completion of the Orla plant and Orla Express Pipeline, connection of our Willow Lake and Nautilus systems, acquisition of NGL capacity in the EPIC NGL pipeline, and long-term sales agreement with Chevron Phillips creates a similarly integrated midstream business model that greatly enhances our ability to compete for new volumes in this active region. In the Powder River Basin, with our partner Williams, the Jackalope expansion is expected to maintain pace with rapidly growing volumes from Chesapeake and third-party off-set producers. Overall, Crestwood’s visible backlog of growth projects in all three basins will provide the partnership a multi-year path to accretive cash flow growth that is fully financed internally through excess cash flow and our revolving credit facility.”

For earnings history and earnings-related data on Crestwood Equity Partners (CEQP) click here.

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