Crestwood Equity Partners (CEQP) Reports Q4 EPS of $0.57, Revenues Miss

Crestwood Equity Partners (NYSE: CEQP) reported Q4 EPS of $0.57, versus $0.13 reported last year. Revenue for the quarter came in at $768.4 million versus the consensus estimate of $1.01 billion.

“Throughout 2018, Crestwood stayed committed to our strategy of investing in accretive projects across our core growth assets while focusing on capital efficiency and maintaining strict financial discipline to drive value for unitholders. As a result, our assets generated full-year 2018 Adjusted EBITDA of over $420 million, exceeding the high end of our guidance range and consensus estimates, and resulted in strong fourth quarter coverage and leverage ratios of 1.51x and 4.25x, respectively,” said Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “We remain confident in our ability to generate a 15% annual growth rate in EBITDA and DCF per unit through 2020 by executing on the expansion opportunities currently in our portfolio which can be funded with excess cash flow, revolver borrowings and joint venture contributions while we continue to focus on further building our balance sheet strength.”

Mr. Phillips continued, “Beginning in 2017, Crestwood committed to invest approximately $850 million in a 3-year capital program to organically grow our franchise gathering and processing positions in the Bakken, Powder River Basin and Delaware Basin systems. These much-needed infrastructure expansions were supported by strong producer activity, increased well performance and improved breakeven economics for our customers despite significant commodity volatility during this period. By year-end 2019, Crestwood expects our capital investments to result in incremental EBITDA of approximately $160 million from 2017, implying the realization of an approximately 5.5x investment multiple. Looking beyond 2019, we see continued growth potential across our core oil-weighted basins through the continued development of full midstream value chain facilities and services in our footprint and the opportunity to consolidate our joint venture partners and third party facilities in the regions that we operate as production volumes from stacked shale plays grow and change over time.”

“Finally, Crestwood’s capital allocation will continue to be dedicated toward prudent investments in accretive, high return capital projects that meet our strict investment hurdles. As we execute our current set of investment opportunities we will stay dedicated to maintaining solid financial metrics. While there is significant debate in the industry today about the allocation of capital and excess cash flow, our strategy is clear. Crestwood plans to maintain our current distribution throughout the 2019 investment cycle using excess cash flow for reinvestment and increasing coverage ratio. Once we achieve our targeted leverage ratio between 3.5x and 4.0x in 2020, we will reevaluate distribution growth. Our goal is to generate long-term value for our investors and we believe maintaining balance sheet strength, financial flexibility, and funding expansions with cash flow from operations and joint venture partners, is the appropriate capital allocation strategy in the current market environment.”

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

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