Crestwood Equity Partners (CEQP) Misses Q3 EPS by 3c

Crestwood Equity Partners (NYSE: CEQP) reported Q3 EPS of $0.12, $0.03 worse than the analyst estimate of $0.15. Revenue for the quarter came in at $657.4 million versus the consensus estimate of $689.31 million.

• Strong execution in the G&P and MS&L segments drives net income of $33.6 million and Adjusted EBITDA of $140.9 million, a 39% year-over-year increase
• Bakken Bear Den II processing plant commenced service in third quarter driving record volumes on the Arrow system and an increased well connect forecast to 120 new wells for full-year 2019
• Year-to-date 2019 results exceed expectations; Upwardly revising 2019E Adjusted EBITDA guidance range to $520 million to $535 million

Third Quarter 2019 Highlights1

• Third quarter 2019 net income of $33.6 million, compared to a net loss of $5.2 million in third quarter 2018
• Third quarter 2019 Adjusted EBITDA of $140.9 million, an increase of 39% compared to $101.4 million in the third quarter 2018
• Third quarter 2019 distributable cash flow (“DCF”) to common unitholders of $82.5 million; The third quarter 2019 coverage ratio was approximately 1.9x
• Ended third quarter 2019 with approximately $2.3 billion in total debt and a 4.2x leverage ratio; Crestwood has substantial liquidity available under its $1.25 billion revolver with $497.6 million drawn as of September 30, 2019
• Declared third quarter 2019 cash distribution of $0.60 per common unit, or $2.40 per common unit on an annualized basis, to be paid on November 14, 2019, to unitholders of record as of November 7, 2019

Management Commentary

“I am pleased to announce another great quarter by Crestwood with third quarter Adjusted EBITDA of $140.9 million and Distributable Cash Flow of $82.5 million, driving robust metrics of a 1.9x coverage ratio and a 4.2x leverage ratio,” said Robert G. Phillips, Chairman, President, and Chief Executive Officer of Crestwood’s general partner. “During the third quarter, our operations and technical services teams completed and placed into service our most critical 2019 capital expansion projects, with outstanding safety performance, leading to record daily gathering and processing volumes in the Bakken and Powder River Basin. Additionally, our MS&L team continued its stellar 2019 performance by utilizing our NGL and crude logistics platform to take advantage of market dislocations in the areas we operate across the industry. The third quarter results also highlight the value of our diversified platform of three midstream operating segments and demonstrates Crestwood’s continued ability to use our solid balance sheet and disciplined capital management to provide investors with visible, steady growth in DCF per unit.”

Mr. Phillips continued, “The third quarter of 2019 represented a key milestone in Crestwood’s Bakken capital expansion program as we completed the Bear Den II processing plant and Station 8 compression station allowing us to process 100% of the gas gathered on the Arrow system with substantial room for future volumes. Importantly, these projects support our sustainability initiatives by reducing flaring and carbon emissions across the Fort Berthold Indian Reservation. Arrow continues to achieve gathering records across all three products which, combined with outperformance in our MS&L segment, positions Crestwood to increase our 2019 Adjusted EBITDA guidance to $520 million to $535 million.”

Mr. Phillips concluded, “So far, 2019 has been another stand-out year for Crestwood as we near the end of a successful three-year, approximately $1.0 billion, capital investment program in the Bakken, Powder River and Delaware Basins. Remaining projects include the Bucking Horse II plant and Jackalope gathering and compression projects in the Powder River Basin which will be completed in early 2020. Looking into 2020, we will maintain our capital discipline with forecasted growth capital of $100 million to $150 million focused on identified, low-risk accretive projects in the Bakken, Powder River and Delaware Basins. Based on reduced capital spending and significant year-over-year cash flow growth, Crestwood expects to achieve its primary financial objective to become free cash flow positive in the first half of 2020, driving a sub-4.0x leverage ratio and a coverage ratio of approximately 2.0x for the full-year 2020. These forecasted financial milestones set the stage for Crestwood to execute a best-in-class capital allocation strategy in 2020 which will include self-funding accretive capital projects, further reducing leverage, distribution growth, and potential common or preferred unit buybacks.”

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

You May Also Be Interested In

• Humana (HUM) surges on Q1 beat, reiterated adjusted earnings outlook
• Boston Scientific (BSX) Tops Q1 EPS by 5c; Guides Above Views
• Masco Corp. (MAS) Tops Q1 EPS by 5c; offers guidance