Buckeye Partners L.P. (BPL) announced its third-quarter 2010 operating earnings of 93 cents per limited partner unit, which matched the Zacks Consensus Estimate. The results of the partnership beat the year-ago earnings of 89 cents per share.
Total Revenue
Total revenue of the partnership at the end of the third quarter was $734.9 million versus $423.4 million in the year-ago quarter, reflecting a growth of 73.5%. Reported results came in higher than the Zacks Consensus Estimate of $626 million.
The growth in total revenue was primarily driven by the Energy Services segment. Revenue from Energy Services increased a substantial 119.3% year over year to $566.8 million, constituting 77.1% of total revenue in the reported quarter versus 61.0% in the year-ago quarter.
All the other segments of Buckeye apart from the Natural Gas Storage saw an improvement in performance on a year-over-year basis.
Operational Update
Operating expenses of the partnership during the reported quarter increased to $653.3 million from $347.5 million in the year-ago quarter mainly due to the higher cost of product sales and natural gas storage services.
The partnership reported an operating income of $81.6 million versus $75.9 million in the year-ago quarter, reflecting a growth of 7.4%. The strong topline results helped the partnership to post high operating income year over year, despite an increase in the operating expenses.
Interest and debt expenses of the partnership increased 7.2% to $22 million in the reported quarter versus $20.5 million in the year-ago quarter. The increase in interest expenses was due to higher debt levels from the year-ago quarter.
Financial Update
Total cash and cash equivalents as of September 30, 2010, were $13.3 million versus $27.2 million as of September 30, 2009.
Buckeye ended the quarter with long-term debt of $1.44 billion compared with $1.42 billion of long-term debt in the year-ago period.
Buckeye spent approximately $21.7 million on capital expenditure during the quarter under review, compared with $18.9 million in the year-ago quarter.
Cash Distribution
The partnership announced an increase in the cash distribution rate by 1 cent to 97.25 cents per LP unit for the quarter ended September 30, 2010 from 96.25 cents per LP unit for the quarter ended June 30, 2010. The distribution will be payable on November 30, 2010, to unitholders of record on November 15, 2010. The distribution rate in the comparable year-ago quarter was 92.50 cents.
Buckeye Partners currently retains a Zacks #3 Rank (short-term Hold rating). We maintain our long-term Neutral rating on the stock.
Based in Houston, Texas, Buckeye Partners, L.P. primarily operates refined petroleum products pipeline systems in the United States.
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