EQT Midstream Partners, LP (NYSE: EQM) today announced first
quarter 2017 results, including net income of $143.2 million,
adjusted EBITDA of $168.7 million, net cash provided by
operating activities of $161.4 million, and distributable cash flow
of $154.8 million. EQM operating income was $145.1 million, which
was 6% higher than last year. The Non-GAAP Disclosures section of
this news release provides reconciliations of non-GAAP financial
measures to their most comparable GAAP financial measure as well as
important disclosures regarding projected adjusted EBITDA and
projected distributable cash flow.
EQT GP Holdings, LP (NYSE: EQGP) today announced net income
attributable to EQGP of $61.4 million for the first
quarter.
EQM Highlights:
- Increased EQM per unit distribution by
19% compared to Q1 2016
- Maintained a 1.5x coverage ratio for
the quarter
- Generated 92% of revenue from firm
reservation fees
EQM first quarter operating revenue increased $17.6 million, 9%
higher compared to the same quarter last year. The increase was
primarily due to increased firm transmission capacity and higher
contracted firm gathering capacity. During the quarter, 92% of
operating revenue was generated by firm reservation fees. Operating
expenses were up $9.6 million versus the first quarter of 2016,
primarily from higher depreciation and amortization and operating
and maintenance expenses from assets placed in service.
QUARTERLY DISTRIBUTION
EQM
For the first quarter of 2017, EQM will pay a quarterly cash
distribution of $0.89 per unit, which will be paid on May 15, 2017
to EQM unitholders of record at the close of business on May 5,
2017. The quarterly cash distribution is 5% higher than the fourth
quarter of 2016 and is 19% higher than the first quarter of
2016.
EQGP
For the first quarter of 2017, EQGP will pay a quarterly cash
distribution of $0.191 per unit, which will be paid on May 24, 2017
to EQGP unitholders of record at the close of business on May 5,
2017. The quarterly cash distribution is 8% higher than the fourth
quarter of 2016 and is 43% higher than the first quarter 2016
distribution. For the quarter, EQGP expects to receive $51.9
million of cash distributions from EQM and distribute $50.8
million.
GUIDANCE
Full-year 2017 - $MM Net Income $555 – $595
Adjusted EBITDA $670 – $710 Distributable Cash Flow $590 – $630
Q2 2017 Net Income $124 – $134 Adjusted EBITDA $150 – $160
Due to the seasonal nature of EQM's utility customer contracts,
second quarter 2017 revenue from these contracts will be lower than
the first quarter by approximately $14 million.
EQM forecasts 20% growth in its annual per unit distribution for
2017 and EQGP forecasts annual per unit distribution growth of
approximately 40%. Beginning in 2018, EQM is targeting annual per
unit distribution growth of 15% - 20% for several years. For EQGP,
the corresponding annual per unit distribution growth target is 30%
- 40%.
EQM is unable to provide a projection of its full-year 2017 net
cash provided by operating activities, the most comparable
financial measure to distributable cash flow calculated in
accordance with GAAP. Please see the Non-GAAP Disclosures section
of this news release.
EQM EXPANSION & ONGOING MAINTENANCE
CAPITAL EXPENDITURES
Expansion
Expansion capital expenditures and capital contributions to
Mountain Valley Pipeline, LLC (MVP JV), totaled $86 million in the
first quarter.
$MM
Three Months Ended March 31, 2017
2017 Full-yearForecast
Gathering $28 $200 - $230 Mountain Valley Pipeline $20 $200
Transmission $17 $60 - $80 Header Pipeline $ 21 $ 40 Total $ 86
$500 - $550
Ongoing Maintenance
Ongoing maintenance capital expenditures are cash expenditures
made to maintain, over the long-term, EQM operating capacity or
operating income. EQM ongoing maintenance capital expenditures, net
of expected reimbursements, totaled $2.6 million in the first
quarter. EQM continues to forecast full-year 2017 ongoing
maintenance capital expenditures of approximately $35 million.
PROJECT UPDATE
Header Pipeline
On October 1, 2016, phase one of the natural gas header pipeline
for Range Resources was placed into service, providing 75 MMcf per
day of firm capacity. The firm capacity will increase to 600 MMcf
per day upon completion of the project, which is expected in Q2 of
2017. The project is backed by a ten-year firm capacity reservation
commitment.
Mountain Valley Pipeline
On March 31, 2017, the Federal Energy Regulatory Commission
(FERC) issued an updated Notice of Schedule for the environmental
review of the Mountain Valley Pipeline project. Based on the
revised schedule, MVP JV expects to receive the Final Environmental
Impact Statement on June 23, 2017. MVP JV has secured a total of 2
Bcf per day of firm capacity commitments at 20-year terms and
continues to target a late 2018 in-service date.
NON-GAAP DISCLOSURES
EQM Adjusted EBITDA and Distributable Cash Flow
As used in this news release, EQM adjusted EBITDA means EQM’s
net income plus net interest expense, depreciation and amortization
expense, preferred interest payments received post conversion, and
non-cash long-term compensation expense (if applicable) less equity
income and AFUDC - equity. As used in this news release,
distributable cash flow means EQM adjusted EBITDA less net interest
expense excluding interest income on the preferred interest,
capitalized interest and AFUDC - debt, and ongoing maintenance
capital expenditures net of expected reimbursements. Distributable
cash flow should not be viewed as indicative of the actual amount
of cash that EQM has available for distributions from operating
surplus or that EQM plans to distribute. Adjusted EBITDA and
distributable cash flow are non-GAAP supplemental financial
measures that management and external users of EQM’s consolidated
financial statements, such as industry analysts, investors, lenders
and rating agencies, use to assess:
- EQM’s operating performance as compared
to other publicly traded partnerships in the midstream energy
industry without regard to historical cost basis or, in the case of
adjusted EBITDA, financing methods;
- the ability of EQM’s assets to generate
sufficient cash flow to make distributions to EQM unitholders;
- EQM’s ability to incur and service debt
and fund capital expenditures; and
- the viability of acquisitions and other
capital expenditure projects and the returns on investment of
various investment opportunities.
EQM believes that adjusted EBITDA and distributable cash flow
provide useful information to investors in assessing EQM’s results
of operations and financial condition. Adjusted EBITDA and
distributable cash flow should not be considered as alternatives to
net income, operating income, net cash provided by operating
activities or any other measure of financial performance or
liquidity presented in accordance with GAAP. Adjusted EBITDA and
distributable cash flow have important limitations as analytical
tools because they exclude some, but not all, items that affect net
income and net cash provided by operating activities. Additionally,
because adjusted EBITDA and distributable cash flow may be defined
differently by other companies in its industry, EQM’s definition of
adjusted EBITDA and distributable cash flow may not be comparable
to similarly titled measures of other companies, thereby
diminishing the utility of the measures. The table below reconciles
adjusted EBITDA and distributable cash flow with net income and net
cash provided by operating activities as derived from the
statements of consolidated operations and cash flows to be included
in EQM’s quarterly report on Form 10-Q for the three months ended
March 31, 2017.
EQM is unable to project net cash provided by operating
activities or provide the related reconciliation of projected net
cash provided by operating activities to projected distributable
cash flow, the most comparable financial measure calculated in
accordance with GAAP, because net cash provided by operating
activities includes the impact of changes in operating assets and
liabilities. Changes in operating assets and liabilities relate to
the timing of EQM’s cash receipts and disbursements that may not
relate to the period in which the operating activities occurred,
and EQM is unable to project these timing differences with any
reasonable degree of accuracy to a specific day, three or more
months in advance. EQM is also unable to provide a reconciliation
of its projected EBITDA to projected net income, the most
comparable financial measure calculated in accordance with GAAP,
because EQM does not provide guidance with respect to the
intra-year timing of its or MVP JV’s capital spending, which impact
AFUDC-debt and equity and equity earnings, among other items, that
are reconciling items between adjusted EBITDA and net income. The
timing of capital expenditures is volatile as it depends on
weather, regulatory approvals, contractor availability, system
performance and various other items. EQM provides a range for the
forecasts of net income, adjusted EBITDA and distributable cash
flow to allow for the variability in the timing of cash receipts
and disbursements, capital spending and the impact on the related
reconciling items, many of which interplay with each other.
Therefore, the reconciliations of projected distributable cash flow
and adjusted EBITDA to projected net cash provided by operating
activities and net income are not available without unreasonable
effort.
Reconciliation of EQM Adjusted EBITDA and Distributable Cash
Flow
(Thousands)
Three Months Ended March 31, 2017
Net income $ 143,196 Add: Net interest expense 7,926
Depreciation and amortization expense 20,547 Preferred Interest
payments received post conversion 2,746 Non-cash long-term
compensation expense 225 Less: Equity income (4,277 ) AFUDC –
equity (1,699 ) Adjusted EBITDA $ 168,664 Less: Net interest
expense excluding interest income on the Preferred Interest (9,652
) Capitalized interest and AFUDC – debt (1,600 ) Ongoing
maintenance capital expenditures net of expected reimbursements
(2,608 ) Distributable cash flow $ 154,804
Distributions declared (1): Limited Partner $ 71,718 General
Partner 32,520 Total $ 104,238 Coverage Ratio 1.49x
Net cash provided by operating activities $ 161,422 Adjustments:
Capitalized interest and AFUDC – debt (1,600 ) Principal payments
received on Preferred Interest 1,020 Ongoing maintenance capital
expenditures net of expected reimbursements (2,608 ) Other,
including changes in working capital (3,430 ) Distributable cash
flow $ 154,804 (1) Reflects cash distribution
of $0.89 per limited partner unit for the first quarter 2017 and
80,581,758 million limited partner units outstanding as of March
31, 2017. If limited partner units are issued on or prior to May 5,
2017, the aggregate level of all distributions will be higher than
reflected.
Q1 2017 Webcast Information
EQM and EQGP will host a joint live webcast with security
analysts today at 11:30 a.m. ET. Topics include first quarter 2017
financial results, operating results, and other matters. The
webcast is available at www.eqtmidstreampartners.com, with a replay
available for seven days following the call.
EQT, which owns EQGP’s general partner and holds a 90% limited
partner interest in EQGP, will also host a webcast with security
analysts today at 10:30 a.m. ET. EQM and EQGP unitholders are
encouraged to listen to EQT’s webcast, as the discussion may
include topics relevant to EQM and EQGP, such as EQT's financial
and operational results, and specific reference to EQM and EQGP
first quarter 2017 results. The webcast can be accessed via
www.eqt.com, with a replay available
for seven days following the call.
About EQT Midstream
Partners:
EQT Midstream Partners, LP is a growth-oriented limited
partnership formed by EQT Corporation to own, operate, acquire, and
develop midstream assets in the Appalachian Basin. The Partnership
provides midstream services to EQT Corporation and third-party
companies through its strategically located transmission, storage,
and gathering systems that service the Marcellus and Utica regions.
The Partnership owns approximately 950 miles of FERC-regulated
interstate pipelines; and also owns approximately 1,800 miles of
high and low pressure gathering lines.
Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com.
About EQT GP Holdings:
EQT GP Holdings, LP is a limited partnership that owns the
general partner interest, all of the incentive distribution rights,
and a portion of the limited partner interests in EQT Midstream
Partners, LP. EQT Corporation owns a 90% limited partner interest
in EQT GP Holdings, LP.
Visit EQT GP Holdings, LP at www.eqtmidstreampartners.com.
EQM and EQGP management speak to investors from time to time and
the analyst presentation for these discussions, which is updated
periodically, is available via the EQM and EQGP website at
www.eqtmidstreampartners.com.
Cautionary Statements
The distribution amounts from EQM to EQGP are subject to change
if EQM issues additional common units on or prior to the record
date for the first quarter 2017 distribution.
Disclosures in this news release contain certain forward-looking
statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended. Statements that do not relate strictly to
historical or current facts are forward-looking. Without limiting
the generality of the foregoing, forward-looking statements
contained in this news release specifically include the
expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of EQGP and its
subsidiaries, including EQM, including guidance regarding EQM’s
gathering and transmission and storage revenue and volume growth;
revenue and expense projections; infrastructure programs (including
the timing, cost, capacity and sources of funding with respect to
gathering and transmission projects); the timing, cost, capacity
and expected interconnects with facilities and pipelines of the
Mountain Valley Pipeline (MVP); the ultimate terms, partners and
structure of the MVP joint venture; natural gas production growth
in EQM’s operating areas for EQT and third parties; asset
acquisitions, including EQM’s ability to complete any asset
purchases and anticipated synergies and accretion associated with
any acquisition; internal rate of return (IRR); compound annual
growth rate (CAGR); capital commitments, projected capital
contributions and capital and operating expenditures, including the
amount and timing of capital expenditures reimbursable by EQT,
capital budget and sources of funds for capital expenditures;
liquidity and financing requirements, including funding sources and
availability; distribution amounts, rates and growth; projected net
income, projected adjusted EBITDA and projected distributable cash
flow; the timing and amount of future issuances of EQM common units
under EQM’s $750 million at the market equity distribution program;
the expected cash distributions from EQT Energy Supply, LLC;
changes in EQM’s credit ratings; the effects of government
regulation and litigation; and tax position. These forward looking
statements involve risks and uncertainties that could cause actual
results to differ materially from projected results. Accordingly,
investors should not place undue reliance on forward-looking
statements as a prediction of actual results. EQM and EQGP have
based these forward-looking statements on current expectations and
assumptions about future events. While EQM and EQGP consider these
expectations and assumptions to be reasonable, they are inherently
subject to significant business, economic, competitive, regulatory
and other risks and uncertainties, many of which are difficult to
predict and beyond the partnerships’ control. The risks and
uncertainties that may affect the operations, performance and
results of EQM’s and EQGP’s business and forward-looking statements
include, but are not limited to, those set forth under Item 1A,
“Risk Factors” of EQM’s Form 10-K for the year ended
December 31, 2016 as filed with the SEC and Item 1A, “Risk
Factors” of EQGP’s Form 10-K for the year ended December 31,
2016 as filed with the SEC, in each case as may be updated by any
subsequent Form 10-Qs. Any forward-looking statement speaks only as
of the date on which such statement is made, and neither EQM nor
EQGP intends to correct or update any forward-looking statement,
whether as a result of new information, future events or
otherwise.
Information in this news release regarding EQT Corporation and
its subsidiaries, other than EQM and EQGP, is derived from publicly
available information published by EQT.
This release serves as qualified notice to nominees under
Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note
that 100% of EQM’s and EQGP’s distributions to foreign investors
are attributable to income that is effectively connected with a
United States trade or business. Accordingly, all of EQM’s and
EQGP’s distributions to foreign investors are subject to federal
income tax withholding at the highest effective tax rate for
individuals or corporations, as applicable. Nominees, and not EQM
or EQGP, as applicable, are treated as the withholding agents
responsible for withholding on the distributions received by them
on behalf of foreign investors.
EQT MIDSTREAM PARTNERS, LP AND
SUBSIDIARIESSTATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED) (1)
Three Months Ended March 31, 2017
2016 (Thousands, except per unit amounts)
Operating revenues (2) $ 203,426 $ 185,786 Operating expenses:
Operating and maintenance 20,286 17,136 Selling, general and
administrative 17,480 17,523 Depreciation and amortization 20,547
14,007 Total operating expenses 58,313 48,666
Operating income 145,113 137,120 Other income 6,009 7,602
Net interest expense 7,926 4,552 Income before income
taxes 143,196 140,170 Income tax expense — 3,435 Net
income $ 143,196 $ 136,735 Calculation of
limited partners' interest in net income: Net income $ 143,196 $
136,735 Less pre-acquisition net income allocated to parent —
(7,670 ) Less general partner interest in net income – general
partner units (2,519 ) (2,355 ) Less general partner interest in
net income – incentive distribution rights (30,686 ) (18,832 )
Limited partners' interest in net income $ 109,991 $ 107,878
Net income per limited partner unit – basic $ 1.36 $
1.39 Net income per limited partner unit – diluted $ 1.36 $ 1.39
Weighted average limited partner units outstanding – basic
80,602 77,593 Weighted average limited partner units outstanding –
diluted 80,602 77,675
(1)
EQM’s consolidated financial statements
for the three months ended March 31, 2016 have been retrospectively
recast to include the pre-acquisition results of the Allegheny
Valley Connector (AVC) and several Marcellus gathering systems
(October 2016 Acquisition), which were acquired by EQM effective on
October 1, 2016.
(2)
Operating revenues included affiliate
revenues from EQT of $143.4 million and $135.3 million for the
three months ended March 31, 2017 and 2016, respectively.
EQT MIDSTREAM PARTNERS, LP AND
SUBSIDIARIESGATHERING RESULTS OF OPERATIONS
(1)
Three Months Ended March 31, 2017
2016 FINANCIAL DATA (Thousands, other than
per day amounts) Firm reservation fee revenues $ 94,271 $
82,007 Volumetric based fee revenues: Usage fees under firm
contracts (2) 4,821 10,452 Usage fees under interruptible contracts
3,237 5,550 Total volumetric based fee revenues 8,058
16,002 Total operating revenues 102,329 98,009 Operating expenses:
Operating and maintenance 10,455 8,945 Selling, general and
administrative 9,425 9,197 Depreciation and amortization 8,860
7,263 Total operating expenses 28,740 25,405
Operating income $ 73,589 $ 72,604
OPERATIONAL
DATA Gathering volumes (BBtu per day) Firm capacity reservation
1,728 1,424 Volumetric based services (3) 224 473 Total
gathered volumes 1,952 1,897 Capital expenditures $ 48,838 $
73,087
(1)
EQM’s consolidated financial statements
for the three months ended March 31, 2016 have been retrospectively
recast to include the pre-acquisition results of the October 2016
Acquisition.
(2)
Includes fees on volumes gathered in
excess of firm contracted capacity.
(3)
Includes volumes gathered under
interruptible contracts and volumes gathered in excess of firm
contracted capacity.
EQT MIDSTREAM PARTNERS, LP AND
SUBSIDIARIESTRANSMISSION RESULTS OF OPERATIONS
(1)
Three Months Ended March 31, 2017
2016 FINANCIAL DATA (Thousands, other than
per day amounts) Firm reservation fee revenues $ 92,274 $
70,109 Volumetric based fee revenues: Usage fees under firm
contracts (2) 2,857 13,429 Usage fees under interruptible contracts
5,966 4,239 Total volumetric based fee revenues 8,823
17,668 Total operating revenues 101,097 87,777 Operating expenses:
Operating and maintenance 9,831 8,191 Selling, general and
administrative 8,055 8,326 Depreciation and amortization 11,687
6,744 Total operating expenses 29,573 23,261
Operating income $ 71,524 $ 64,516
OPERATIONAL
DATA Transmission pipeline throughput (BBtu per day) Firm
capacity reservation 2,119 1,622 Volumetric based services (3) 31
487 Total transmission pipeline throughput 2,150 2,109
Average contracted firm transmission reservation commitments
(BBtu per day) 3,743 3,005 Capital expenditures $ 21,389 $
60,071
(1)
EQM’s consolidated financial statements
for the three months ended March 31, 2016 have been retrospectively
recast to include the pre-acquisition results of the October 2016
Acquisition.
(2)
Includes commodity charges and fees on all
volumes transported under firm contracts as well as transmission
fees on volumes in excess of firm contracted capacity.
(3)
Includes volumes transported under
interruptible contracts and volumes transported in excess of firm
contracted capacity.
EQT MIDSTREAM PARTNERS, LP AND
SUBSIDIARIESCAPITAL EXPENDITURE SUMMARY (1)
Three Months Ended March 31, 2017
2016 (Thousands) Expansion capital
expenditures (2) $ 66,645 $ 127,950 Maintenance capital
expenditures: Ongoing maintenance 3,582 5,033 Funded regulatory
compliance — 175 Total maintenance capital expenditures
3,582 5,208 Total capital expenditures $ 70,227 $
133,158
(1)
EQM’s consolidated financial statements
for the three months ended March 31, 2016 have been retrospectively
recast to include the pre-acquisition results of the October 2016
Acquisition.
(2)
Expansion capital expenditures do not
include capital contributions made to the MVP JV. Capital
contributions to the MVP JV were $19.8 million and $11.4 million
for the three months ended March 31, 2017 and 2016,
respectively.
EQT GP HOLDINGS, LP AND
SUBSIDIARIESSTATEMENTS OF CONSOLIDATED OPERATIONS
(UNAUDITED) (1)
Three Months Ended March 31, 2017
2016 (Thousands, except per unit amounts)
Operating revenues (2) $ 203,426 $ 185,786 Operating expenses:
Operating and maintenance 20,286 17,136 Selling, general and
administrative 18,692 18,480 Depreciation and amortization 20,547
14,007 Total operating expenses 59,525 49,623
Operating income 143,901 136,163 Other income 6,009 7,602
Net interest expense 7,922 4,551 Income before income
taxes 141,988 139,214 Income tax expense — 3,435 Net
income 141,988 135,779 Net income attributable to noncontrolling
interests 80,612 77,787 Net income attributable to
EQT GP Holdings, LP $ 61,376 $ 57,992
Calculation of limited partners' interest in net income: Net income
attributable to EQT GP Holdings, LP $ 61,376 $ 57,992 Less
pre-acquisition income allocated to parent — (7,670 )
Limited partners' interest in net income $ 61,376 $ 50,322
Net income per limited partner unit – basic and
diluted $ 0.23 $ 0.19 Weighted average common units outstanding –
basic and diluted 266,183 266,173
(1)
EQGP’s consolidated financial statements
for the three months ended March 31, 2016 have been retrospectively
recast to include the pre-acquisition results of the October 2016
Acquisition.
(2)
Operating revenues included affiliate
revenues from EQT of $143.4 million and $135.3 million for the
three months ended March 31, 2017 and 2016, respectively.
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version on businesswire.com: http://www.businesswire.com/news/home/20170427005175/en/
Analyst inquiries please contact:Nate Tetlow – Investor
Relations Director,
412-553-5834ntetlow@eqtmidstreampartners.comorPatrick Kane – Chief
Investor Relations Officer,
412-553-7833pkane@eqtmidstreampartners.comorMedia inquiries
please contact:Natalie Cox – Corporate Director,
Communications, 412-395-3941ncox@eqtmidstreampartners.com
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