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Buckeye Partners’ 4Q17 Earnings and Growth Outlook

PART:
1 2 3 4
Part 2
Buckeye Partners’ 4Q17 Earnings and Growth Outlook PART 2 OF 4

Buckeye Partners’ 4Q17 Performance by Segment

Domestic Pipelines & Terminals

Domestic Pipelines & Terminals, which is currently Buckeye Partners’ (BPL) largest business segment, posted 9.7% YoY1 growth in adjusted EBITDA2 for the fourth quarter of 2017. The YoY growth was driven by a contribution from phase 1 of the Michigan/Ohio project placed into service during the year and higher heating oil demand due to colder winters. The partnership expects a positive impact from colder winters in the first quarter of 2018 as well. 

Marine Terminals

Buckeye Partners’ Global Marine Terminals segment posted 20% YoY EBITDA growth in the fourth quarter, mainly driven by an investment in the VTTI expansion. This growth was partially offset by lower capacity utilization during the fourth quarter (88%) than in the same quarter of the prior year (99%). This reduction is mainly due to BPL’s inability to renew a long-term contract in one of its Caribbean facilities.

The partnership expects utilization to improve in 2018, driven by recent renewals—including a long-term contract with Marathon Petroleum Corporation (MPC)—and re-contracting open capacity. However, it doesn’t expect capacity utilization to reach 2016 levels. According to Keith E. St. Clair, BPL’s CFO, “Contributing to the challenges of contract renewals are higher crude and product inventory draws, which are reducing overall storage utilization.”

Merchant Services

Buckeye Partners’ Merchant Services, which had been the worst-performing segment in previous quarters, recovered slightly in the fourth quarter. The segment posted a 4.6% YoY adjusted EBITDA increase during the recent quarter.

In the next part of this series, we’ll look into Buckeye Partners’ distribution plans and coverage for 2018.

  1. Year-over-year
  2. Earnings before interest, tax, depreciation, and amortization
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