Buckeye Partners’ 4Q17 Earnings and Growth Outlook

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Buckeye Partners’ 4Q17 Earnings and Growth Outlook PART 1 OF 4

Buckeye Partners Posted Better-than-Expected 4Q17 Earnings

BPL’s 4Q17 EBITDA grew 13.6%

Buckeye Partners (BPL) announced its fourth-quarter and fiscal 2017 earnings on February 9, 2018. The partnership reported adjusted EBITDA1 of $289.9 million in the fourth quarter of 2017, compared to $255.1 million in the same quarter of the prior year, representing a 13.6 YoY (year-over-year) increase. Moreover, the partnership beat its 4Q17 EBITDA estimate by 5.5%. 

Buckeye Partners Posted Better-than-Expected 4Q17 Earnings

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For 2017 as a whole, the partnership reported adjusted EBITDA of $1.114 billion, compared to $1.028 in 2016—an 8.4% YoY increase. The partnership’s 2017 EBITDA growth was mainly driven by its VTTI acquisition and the contribution from phase 1 of the Michigan/Ohio project placed into service during the year. These drivers were partially offset by the impact of hurricanes, lower utilization of marine terminal capacity, and weak production activity in some regions.

Buckeye Partners’ 2017 EBITDA growth is lower than the expected industry median of 16% due to fewer expansion opportunities and the headwinds we mentioned above.

BPL’s DCF growth versus peers

Distributable cash flow (or DCF) is another important measure for analyzing the financial performance of midstream companies. The partnership reported DCF of $188.9 million in 4Q17, versus $170.7 million in 4Q16, which represents 10.7% YoY growth. The partnership’s lower DCF growth compared to EBITDA growth was mainly due to higher interest expense resulting from debt issuance to fund the VTTI acquisition and expansion projects.

BPL’s peers, Magellan Midstream Partners (MMP) posted YoY DCF growth of 11% in the fourth quarter while NuStar Energy (NS) saw a 53% decline due to higher reliability spending. For a post-earnings analysis of MMP, see Behind Magellan Midstream Partners’ Strong 4Q17 Results.

In the next part of this series, we’ll look into the earnings drivers for each of the partnership’s segments in the fourth quarter of 2017. We’ll also discuss Buckeye Partners’ distribution plans and outlook.

  1. Earnings before interest, tax, depreciation, and amortization

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