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Analyzing Cash Flows of Master Limited Partnerships

Stock Quotes

BPL72.77  chart-0.56
BWP15.26  chart+0.29
EPB0.00  chartN/A
EPD34.44  chart+0.08
ETP61.40  chart+0.65
KMI41.05  chart+0.34
MMP77.52  chart+0.22
NGLS45.05  chart-0.56
RGP25.66  chart+0.55
PAA49.59  chart+0.69
SPH44.19  chart-0.445
WPZ42.41  chart+0.37
NLY10.56  chart+0.01
AGNC21.55  chart+0.03
2015-01-30 16:00

NLY - Methodology for Assessing Sustainability of Annaly’s 11.3% dividend yield

 

 

 

REIT logos-NLY

Author: Ron Hiram

Published: January 27, 2015

Summary:

  • In 3 of the last 4 quarters sustainable coverage of dividends was positive.
  • Return to positive coverage in 2Q14 and 3Q14 was achieved without increasing leverage and was almost entirely driven by the better net interest spreads.
  • The current dividend again seems to be aligned with what NLY’s basic business model can produce.
  • Recent declines in long-term interest rates could exert a downward pressure on the spread and endanger dividend sustainability.

Continue reading NLY – Methodology for Assessing Sustainability of Annaly’s 11.3% dividend yield

KMI - Preliminary review of Kinder Morgan’s results for 4Q 2014

master limited partnership logos-KMP

Author: Ron Hiram

Published: January 26, 2015

Summary:

  • KMI’s first quarterly report after the merger transactions showed solid results.
  • The 41% increase in the number of shares outstanding is the reason for the 25% decline in Adjusted EBDA per share in 4Q14 vs. 4Q13.
  • DCF in 4Q14 is much higher than in prior quarters due to the manner of its derivation post the merger transactions, not due to operational results.
  • KMI appears reasonably priced vs. its large cap peers on an EV/EBITDA basis.
  • Recent market turmoil and sharp declines in oil and gas prices are not expected to have a material adverse effect in 2015.

Continue reading KMI – Preliminary review of Kinder Morgan’s results for 4Q 2014

NGLS - A Closer Look at Targa Resources Partners’ Distributable Cash Flow as of 3Q 2014

master limited partnership logos-NGLS

Author: Ron Hiram

Published: November 25, 2014

Summary:

  • Impressive increases in operating margins and Adjusted EBITDA in the last 4 consecutive quarters.
  • Very solid coverage of sustainable DCF in the TTM ended 9/30/14.
  • Multiple of enterprise value to TTM EBITDA appears very reasonable relative to other MLPs with lower distribution growth prospects.
  • APL acquisition should be immediately accretive to DCF. Combined partnership will be one of the largest diversified MLPs with pro forma enterprise value of $23 billion.

Continue reading NGLS – A Closer Look at Targa Resources Partners’ Distributable Cash Flow as of 3Q 2014

BPL - A Closer Look at Buckeye Partners' Distributable Cash Flow as of 3Q 2014

master limited partnership logos-BPL

 

Author: Ron Hiram

Published: November 21, 2014

Summary:

  • BPL has been funding distributions by issuing debt and equity.
  • Stark differences between reported and sustainable DCF due to cash consumed by working capital and by payments to terminate interest rate swaps.
  • DCF coverage is likely to be below 1x in 2014. Improvement expected in 4Q14.
  • Distribution growth rate is slow; increased by 1.25 cents per unit each quarter in 2013 and in each of the first 3 quarters of 2014.
  • High multiple of enterprise value to TTM EBITDA relative to better performing MLPs.

Continue reading BPL – A Closer Look at Buckeye Partners’ Distributable Cash Flow as of 3Q 2014

ETP - A Closer Look at Energy Transfer Partners' Distributable Cash Flow as of 3Q 2014

master limited partnership logos-ETP

Author: Ron Hiram

Published: November 17, 2014

Summary:

  • All segments exhibited notable Adjusted EBITDA improvements on a TTM basis except Interstate Transportation & Storage.
  • Substantial differences between reported DCF and what I consider sustainable DCF.
  • Sustainable DCF coverage in the latest TTM periods improved considerably compared to the prior year period, but is still below 1x in the TTM ended 9/30/14.
  • ETE’s relinquishment of some IDR distributions provided considerable help in achieving the improvement.
  • Growth underpinned by substantial list of large projects underway; concerns regarding related-party transactions remain regarding how these projects will be split among the various Energy Transfer entities.

Continue reading ETP – A Closer Look at Energy Transfer Partners’ Distributable Cash Flow as of 3Q 2014