About this website

The website explains how distributable cash flow (DCF) is defined and why it is important to analyze it and derive a sustainable measure of DCF. Results reported by master limited partnerships (MLPs) are analyzed. comparisons of reported DCF to sustainable DCF are generated, and various coverage ratios and reports analyzing performance are generated. Simplified sources and uses of funds statements are presented to focus readers' attention on key cash flow items. The website also features general articles about MLPs and about other topics of interest to yield-focused investors.



The documents and opinions in this website are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the securities mentioned or to solicit transactions or clients. The information in this website is believed, but not guaranteed, to be accurate. All content on this website is presented as of the date published, is not updated and may be superseded by subsequent market events or for other reasons Under no circumstances should a person act upon the information contained within without first conducting his/her own independent research and consulting with his/her investment advisor and tax professional as to whether such action is suitable based on the investor’s investment objectives, personal and financial situation, and specific legal or tax situation.

KMI - A Closer Look at Kinder Morgan’s results for 4Q 2016


Author: Ron Hiram

Published: February 25, 2017


  • Adjusted EBDA declined 6.2% in 4Q16 and 3.7% in 2016, mostly due to sharply lower gas-gathering volumes and crude/condensate gathering volumes.
  • Cash generated by operating activities declined 28.1% in 4Q16 and 9.7% in 2016; consequently, reported and sustainable DCF were also lower.
  • Management‘s 2017 guidance indicates no substantial improvement over 2016 in terms of Adjusted EBDA, DCF and leverage.
  • Management seems to be planning to announce a substantial dividend increase late in 2017; it may be premature to do so before showing significant improvement in key operational parameters.
  • KMI is now on a much more solid financial footing; growth projects are being funded with internally generated cash flow without needing to access equity markets.

Continue reading KMI – A Closer Look at Kinder Morgan’s results for 4Q 2016

MMP - A Closer Look at Magellan Midstream Partners' results for 4Q16

Author: Ron Hiram

Published: February 22, 2017


  • Crude Oil segment operating margins increased 17.9% in 4Q16; higher average rates, in part resulting from deficiency revenues, more than offset lower shipment volumes. Storage revenues also increased.
  • Refined Products’ operating margin decreased 6.4 due to mark-to-market losses on hedges; but total volume shipped increased 5.9% and revenue per barrel shipped increased 2.2%.
  • Distribution coverage ratios remain strong and well above industry peers, whether calculated on a sustainable basis or as reported.
  • The condensate splitter dispute reflects a rare management stumble, but is not of a magnitude that affects MMP’s ability to achieve 8% distribution growth in 2017-2018 with solid coverage.
  • Distribution growth has been outpacing DCF growth; consequently, coverage ratios, while still very robust, are declining.

Continue reading MMP – A Closer Look at Magellan Midstream Partners’ results for 4Q16

SPH - A Closer Look at Suburban Propane Partners' 1QFY17 Results


Author: Ron Hiram

Published: February 7, 2017


  • Cold weather throughout most of SPH’s service territories in December drove the improvement in results for 1QFY17.
  • In the latest TTM period, coverage of distributions deteriorated substantially and was below 1x; distributions were funded from non-sustainable sources.
  • Overall demand for propane is expected to be flat or to moderately decline over the next several years; while SPH may continue consolidating, that path is becoming harder.
  • SPH could, for a period, outperform the Alerian MLP Index should the index pull back, especially if cold weather prevails in SPH’s service areas for the rest of the winter.

Continue reading SPH – A Closer Look at Suburban Propane Partners’ 1QFY17 Results

TRGP - A Closer Look at Targa Resources Corp.’s results for 3Q 2016

master limited partnership logos-NGLS


Author: Ron Hiram

Published: November 28, 2016


  • Operating margin in 3Q16 is down 12-13% vs. 3Q15; on a TTM basis it is down 2% in absolute terms and 25% per share, primarily due to lower commodity prices.
  • Adjusted EBITDA per unit declined in the last 3 quarters but is expected to improve in 4Q16; for the TTM ended 9/30/16, it declined 27% vs. the prior year.
  • DCF coverage is expected to be >1x for 2016, in line with coverage in the latest TTM period, and despite ratios substantially below 1x in 3Q16.
  • Growth projects will be financed with >50% equity until the leverage target is reached; until then dividend increases are also unlikely; this could take several years.
  • Sale of commodities still generates a significant (and recently increasing) portion of total gross margin; this makes TRGP more susceptible to commodity price fluctuations.  Continue reading TRGP – A Closer Look at Targa Resources Corp.’s results for 3Q 2016

PAA - A Closer Look at Plains All American Pipeline's 3Q16 results

master limited partnership logos-PAA




Author: Ron Hiram

Published: November 26, 2016


  • Lower Supply & Logistics continues to burden results; management attributed some of the 3Q16 segment loss to one-time events and is forecasting segment profit of ~$165 million in 1Q17.
  • Coverage was below 1x i n 3Q16 and TTM; PAA funded distributions by issuing debt and equity; the Simplification Transaction reduces cost of capital and cuts distributions by ~$320 million.
  • Total segment profit and Adjusted EBITDA have declined in 6 and 7 of the last 9 quarters, respectively; for the past 9 quarters, total dollars distributed grew faster than DCF.
  • Management expects DCF coverage to improve to ~1.09x in 2017.
  • Higher cash retention, asset sale proceeds, projects coming online, and lower 2017 capital expenditures, should reduce PAA’s high leverage ratio and allow maintaining its maintain investment grade rating.

Continue reading PAA – A Closer Look at Plains All American Pipeline’s 3Q16 results