TC PipeLines, LP Announces 2016 Fourth Quarter and Year End Financial Results
Receives Offer from TransCanada to Purchase Interests in the Iroquois and PNGTS Systems
(firmenpresse) - HOUSTON, TEXAS -- (Marketwired) -- 02/27/17 -- TC PipeLines, LP (NYSE: TCP) (the Partnership) today reported fourth quarter 2016 net income attributable to controlling interests of $60 million and distributable cash flow of $67 million. For the year ended December 31, 2016, net income attributable to controlling interests was $244 million and distributable cash flow was $313 million.
"The Partnership delivered solid results in 2016, reflecting the strength and stability of our portfolio of high quality, FERC-regulated natural gas pipelines, all of which are underpinned by long-term, ship-or-pay contracts with creditworthy customers," said Brandon Anderson, president of TC PipeLines GP, Inc. "Our steady financial performance positions us for additional dropdown transactions as well as other organic growth opportunities."
"We are currently in receipt of an offer from TransCanada to sell to us a 49.3 percent interest in the Iroquois Gas Transmission System and its remaining 11.8 percent of the PNGTS system," added Anderson. "These pipelines are critical energy infrastructure in the U.S. Northeast and are expected to be integral to those markets for years to come. Upon a successful transaction, we believe this investment will further strengthen our cash flows and our ability to increase our quarterly distributions this year in line with recent increases."
The terms and structure of the proposed transaction are subject to satisfactory negotiation and approval by the Conflicts Committee of the Board of Directors of the Partnership''s general partner and, upon recommendation from the Conflicts Committee, approval by the Board of Directors. Funding of the transaction could be sourced from a combination of debt and equity, the latter from the expected continued use of the Partnership''s ATM program. We expect the transaction to be completed mid-year 2017.
Full Year 2016 Highlights and Fourth Quarter Highlights (All financial figures are unaudited)
The Partnership''s financial highlights for the fourth quarter of 2016 and for the year ended December 31, 2016 compared to the same periods of 2015 were:
Recent Developments
Cash Distributions - On January 23, 2017, the board of directors of our General Partner declared the Partnership''s fourth quarter 2016 cash distribution in the amount of $0.94 per common unit payable on February 14, 2017 to unitholders of record as of February 2, 2017. The declared distribution to our General Partner will include a $1.3 million distribution for its effective two percent general partner interest and an IDR payment amounting to $2.0 million for a total fourth quarter 2016 distribution of $68 million.
Three Months Ended December 31, 2016 Results of Operations
For the three months ended December 31, 2016, net income attributable to controlling interests and EBITDA increased by $197 million and $198 million, respectively compared to the same period in 2015 primarily due to the recognition of the $199 million non-cash impairment on our investment in Great Lakes in fourth quarter 2015. Our Adjusted earnings and Adjusted EBITDA remained comparable to the same period in 2015 and were impacted by the net effect of:
For the three months ended December 31, 2016, our Distributable cash flow decreased $7 million compared to the same period in 2015 primarily due to higher interest expense and higher maintenance capital expenditures in fourth quarter of 2016 compared to 2015.
Twelve months Ended December 31, 2016 Cash Flow Analysis
The Partnership''s net cash provided by operating activities increased by $62 million for the twelve months ended December 31, 2016 compared to the same period in 2015 primarily due to higher earnings. Earnings were higher due to the net effect of the following:
Transmission revenues - the $13 million increase was primarily due to the net effect of:
Earnings from equity investments - the $19 million increase was mainly due to our share of earnings from the acquisition of a 49.9 percent interest in PNGTS effective January 1, 2016.
Operating expenses - generally lower expenses in 2016 as a result of lower operational costs on our consolidated entities. Additionally, dropdown costs were incurred on the PNGTS acquisition in 2015.
Financial charges and other - the $11 million increase was mainly attributable to additional borrowings to fund a portion of our recent acquisitions.
Net income attributable to non-controlling interests - the $7 million decrease was due to the 2015 GTN acquisition effective April 1, 2015, whereby the Partnership now owns 100 percent of GTN.
The Partnership''s net cash used in investing activities decreased by $97 million as we invested a lesser amount for our recent acquisition of PNGTS compared to our investment during the same period in 2015. In 2015, we paid $264 million to acquire the remaining 30 percent interest in GTN compared to $193 million paid for the acquisition of a 49.9 percent interest in PNGTS in 2016. Additionally, we had higher capital expenditures in 2015 due to expenditures related to the construction of the Carty Lateral at GTN.
The Partnership''s net cash provided by financing activities decreased by $161 million in the twelve months ended December 31, 2016 compared to the same period in 2015 primarily due to the net effect of:
At December 31, 2016, the Partnership''s available borrowing capacity under its $500 million credit facility was $340 million.
Non-GAAP Financial Measures
The following non-GAAP financial measures are presented as a supplement to our financial statements:
We have evaluated our financial performance and position inclusive of the impairment charge to our investment in Great Lakes during the fourth quarter of 2015. However, we believe it is not reflective of our underlying operations during the periods presented. Therefore, we have presented adjusted earnings and adjusted earnings per common unit as non-GAAP measures that exclude the impact of the $199 million non-cash impairment charge.
EBITDA is an approximate measure of our operating cash flow during the current earnings period and reconciles directly to the net income amount presented. It measures our earnings before deducting interest, depreciation and amortization and net income attributable to non-controlling interests and it includes earnings from our equity investments. Adjusted EBITDA also excludes the impact of the $199 million non- cash impairment charge we believe is significant but not reflective of our underlying operations.
Total distributable cash flow and distributable cash flow provide measures of distributable cash generated during the current earnings period and reconcile directly to the net income amounts presented.
We believe these measures provide investors with meaningful information in evaluating our financial performance and cash distribution capability.
Total distributable cash flow includes Adjusted EBITDA plus:
Distributable cash flow is computed net of distributions declared to the General Partner and distributions allocable to Class B units. Distributions declared to the General Partner are based on its effective two percent interest plus an amount equal to incentive distributions. Distributions allocable to the Class B units equal 30 percent of GTN''s distributable cash flow for the year ended December 31, 2016 less $20 million (2015- less $15 million).
The non-GAAP financial measures described above are performance measures presented to assist investors in evaluating our business performance. We believe these measures provide additional meaningful information in evaluating our financial performance and cash generating performance.
The non-GAAP financial measures presented as part of this release are provided as a supplement to GAAP financial results and are not meant to be considered in isolation or as substitutes for financial information prepared in accordance with GAAP. Additionally, these measures as presented may not be comparable to similarly titled measures of other companies.
For a reconciliation of these non-GAAP financial measures to GAAP measures, please see the tables captioned "Reconciliation of Net income to Distributable Cash Flow," "Reconciliation of Net income (loss) attributable to controlling interests to adjusted earnings" and "Reconciliation of Net income (loss) per common unit to adjusted earnings per common unit," included at the end of this release.
Conference Call
Members of the investment community and other interested parties are invited to participate in a teleconference by calling 866.223.7781 on Monday, February 27, 2017 at 9:00 a.m. central time (CDT)/10:00 a.m. eastern time (EDT). Brandon Anderson, president of the General Partner, will discuss the fourth quarter financial results and provide an update on the Partnership''s business, followed by a question and answer session. Please dial in 10 minutes prior to the start of the call. No pass code is required. A live webcast of the conference call will also be available through the Partnership''s website at . Slides for the presentation will be posted on the Partnership''s website under "Events and Presentations" prior to the webcast.
A replay of the teleconference will also be available two hours after the conclusion of the call and until 11 p.m. (CDT) and midnight (EDT) on March 6, 2017, by calling 800.408.3053, then entering pass code 9983947.
About TC PipeLines, LP
TC PipeLines, LP is a Delaware master limited partnership with interests in seven federally regulated U.S. interstate natural gas pipelines which serve markets in the Western, Midwestern and Eastern United States. The Partnership is managed by its general partner, TC PipeLines GP, Inc., a subsidiary of TransCanada Corporation (NYSE: TRP). For more information about TC PipeLines, LP, visit the Partnership''s website at .
Forward-Looking Statements
Certain non-historical statements in this release relating to future plans, projections, events or conditions are intended to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on current expectations and, therefore, subject to a variety of risks and uncertainties that could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including, without limitation to costs of compliance with newly enacted regulations, the timing, terms and closing of future acquisitions of additional natural gas pipeline assets and the ability of these assets to generate ongoing value to our unitholders, impact of potential impairment charges, potential of claims for rescission in connection with certain sales under our ATM program, decreases in demand on our pipeline systems, increases in operating and compliance costs, the outcome of rate proceedings, the impact of recently issued and future accounting updates and other changes in accounting policies, our ability to identify and complete expansion and growth opportunities, operating hazards beyond our control, disruption in the debt and equity markets that negatively impacts the Partnership''s ability to finance its capital spending. These and other factors that could cause future results to differ materially from those anticipated are discussed in Item 1A in our Annual Report on Form 10-K for the year-ended December 31, 2016 filed with the Securities and Exchange Commission (the SEC), as updated and supplemented by subsequent filings with the SEC. All forward-looking statements are made only as of the date made and except as required by applicable law, we undertake no obligation to update any forward-looking statements to reflect new information, subsequent events or other changes.
Contacts:
Media Inquiries:
Mark Cooper/James Millar
403.920.7859
800.608.7859
Unitholder and Analyst Inquiries:
Rhonda Amundson
877.290.2772
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Datum: 27.02.2017 - 06:29 Uhr
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