Plains All American (PAA) Incurs Q2 Loss, Revenues Beat

Plains All American Pipeline, L.P. (NYSE:PAA) reported second-quarter 2016 adjusted loss of 12 cents per unit while the Zacks Consensus Estimate was earnings of 3 cents.

On a GAAP basis, loss per unit was 20 cents compared with 6 cents a year ago.

Total Revenue

In the second quarter, the partnership reported total revenue of $4,950 million, which beat the Zacks Consensus Estimate of $4,592 million by 7.8%.

However, revenues plunged around 25.7% year over year primarily due to lower contribution from the Supply & Logistics (26.8%) segment.

Operational Update

In the quarter under review, Plains All American’s total cost and expenses were $4,804 million, down 25.5% year over year primarily due to lower purchases and related costs, field operating costs, and general and administrative expenses.

The partnership’s operating income plummeted 30.8% to $146 million from $211 million a year ago.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) came in at $461 million in the second quarter, down 5.1% year over year.

Interest expenses increased 6.5% to $114 million from $107 million a year ago.

Financial Update

Current assets as of Jun 30, 2016, were $3,603 million compared with $2,969 million as of Dec 31, 2015.

As of Jun 30, 2016, Plains All American had long-term debt of $9,486 million, compared with $10,375 million as of Dec 31, 2015. The long-term, debt-to-total book capitalization ratio at the end of the quarter was 51%, down from 57% at 2015 end.

Guidance

Plains All American issued third-quarter 2016 and full-year adjusted net income guidance in the range of $237–$299 million and $1,036–$1,160 million, respectively.

Plains All American expects third-quarter 2016 EBITDA in the range of $450 million to $500 million. The partnership raised its 2016 guidance for adjusted EBITDA to the range of $2,125 million to $2,225 million from an earlier range of $2,100 million to $2,250 million.

The partnership also provided 2016 expansion capital expenditure guidance in the $1,350–$1,500 million band. It projects maintenance capital expenditure in the range of $180–$200 million.

Peer Releases

PBF Logistics LP (NYSE:PBFX) reported second-quarter 2016 earnings of 76 cents, beating the Zacks Consensus Estimate of 51 cents by 49%.

Boardwalk Pipeline Partners, LP’s (NYSE:BWP) second-quarter 2016 earnings of 26 cents beat the Zacks Consensus Estimate of 18 cents by 44.44%.

ONEOK (NYSE:OKE) Partners, L.P. (NYSE:OKS) reported second-quarter 2016 earnings of 54 cents per unit, beating the Zacks Consensus Estimate of 53 cents by 1.9%.

Zacks Rank

Plains All American currently holds a Zacks Rank #3 (Hold).

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