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Q2 Earnings at EQT Midstream Partners
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Q2 Earnings at EQT Midstream Partners


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EQT Midstream's second quarter earnings results look solid.

EQT Midstream's second quarter earnings results look solid.

Published in: Economy & Finance
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  • 1. Q2 Earnings at EQT Midstream Partners
  • 2. Meet the metrics EPS is meaningless for MLPs, we’re going to look at the distribution, coverage ratio, and DCF/unit before addressing anything specific that came up in EQT Midstream’s conference call instead.
  • 3. Distribution
  • 4. Distribution That yield leaves a lot to be desired, but given the stock is up ~60% this year and 105% TTM, it’s not that surprising. Ultimately, this is a 30% increase year-over-year, and a 6% increase quarter-over-quarter. That’s outstanding.
  • 5. Distribution coverage ratio
  • 6. Distribution coverage ratio Coverage was 1.56x payouts in the first quarter of this year, and 1.08x payouts a year ago. That’s more than ample coverage, but is refreshing given the 30% YOY distribution increase.
  • 7. DCF per Unit
  • 8. DCF per Unit Weighted Avg Limited Partner Units Outstanding Q2 2013 Q2 2014 ~34.77 million ~47.94 million DCF/Unit Q2 2013 Q2 2014 $0.61 $0.81
  • 9. DCF per Unit In other words, despite a massive equity issuance, EQT Midstream managed to grow the value of its units on an annual basis.
  • 10. Conference call insight • Expect distribution to head back closer to 1.1x payouts in the future • Organic growth is the focus near-term, third-party business (i.e. customer other than EQT) is growing • “We now expect to maintain the $0.03 per unit increase each quarter at least through the end of 2016” • “We can do the $0.03 without doing any additional drops, but we intend to do additional drops…” Read the whole transcript here.
  • 11. Sum it all up EQT Midstream Partners posted a great quarter, featuring excellent distribution growth while also growing the value of its units. As of right now, the distribution growth visibility is high, and the organic growth plan looks sound. The latter will depend on securing open season commitments for its projects and executing on time and on budget. Overall, things look great here.