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Spectra Energy reports mainly strong revenues and profits

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Revenues and net income increase

Spectra Energy (SE) released its 4Q14 financial results on February 4. In the previous section of this series, we discussed Spectra Energy’s (SE) revenues and earnings relative to analyst estimates. In this article, we’ll analyze how the company performed in the latest quarter by looking at its revenues and profits.

In 4Q14, Spectra Energy (SE) quarterly revenues increased 2.2% to $1.6 billion, up from $1.56 billion in 4Q13. Kinder Morgan (KMI), the largest midstream company, increased its revenues by 2% in 4Q14. AGL Resources (GAS) revenues increased by 18.6%. TransCanada Corporation (TRP), another midstream energy giant, is expected to announce its 4Q14 results soon.

Spectra Energy makes up 2% of the Energy Select Sector SPDR ETF (XLE).

Net income for 4Q14 increased 33.9% to $316 million, up from $236 million recorded in 4Q13. Net income margin—or, net income as a percentage of revenues—also rose to 19.8%, up from 15.1% in the same quarter a year ago.

Distributable cash flow was up $168 million year-over-year to $1.46 billion, 13% higher than it was in 2013.

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Earnings by segment

From 4Q13 to 4Q14, Spectra Energy Partners and the Western Canada Transmission & Processing segments recorded jumps in EBITDA (earnings before interest, taxes, depreciation, and amortization). Meanwhile, the company’s Distribution and Field Services segments each saw EBITDA decrease. The Field Services segment suffered the most. In contrast to a 20% increase in Spectra Energy Partners (SEP) EBITDA, the Field Services segment witnessed a loss in EBITDA. In the same quarter a year ago, Field Services reported $72 million in EBITDA.

Factors affecting Spectra Energy’s quarterly results

A number of concerns outweighed the positive results in the latest quarter. The company’s earnings increased on account of the following:

  • various expansion projects including the Kingsport expansion project, developments in the Sabal Trail pipeline, the NEXUS pipeline, the Ohio pipeline energy network (OPEN) project, and the Uniontown to Gas City project
  • higher volumes in Western Canada natural gas transmission & processing
  • higher crude oil transportation revenues

These factors negatively affected the latest quarter’s results:

  • a weaker Canadian dollar relative to the US dollar. For more on this topic, read Must-know: Spectra Energy’s currency concerns
  • weaker commodity prices and higher operating costs
  • lower customer usage in the Distribution segment as a result of warmer weather

Read the following section to learn about Spectra Energy’s 2014 results.

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