Share price movement
Western Gas Partners’ (WES) stock price increased 1.3% from $70.9 per share to $71.9 per share after it announced its results for fiscal 1Q15 on May 5, 2015. The stock price increased due to higher revenues and adjusted EBITDA compared to the corresponding quarter last year.
Distributable cash flow in 1Q15
Distributable cash flow (or DCF) increased by 18.3% to $148 million compared to $125.1 million for 1Q15. The $64 million increase in DCF for the quarter was driven by an increase in adjusted EBITDA, partially offset by higher interest expense and maintenance capital expenditures. The company’s LP (limited partner) and GP (general partner) distributions for 1Q15 increased by 13.2% to $133 million.
Western Gas Partners increased its cash distribution from $0.16 per unit in August 2008 to $0.72 per unit in April 2015. The company’s distribution coverage ratio stood at 1.1x in 1Q15 as compared to 1.0x in 1Q14.
WES defines distributable cash flow as adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) plus interest income less maintenance capital expenditure, interest expense, and income taxes. Distribution declared is the amount of cash distributed to the general partner and the limited partner. Cash distribution is defined as distributions declared divided by the total number of general partner and limited partner units.
Key ETFs and stocks
Williams Partners (WPZ) and Boardwalk Pipeline Partners (BWP) increased their DCF by 11% and 18%, respectively. On the other hand, the DCF for Enterprise Products Partners (EPD) decreased by 5.3% in 1Q15. These MLPs together with Western Gas Partners have a combined weight of 25.1% in the Alerian MLP ETF (AMLP).
In the next part of the series, we’ll discuss how each of Western Gas Partners’ operating segments performed in 1Q15.