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A Look at Buckeye Partners’ Earnings Drivers in 1Q18

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1Q18 EBITDA estimates

Buckeye Partners (BPL) is scheduled to release its 1Q18 earnings on May 4. Among BPL’s peers, Kinder Morgan (KMI) and NuStar Energy (NS) recently announced their 1Q18 numbers. NS reported adjusted EBITDA[1. earnings before interest, tax, depreciation, and amortization] of $250.2 million in 1Q18, compared to $154.1 million in 1Q17, representing a 62.3% YoY increase. This trend was driven by one-time hurricane insurance proceeds of $87.5 million. 

In this series, we’ll talk about Buckeye Partners’ 1Q18 estimates, segment performance drivers, and distribution coverage. We’ll look at partnership’s recent market performance, valuations, technical indicators, and analyst recommendations. Let’s start with analysts’ earnings estimates.

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Wall Street analysts’ 1Q18 consensus EBITDA estimate for BPL is $273.7 million. BPL’s 1Q18 estimate is 1.4% less than its 1Q17 adjusted EBITDA and 5.6% less than its 4Q17 adjusted EBITDA. The partnership beat its EBITDA estimate in 4Q17, which was $274.9 million. Its adjusted EBITDA was $289.9 million, a beat of 5.5%.

1Q18 earnings drivers

The expected year-over-year decline in BPL’s 1Q18 earnings could be driven by the following factors:

  • Lower capacity utilization at Buckeye Partners’ Global Marine Terminals could be due to the expiration of certain long-term contracts and the expiration of a crude-oil-by-rail contract.
  • Another factor is weak production activity in some regions, including Eagle Ford.

These factors could be offset by an increase in the partnership’s Merchant Services segment due to strong crude oil prices during 1Q18, higher Permian throughput volumes, VTTI acquisition, higher refined products demand, and contributions from the placement of Phase 1 of the Michigan/Ohio project.

In the next article, we’ll look into Buckeye Partners’ segment performance drivers during 1Q18.

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