NuStar Energy misses by $0.30, misses on revs (45.25)
- Reports Q2 (Jun) earnings of $0.05 per share, $0.30 worse than the Capital IQ Consensus of $0.35; revenues fell 0.5% year/year to $435.49 mln vs the $500.83 mln Capital IQ Consensus.
- "After covering our distribution for three full years, we made the strategic decision to exchange short-term coverage for long-term distribution growth by moving forward with the Permian Crude System acquisition in the core of the core of the Midland Basin. And, as we said at that time, as a result of this strategic decision, we do not expect to cover our distribution until the back half of 2018. We also noted that the second quarter would be disproportionately impacted by the transaction costs associated with the acquisition. And, of course, you can't issue 14 million new units without negatively impacting earnings per unit. And finally, revenues, which do not have a meaningful impact on profits in commodity trading operations, will be down, but discontinuing these operations should be earnings-neutral...Given all of this, it is not surprising that for the second quarter of 2017, we reported net income of $0.05 per unit, earnings before interest, taxes, depreciation and amortization (EBITDA) of $141 million and DCF available to common limited partners of $60 million, which resulted in a distribution coverage ratio of 0.59 times...These short-term results were anticipated. However, more importantly, we are on-track with our forward-looking plans that are paving the way for strong future growth -- in our earnings, assets and distributions. Drilling in the area has exceeded our initial projections. In terms of rig counts, there are currently 39 rigs running on dedicated and interconnected acreage. This is in excess of the 29 we forecast would be running at the end of 2017. In fact, back in April when we were evaluating the system, we weren't projecting 39 rigs until the end of 2018,"