Spectra Energy Q2 Profit Down 27%, Results Miss View

(RTTNews) - Spectra Energy Corp. (SE), which owns and operates natural gas-related energy assets, on Wednesday reported a 27 percent decline in profit for the second quarter from last year, as higher revenues were more than offset by planned plant turnarounds and higher expenses. Both revenue and earnings per share for the quarter missed analysts' expectations.

Greg Ebel, chief executive officer of Spectra Energy said, "In the quarter, our planned turnarounds added to maintenance costs and reduced revenues. Even with this and a weaker Canadian dollar, we realized strong growth in our distributable cash flow and remain positioned to exceed our 2014 expectations."

For the second quarter, Spectra Energy's net income attributable to controlling interests declined to $146 million or $0.22 per share from $199 million or $0.30 per share in the prior-year quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings of $0.29 per share for the quarter. Analysts' estimates typically exclude special items.

Spectra Energy's earnings before interest, taxes, depreciation and amortization or EBITDA for the quarter was $627 million, down from $647 million in the prior-year quarter.

Operating revenues for the quarter grew 2.5 percent to $1.25 billion from $1.22 billion in the same quarter last year. Analysts had a consensus revenue estimate of $1.29 billion for the quarter.

Operating expenses increased 6 percent to $915 million from $866 million in the prior-year period.

Distributable cash flow for the quarter increased to $277 million from $248 million in the year-ago period.

Looking ahead, Spectra Energy said that it is on track to exceed its full-year EBITDA targets.

In a separate statement, Spectra Energy Partners, LP (SEP) reported second-quarter net income attributable to controlling interests of $215 million, up from $177 million in the prior-year period. However, earnings per share declined to $0.59 from $1.52 in the year-ago period.

The company noted that prior-year results have been recast to include the U.S. Assets Dropdown as of January 1, 2013 and Express-Platte as of March 14, 2013.

On average, twelve analysts polled by Thomson-Reuters expected the company to earn $0.59 per share for the quarter. Analysts' estimates typically exclude one-time items.

Operating revenues for the quarter increased 8 percent to $531 million from $492 million in the prior year. Distributable cash flow was $239 million, compared to $56 million in the prior-year quarter.

EBITDA for the quarter totaled $353 million, up from $348 million a year ago. According to the company, the Express-Platte acquisition and expansion projects bolstered EBITDA.

Ebel said, "Increased earnings from expansion projects and solid performance of the Express-Platte system, which continues to exceed expectations, led to another strong quarter of Spectra Energy Partners delivering on its commitments. We are well positioned to exceed our 2014 financial targets and, in turn, provide ongoing distribution growth for our unitholders."

Spectra Energy Partners said that the board of directors of its general partner has declared a quarterly cash distribution to unitholders of $0.56625 per unit, representing an increase of one cent over the previous level of $0.55625 per unit.

This is the 27th consecutive quarter that Spectra Energy Partners has increased its quarterly cash distribution. The cash distribution, payable on August 29, 2014, to unitholders of record at the close of business on August 18, 2014, equates to $2.265 per unit on an annual basis.

SE is trading at $40.41, up $0.19 or 0.47 percent on a volume of 715,753 shares.