Cheniere Energy (CQP) Stock Dips 1.5% Despite Q1 Earnings Beat

Cheniere Energy Partners, L.P.’s CQP units have declined 1.5% since the first-quarter 2022 earnings announcement on May 4. The downward movement can be attributed to much increased costs and expenses.

The company reported first-quarter earnings per unit of 73 cents, beating the Zacks Consensus Estimate by a penny. The bottom line improved from 64 cents per unit in the year-ago quarter.

Revenues of $3,328 million were higher than the year-ago level of $1,963 million and beat the Zacks Consensus Estimate of $3,142 million.

The strong quarterly earnings can be attributed to increased LNG volumes delivered and higher prices. Also, the distribution hike signals its operational strength to investors.

Cheniere Energy Partners, LP Price, Consensus and EPS Surprise

Cheniere Energy Partners, LP Price, Consensus and EPS Surprise

Cheniere Energy Partners, LP price-consensus-eps-surprise-chart | Cheniere Energy Partners, LP Quote

Cash Distribution

Cheniere Energy announced a cash distribution of $1.05 per common unit, comprising a base amount of 77.5 cents and a variable amount of 27.5 cents. The metric suggests a 50% improvement from the prior distribution. The common unit distribution will be paid out on May 13, 2022, to unitholders of record as of May 5, 2022.

Operations

Cheniere Energy sent 105 cargoes in the first quarter, up from 89 in the year-ago period. Total LNG volumes loaded in the quarter were 385 trillion British thermal units (TBtu), higher than the year-ago level of 317 TBtu.

Adjusted EBITDA in the first quarter was $1,031 million, up from the year-ago level of $779 million. Profits increased in the first quarter due to a rise in the volumes of LNG delivered and increased prices per MMBtu of LNG delivered.

Costs and Expenses

The cost of sales for the quarter was $2,562 million, up from the year-ago period’s $948 million. Operating and maintenance expenses increased to $170 million from $149 million in first-quarter 2021.

Total costs and expenses for the quarter were $2,966 million, significantly up from $1,345 million in the March-end quarter of 2021.

Cash Flow

Cheniere Energy generated an operating net cash flow of $800 million for the first three months of 2022, higher than the year-ago level of $588 million.

Balance Sheet

As of Mar 31, 2022, the partnership had $1,156 million in cash and cash equivalents, rising from $876 million at the fourth-quarter end. Cheniere Energy had a net long-term debt of $17,184 million, higher than $17,177 million at the fourth-quarter end.

Guidance

For 2022, Cheniere Energy reiterated its guidance for distribution per unit at $4-$4.25. The partnership currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Midstream Earnings Snapshot

Apart from CQP, supportive industry fundamentals and favorable margins have led to a good earnings season for some other midstream stocks.

Kinder Morgan Inc. KMI reported first-quarter 2022 adjusted earnings per share of 32 cents, beating the Zacks Consensus Estimate of 27 cents per share. The better-than-expected results can be attributed to higher refinery utilization rates and a rebound in fuel demand.

Kinder Morgan’s board of directors approved a cash dividend of 27.75 cents per share for the first quarter of 2022. This suggests a 2.8% increase from the prior dividend of 27 cents per share. The amount is payable on May 16, 2022, to stockholders of record as of the close of business on May 2, 2022.

The Williams Companies, Inc. WMB reported first-quarter 2022 adjusted earnings per share of 41 cents, beating the Zacks Consensus Estimate of 36 cents. The outperformance was due to higher-than-expected contributions from one major segment.

Williams expects to achieve a leverage ratio mid-point of 3.8, which, along with expectations to generate a positive free cash flow after dividends and capital expenditure (excluding the Trace acquisition of $950 million), offers financial flexibility. The dividend guidance increased 3.7% on an annualized basis to $1.70 in 2022 from $1.64 in 2021.

MPLX LP MPLX reported first-quarter earnings of 78 cents per unit, beating the Zacks Consensus Estimate by a penny. The strong quarterly results of MPLX were supported by increased contributions from logistics and storage operations, as well as the gathering and processing business.

Distributable cash flow attributable to MPLX for first-quarter 2022 was $1,210 million, providing 1.65X distribution coverage, up from $1,137 million in the year-ago quarter. Distribution per unit was 70.5 cents for the reported quarter.

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