Azure Midstream Partners, LP (OTCMKTS:AZUR) reported an increase in earnings for the quarter.
DALLAS, Nov. 1, 2016 /PRNewswire/ — Azure Midstream Partners, LP (AZUR) (“Azure” or the “Partnership”), announced third quarter 2016 financial and operating results, including, significant debt reduction.
Third Quarter 2016 Results
Azure’s net income was $14.4 million for the quarter ended September 30, 2016, compared to a net loss of $8.4 million for the prior quarter. As discussed below, this increase in earnings relates primarily to the recognition of previously deferred revenue of $18.5 million.
Adjusted EBITDA for the quarter ended September 30, 2016 increased to $1.4 million from $0.8 million for the second quarter of 2016. Deferred revenue associated with our minimum revenue commitment agreements and several minimum volume commitment agreements was $2.0 million for both the second and third quarter, of 2016. These amounts are billed to our customers on an annual basis and are included in our distributable cash flows in the amounts for which we are entitled to receive for the applicable quarter. Distributable cash flow for the quarter was negative by $0.2 million. If the partnership were in compliance with all of its bank covenants, interest expense for the quarter would have been lower by approximately $0.9 million, implying a hypothetical distributable cash flow of $0.7 million, $0.063 per limited partner unit, or $0.25 on an annualized basis at 1.0 times distribution coverage.
“We are pleased to see the increase in earnings as a result of recent initiatives completed by the partnership”, said I.J. “Chip” Berthelot, II, Chief Executive Officer. “We remain focused on creating value for stakeholders, and continue to see positive momentum in our commercial endeavors.”
Adjusted EBITDA and distributable cash flow are explained in greater detail under “Use of Non-GAAP Financial Measures,” and reconciliations of these measures to their most directly comparable GAAP measures are included in the tables at the end of this release.
Gross margin for the gathering and processing segment for the third quarter 2016 was $25.1 million, which includes a one-time recognition of the minimum revenue commitment (“MRC”) previously deferred and included on the balance sheet. Based upon facts known in the third quarter, it was determined that all of the revenue recognition criteria related to the MRC revenues, previously deferred under this contract had been met. This was due to the determination that based on current facts the likelihood that our customer would be able to generate revenues in excess of its future MRC as an offset to future gathering fees is highly unlikely. Gross margin, excluding this one-time recognition, was $6.6 million as compared to $6.9 million in the second quarter 2016. Gathered gas volumes were 235 MMcf/d and gas processed volumes were 65 MMcf/d for the third quarter 2016. Gathered gas volumes were 246 MMcf/d and gas processed volumes were 62 MMcf/d for the second quarter 2016.
The Partnership’s third quarter 2016 recurring operating expenses were $3.2 million, recurring general and administrative expenses were $2.7 million, depreciation and amortization expenses were $3.4 million, and interest expense was $4.0 million. Debt, net of cash, was $162.4 million as of September 30, 2016.
As previously discussed, on August 4, 2016 Azure completed the sale of its 100 MMcf/d Panola I processing plant and Murvaul pipeline to Align Midstream Partners for $44.9 million in cash proceeds. Azure used $41.0 million of the sale proceeds to further reduce debt and improve leverage. Additionally, Azure recorded a $4.8 million gain on the sale of these assets during the third quarter of 2016.
On October 28, 2016 Azure obtained a waiver from its revolving credit facility lenders to continue to pursue various strategic alternatives.
Third Quarter 2016 Conference Call and Webcast
Azure will host a conference call to discuss third quarter 2016 results at 11:00 am CT (12:00 pm ET) on Tuesday, November 1, 2016.
Interested parties can listen to a live webcast of the call from the Events & Presentations page of the Azure Investor Relations website at http://investor.azuremidstreampartners.com/phoenix.zhtml?c=253822&p=irol-calendar. An archived replay of the webcast will be available for 12 months following the live presentation.
Azure Midstream Partners, LP (OTCMKTS:AZUR) shares have moved -15.38% on the news thus far today and have traded in the range of $0.16 – 0.65 during the current session. In order to take a look at where the stock might be headed longer term, investors often look to research firms that cover the stock. Sell-side research firms currently have a consensus one-year price target of $0.00 on the stock. This is according to brokerage analysts polled by Thomson Reuters First Call. The sell-side analysts are projecting earnings per share of $0.00 for the next fiscal quarter. For the current year, analysts are predicting earnings of $0.24 per share according to First Call.
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In looking at where the stock is trading on a technical level, the stock is trading -5.53% away from its 50-day moving average of $0.58. Based on the most recent available data, the equity is -92.78% off of its 52-week high of $7.62 and +254.84% away from its 52-week low which is $0.16.
Today, the stock opened at $0.65 and the last bid at the time of writing stood at $0.55. During the session thus far, the equity dipped down to $0.16 and touched $0.65 as the high point. Azure Midstream Partners, LP (OTCMKTS:AZUR) has a market cap of $6.21M and has seen an average daily volume of 35,418 over the past three months.
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