Boardwalk Pipeline Partners LP (NYSE:BWP) Disappoints
The interstate oil pipeline operator Boardwalk Pipeline Partners, LP (NYSE:BWP) reported weak 4Q results yesterday and cut its distribution payout for the quarter by close to 80 percent. This sent the investors scurrying for cover by exiting the stock in droves, resulting in one of the worst blood baths that the stock has endured at the stock markets in the pasts few years. When the mayhem came to an end at end of trading day, the share price per share had dropped by a huge 45.99 percent to settle at $13.01, which is a new 52 week low price bench mark.
Distribution For The Quarter Down To 1 Cent Per Unit
Boardwalk Pipeline Partners, LP (NYSE:BWP) Chief Executive Officer, President and Director Stanley Horton addressing the media post the conference call, explained the reason for the Board of Directors to go in for such a drastic cut in distribution payout by stating that, “Past year, we distributed $2.13 per common unit with approximately one-times coverage and at December 31 had a debt to EBITDA ratio of 4.6 times. Our revenues are continuing to face substantial market headwind, we do not foresee these conditions changing appreciably in the short term. The Board declared a distribution that will free up internally generated cash to help fund growth and reduce leverage.”
Move Aimed To Maintain Fiscal Discipline
With the cut in the outflow of cash which would otherwise have been routed to distribution payouts, the pipeline operator hopes to continue fiscal discipline by maintaining its earnings to be less than or equal to four times its cash to debt ratio.
Moody’s Downgrades Outlook
The disappointing results announcement was followed by Moody’s Investors Service downgrading its outlook for Boardwalk Pipelines, LP to a negative from its previous call of stable. The rating agency also affirmed the pipeline operators rating on senior unsecured notes at Baa2.