Magellan Midstream Beats Earnings, Lags Rev - Analyst Blog
02 Agosto 2013 - 5:00PM
Zacks
Pipeline operator Magellan
Midstream Partners LP (MMP) announced better-than-expected
second-quarter 2013 earnings, on the back of strong activities from
transportation and terminal operations.
The Tulsa, Oklahoma-based oil distributor reported earnings per
unit (EPU) of 65 cents (excluding mark-to-market commodity-related
pricing adjustments), surpassing the Zacks Consensus Estimate of 53
cents and the prior-year quarter adjusted profit of 51 cents.
Total revenue of $443.9 million was down slightly (by 1.3%) year
over year and also fell short of the Zacks Consensus Estimate of
$452.0 million. Substantial fall in revenue from product sales hurt
the results.
Stock Split
In mid-Oct 2012, Magellan Midstream completed the split of its
limited partner units in the 2:1 ratio. The quarterly results
reflect the effects of the stock split.
Quarterly Distribution & Distributable cash
flow
Magellan Midstream informed that distributable cash flow during
this reported quarter increased by 26% to $168.2 million as
compared to the year ago period.
Recently, Magellan Midstream raised its second-quarter 2013 cash
distribution by 5% sequentially and 13% year over year to 53.25
cents per unit ($2.13 per unit annualized). Magellan Midstream’s
new distribution is payable on Aug 14 to unitholders of record as
on Aug 7, 2013.
Segmental Performance
Refined Products: In this segment, quarterly operating profits
(before affiliate G&A and D&A expenses) were recorded at
$177.8 million, slightly higher than that of the year ago period.
The 3.3% increase in transportation volumes favored this quarter’s
result.
Crude Oil: In this segment, operating margin was $40.5 million, up
significantly by 78.1% year over year due to increased crude oil
transportation volumes and rates.
Marine Storage: This segment’s operating margin increased 38.1%
year over year to $32.9 million, due to significant decrease in
operating expenses partially offset by lower utilization level.
Guidance Raised
Management at Magellan Midstream hiked its expected distributable
cash flows for full-year 2013 by $50.0 million to $630.0 million.
The partnership also announced increased annual distribution growth
target of 16% and 15% for the year 2013 and 2014 respectively.
Magellan guided toward third quarter and full-year 2013 earnings
per unit of 48 cents and $2.50, respectively.
Magellan Midstream maintained its
plans to spend approximately $900 million on growth projects in
2013, with expenditures of an additional $320 million in 2014 to
complete the projects. Moreover, the partnership will continue to
put in more than $500 million in potential growth projects.
Zacks Rating
Magellan Midstream currently retains a Zacks Rank #2 (Buy),
implying that it is expected to outperform the broader U.S. equity
market over the next 1 to 3 months.
In addition to Magellan Midstream, there are other pipeline
operators that are expected to perform well in the next three
months. These include Delek Logistics Partners LP
(DKL), Pioneer Southwest Energy Partners LP (PSE)
and Rose Rock Midstream LP (RRMS). All the stocks
carry a Zacks Rank #2 (Buy).
DELEK LOGISTICS (DKL): Free Stock Analysis Report
MAGELLAN MDSTRM (MMP): Free Stock Analysis Report
PIONEER SW EGY (PSE): Free Stock Analysis Report
ROSE ROCK MIDST (RRMS): Free Stock Analysis Report
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