Pipeline operator Magellan Midstream Partners LP (MMP) announced strong fourth-quarter 2013 results, mainly due to improved transportation volumes of refined products.
The Tulsa, Oklahoma-based oil distributor reported earnings per unit (EPU) of 88 cents (excluding mark-to-market commodity-related pricing adjustments), surpassing the Zacks Consensus Estimate of 82 cents and the prior-year quarter’s adjusted profit of 69 cents.
Total revenue, at $577.4 million, was up 14.8% year over year and also beat the Zacks Consensus Estimate of $560.0 million.
Following Magellan Midstream’s strong fourth-quarter 2013 results, the partnership’s per unit price closed at $65.07 on Feb 5, 2014, reflecting a slight increase of 1.4% from the previous day’s closing price.
For the year ended Dec 31, 2013, Magellan Midstream reported adjusted earnings per unit of $2.58, ahead of the Zacks Consensus Estimate of $2.53. Moreover, the figure also improved from the year-ago adjusted earnings of $2.02 per unit.
Revenues of $1,897.6 million were 7.1% above the prior year level and also surpassed the Zacks Consensus Estimate of $1,880.0 million.
Distributable Cash Flow
Magellan Midstream reported that its distributable cash flow during fourth-quarter 2013 came in at $236.6 million, up 32.0% from the year-ago period.
Segmental Performance
Refined Products: In this segment, quarterly operating profits (before affiliate G&A and D&A expenses) were recorded at $209.2 million, up 7.6% from the year-ago period. Increase in shipment volumes along with improved average tariffs aided the results.
Crude Oil: In this segment, operating margin was approximately $62.7 million, significantly higher (up 181.3%) than the prior-year quarter, owing to shipment of crude oil through the Longhorn pipeline. An increase in the joint venture management fee also supported the results.
Marine Storage: This segment’s operating margin decreased 24.1% year over year to $23.6 million, owing to significant increase in the segment’s operating expenses.
Guidance
Magellan Midstream projects its full-year 2014 distributable cash flows to be a record $730.0 million. The partnership also expects its annual distribution to grow by 20.0% in 2014. The annual distribution growth target for 2015 is anticipated to be 15.0%. Magellan guided first quarter and full-year 2014 earnings per unit of 70 cents and $2.90, respectively.
In order to finish its existing construction development, Magellan Midstream is expected to invest roughly $550.0 million in 2014.
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 one to three months.
One can also look at better-ranked stocks in the energy sector like Helmerich & Payne Inc. (HP), Cabot Oil & Gas Corporation (COG) and Athlon Energy Inc. (ATHL). All the stocks sport a Zacks Rank #1 (Strong Buy).
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