On Aug 5, energy pipelines and terminals operator Sunoco Logistics Partners L.P. SXL reported second-quarter 2015 earnings of 43 cents per share beating the Zacks Consensus Estimate of 40 cents. Strong performance by the Terminal Facilities and Product Pipeline segments led to the beat.
However, the bottom line declined from the prior-year quarter level of 53 cents per share. Low crude margins at its Crude Oil Acquisition and Marketing and Crude Oil Pipelines segments hampered results.
Quarterly revenues of $3,202 million were down 33.6% from that in second-quarter 2014 and also lagged the Zacks Consensus Estimate of $3,996 million.
Sunoco Logistics' quarterly distributable cash flow (DCF) increased nearly 19% year over year to $264 million.
Quarterly Distribution
Last month, Sunoco Logistics raised its quarterly distribution by 5% sequentially and 20% year over year to 43.8 cents per unit or $1.75 per unit annualized.
Segmental Performance
Crude Oil Pipelines: Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the segment fell 14.4% to $89 million from the year-earlier level of $104 million. Lower transportation volumes and higher operating expenses affected the results.
Crude Oil Acquisition and Marketing: Adjusted EBITDA for this segment came in at $41 million, a 22.6% decline from the second-quarter 2014 level. Lower crude oil margins hampered results.
Terminal Facilities: This segment’s EBITDA was $140 million, up 44.3% year over year. Strong performance from the partnership’s products acquisition and marketing activities primarily led to the upside.
Products Pipelines: Adjusted EBITDA for this segment totaled $56 million, a significant increase from $26 million earned in second-quarter 2014. Higher contribution from the Mariner NGL pipeline drove volumes and revenue growth.
Operating Expenses
Operating expenses totaled $55 million as against $28 million in the prior-year quarter.
Capital Expenditure & Balance Sheet
As of Jun 30, 2015, Sunoco Logistics’ maintenance capital expenditure and expansion capital expenditure were $31 million and $909 million, respectively.
As of the end of second quarter 2015, Sunoco Logistics had $58 million cash and cash equivalents. The partnership had $4,619 million in total debt (comprising $550 million of borrowing under the partnership's revolving credit facility), which represents a debt-to-capitalization ratio of approximately 37.7%.
Guidance
The partnership reiterated expansion capital projection for 2015 of $2,500 million. Maintenance capital spending is expected to be about $70 million for the full year.
Zacks Rank
Sunoco Logistics currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the oil and gas production/pipeline MLP space are Valero Energy Partners LP VLP, Buckeye Partners, L.P. BPL and Energy Transfer Partners, L.P. ETP. While Valero Energy Partners sports a Zacks Rank #1 (Strong Buy), both Buckeye Partners and Energy Transfer Partners hold a Zacks Rank #2 (Buy).
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