Energy pipeline and terminal operator, Sunoco Logistics Partners LP (SXL) reported fourth-quarter 2013 diluted earnings per unit (EPU) of 63 cents, down 42.7% from the prior-year quarter level of $1.10. It also failed to beat the Zacks Consensus Estimate of 71 cents per unit. Crude Oil Acquisition and Marketing segment’s weak operating activities affected the results.
However, revenues of $4,288.0 million were up 34.5% from fourth-quarter 2012, comfortably outpacing the Zacks Consensus Estimate of $3,518.0 million. Increased throughput volumes owing to expansion projects aided the results.
For the year ended Dec 31, 2013, Sunoco reported income of $3.25 per unit, below the Zacks Consensus Estimate of $3.38 per unit. The figure was also came lower than the year-ago profit of $4.24 per unit. Revenues came in at $16,639.0 million, higher than $13,121.0 million reported in the year- ago period.
Sunoco’s distributable cash flow (DCF) decreased 6.1% year over year to $155.0 million.
Quarterly Distribution
Last month, Sunoco raised its fourth-quarter 2013 cash distribution by 5% sequentially and 22% year over year to 66.25 cents per unit or $2.65 per unit annualized. Notably, the latest payout increase of Sunoco Logistics marks the 35th distribution hike. Moreover, for each of the last five quarters, the partnership raised its quarterly distribution by 5.0%.
Segmental Performance
Crude Oil Pipelines: Adjusted EBITDA in the segment moved up 41.7% to $102.0 million from the year-earlier level of $72.0 million, driven by enhanced throughput volumes due to project expansions along with higher West Texas crude oil demand.
Crude Oil Acquisition and Marketing: Adjusted EBITDA in this segment stood at $33.0 million, 59.3% below the fourth-quarter 2012 level. The deterioration can be attributed to narrower crude oil margins.
Terminal Facilities: The segment had an adjusted EBITDA (excluding one-time items) of $62.0 million, up 19.2% year over year. Better performances at the Eagle Point and Nederland terminals favored the results.
Refined Products Pipeline System: Adjusted earnings before interest, taxes, depreciation and amortization expenses (EBITDA) in this segment totaled $13.0 million, down 7.1% from $14.0 million in fourth-quarter 2012. Decrease in throughput volumes affected the segments’ results.
Capital Expenditure & Balance Sheet
Sunoco’s maintenance capital expenditure and expansion capital expenditure for the reported quarter totaled $16.0 million and $367.0 million, respectively.
As of Dec 31, 2013, Sunoco had $39.0 million cash and cash equivalents. The partnership had $2,503.0 million in total debt (consisting of $235.0 million of borrowing under the partnership's credit facility), representing a debt-to-capitalization ratio of approximately 28.4%.
Stocks to Consider
Sunoco currently carries a Zacks Rank #4 (Sell), implying that it is expected to underperform the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the oil and gas pipeline master limited partnership sector like Crestwood Equity Partners LP (CEQP), Energy Transfer Equity LP (ETE) and Kinder Morgan Management LLC (KMR). Crestwood Equity Partners sports a Zacks Rank #1 (Strong Buy), while Energy Transfer Equity and Kinder Morgan hold a Zacks Rank #2 (Buy).
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