Energy pipelines and terminals operator Sunoco Logistics Partners L.P. SXL reported disappointing fourth-quarter 20Array5 results. A challenging crude environment, planned refinery turnaround activities, together with lower margins related to liquids acquisition and marketing activities led to the underperformance.
Sunoco Logistics reported adjusted earnings per unit of 23 cents, which was below the Zacks Consensus Estimate of 33 cents and the year-ago quarter earnings of 36 cents.
Quarterly revenues of $2,305 million were down 4Array% from fourth-quarter 20Array4 and also lagged the Zacks Consensus Estimate of $2,537 million.
However, in some positive news, Sunoco Logistics' quarterly distributable cash flow (DCF) increased 38% year over year to $245 million.
Quarterly Distribution
Last month, Sunoco Logistics raised its quarterly distribution by 5% sequentially and 20% year over year to 47.90 cents per unit or $Array.92 per unit annualized.
Segmental Performance
Crude Oil: Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the segment inched up 6% to $Array54 million from the year-earlier level of $Array45 million. Positive results from crude oil pipelines – spurred by the July start up of the Permian Express 2 project – and bigger contribution from Sunoco Logistics’ crude oil terminals were partly offset by lower margins associated with the partnership’s crude oil acquisition and marketing activities.
Natural Gas Liquids: Adjusted EBITDA for this segment came in at $ArrayArray0 million, a 49% jump from the fourth-quarter 20Array4 level. Higher fee-based earnings from the Mariner South and Mariner East Array projects contributed to the improvement. To some extent, this was offset by narrower margins related to natural gas liquids acquisition and marketing activities.
Refined Products: This segment’s EBITDA was $53 million, almost three-fold increase from the year ago period earnings of $Array8 million. Strong growth in Sunoco Logistics’ pipeline and marketing terminals businesses primarily led to the upside. In particular, Allegheny Access pipeline got up and running during 20Array5 first quarter, while the partnership also saw good contributions at its Eagle Point, Marcus Hook and other product terminal facilities.
Operating Expenses
Operating expenses totaled $44 million against $63 million in the prior-year quarter.
Capital Expenditure & Balance Sheet
For the 3 months ended Dec 3Array, 20Array5, Sunoco Logistics’ maintenance capital expenditure and expansion capital expenditure were $35 million and $Array,Array58 million, respectively.
As of the end of 20Array5, Sunoco Logistics had $37 million cash and cash equivalents. The partnership had $5,59Array million in total debt (consisting of $562 million of borrowing under the partnership's revolving credit facility), representing a debt-to-capitalization ratio of approximately 42.5%.
Zacks Rank & Stocks to Consider
Sunoco Logistics currently carries a Zacks Rank #3 (Hold).
Some better-ranked players from the same industry would be Boardwalk Pipeline Partners L.P. BWP, ONEOK Partners L.P. OKS and Shell Midstream Partners L.P. SHLX. All of them sport a Zacks Rank #2 (Buy).
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