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NuStar Energy (NS) Q1 Earnings Miss, Revenues Beat Estimates

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San Antonio-based publicly traded partnership NuStar Energy L.P. (NS - Free Report) reported first-quarter earnings per limited partner unit of 49 cents, lower than the Zacks Consensus Estimate of 52 cents per limited partner unit. Further, this also compares unfavorably with the prior-year adjusted earnings of 57 cents. The weaker result was primarily due to the increase in the cost of product sales.

Quarterly revenues of $487 million beat the Zacks Consensus Estimate of $446 million and also came in well above the year-ago level of $406 million.

 

 

 

 

Quarterly Distribution

NuStar Energy announced a quarterly distribution of $1.095 per unit ($4.38 per unit annualized), flat both sequentially and on an annualized basis. The distribution is payable on May 12, to unit holders on record as of May 8, 2017.

Per NuStar Energy’s earnings release, distributable cash flow (DCF) available to limited partners for the first quarter was $88.9 million (providing 0.87x distribution coverage) compared with $91.3 million (providing 1.06x distribution coverage) without the impact of equity offering that the partnership undertook to finance the acquisition of Navigator Energy Services.

Segmental Performance

Pipeline: Total quarterly throughput volume in the segment was 922,825 barrels per day (Bbl/d), down 1% from the year-ago period. Throughput volumes in the crude oil pipelines dipped 0.5% from the year-ago quarter to 408,809 Bbl/d, whereas refined product pipelines throughput was down 1.4% to 514,016 Bbl/d.  Lower drilling activities in the South Texas and Eagle Ford Basin contributed to the slight decrease in the throughput volumes.

Throughput revenues increased 2% year over year to $121,240 million. The segment’s operating income of $65 million was slightly higher than the year-ago figure of $64.3 million. This is mainly due to the higher revenues associated with refined product pipelines.

Storage: Throughput volumes in the Storage segment fell 62% year over year to 315,010 Bbl/d. There was a 3.3% decline in the unit’s quarterly revenues to $147.4 million from $152.4 million in the prior-year quarter.  It is to be noted here that the throughputs for the three months also included 506,674 barrels per day from our refinery storage at Corpus Christi, which changed from throughput-based to lease-based effective Jan 1, 2017. The marginal net decline after taking into account the lease factor is attributed to turnaround at a refinery.  

The segment’s operating income of $53.7 million was 5.7% lower than $57 million earned in the year-ago quarter. Lower throughput was responsible for the downside. However weaker throughput revenues were partially offset by higher renewal storage rates, increased fees associated with the Martin acquisition and lower operating expenses.

FuelsMarketing: The unit reported operating income of $5.1 million compared with the year-ago loss of $0.8 million. The improvement is attributed to improved margins and decreased operation expenses along with better results from the fuels trading business.

Costs & Expenses

The partnership incurred total costs of $207.8 million, up 61% year over year. Operating expenses came in at $101 million, down 4% from the year-ago period. This was due to the efficiency measures executed in many of the operating regions.

Balance Sheet

As of Mar 31, 2017, the partnership had total debt of $3,023 million, which represents a debt-to-capitalization ratio of 65.8%.

Nustar Energy L.P. Price, Consensus and EPS Surprise

 

Nustar Energy L.P. Price, Consensus and EPS Surprise | Nustar Energy L.P. Quote

Zacks Rank & Key Picks

NuStar Energy is a master limited partnership that engages in the transportation and storage of crude oil as well as refined products. The partnership currently carries a Zacks Rank #3 (Hold).

Better-ranked partnerships in the same industry include PBF Logistics LP , Boardwalk Pipeline Partners L.P. and Cone Midstream Partners LP . While PBF Logistics sports a Zacks Rank #1 (Strong Buy), Boardwalk Pipeline and Cone Midstream carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PBF Logistics posted a positive average surprise of 15.61% in the last four quarters.

Boardwalk Pipeline posted a positive average surprise of 17.91% in the last four quarters.

Cone Midstream posted a positive average surprise of 9.35% in the last four quarters

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