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Magellan Midstream's (MMP) Q1 Earnings Beat, Sales Miss
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Magellan Midstream Partners L.P. reported adjusted earnings per unit of $1.06, surpassing the Zacks Consensus Estimate of $1.00 and the firm’s forecast of 90 cents. Gains derived from the company’s divestment of a portion of interest in the Bridge Tex pipeline and sale of assets related to the Delaware Basin Pipeline project led to the outperformance. Stronger contribution from Crude Oil and Marine Storage units also aided the results. The bottom line was also a tad higher than the year-ago profit of $1.05 cents a unit.
Quarterly revenues of $628.9 million missed the Zacks Consensus Estimate of $683 million. The top line was also lower than the year-ago level of $678.8 million.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Refined Products: Revenues from the segment came in at $422.6 million, down 14% from the year-ago period owing to lower volumes. Notably, total volumes shipped in the quarter under review totaled 116.1 million barrels versus 118 million barrels a year ago. As such, operating margin also declined to $171.9 million in first-quarter 2019 from $211.4 million in the corresponding period of 2018. Depreciation costs increased 22.8% y/y to $35.5 million. As such, operating profit of the segment declined 41.4% y/y to $108.6 million amid higher costs, and lower volumes and operating margins.
Crude Oil: Quarterly revenues came in at $156.8 million, up 14.7% y/y on the back of higher volumes. Total volumes shipped in the quarter totaled 79.4 million barrels, up from 55.7 million barrels in the year-ago period. As such, operating margin increased to $140.2 million from $127.7 million recorded in the year-ago period. Operating profit came in at $112.3 million, up 9% y/y on the back of higher volumes and margins, partly offset by increased depreciation and G&A costs.
Marine Storage: Revenues from the segment came in at $50.5 million compared with the year-ago period’s $49.5 million. Operating margin increased 28% y/y to $38.4 million on the back of higher other income and lower operating expenses. Operating profit also surged 51% y/y to $23.1 million in the quarter under review.
DCF & Balance Sheet
Distributable cash flows in the first quarter of 2019 came in at $318 million, up from $258.9 million in the year-ago period on the back of divestment gains.
Notably, on Apr 25, the partnership announced first-quarter cash distribution of $1.005 per unit ($4.02 a unit on an annualized basis), representing 7% and 1% yearly and sequential growth, respectively. This represents the 68th distribution hike since the partnership became public. The new distribution will be paid on May 15 to unitholders of record as of May 8.
As of Mar 31, the partnership had cash and cash equivalents of $13.5 million, and long-term debt of $4.279.7 million (with a debt-to-capital ratio of 62%).
Guidance Up
For the full year, management now expects to generate distributable cash flows of approximately $1.18 billion versus prior forecast of $1.14 billion. Also, it is targeting annual distribution growth of 5%.Magellan Midstream projects second-quarter earnings per unit to be$1.13 cents. Full-year earnings per unit are now revised upward to $4.05 from the previous guidance of $3.80.The partnership plans to spend approximately $1.1 billion on expansion projects in 2019.
Meanwhile, investors interested in the energy space can consider some better-ranked players such as:
Devon Energy Corporation (DVN - Free Report) : Devon’s 2019 earnings are expected to grow 68.2% on a year-over-year basis.
Murphy Oil Corporation (MUR - Free Report) : Murphy surpassed earnings estimates in three out of the trailing four quarters, with average positive surprise of 17.33%. The company’s 2019 earnings are expected to grow 26.2%.
Bonanza Creek Energy, Inc. : The company delivered average positive earnings surprise of 3.99% in the trailing four quarters. Bonanza Creek’s 2019 revenues are expected to grow 23.1% y/y.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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Magellan Midstream's (MMP) Q1 Earnings Beat, Sales Miss
Magellan Midstream Partners L.P. reported adjusted earnings per unit of $1.06, surpassing the Zacks Consensus Estimate of $1.00 and the firm’s forecast of 90 cents. Gains derived from the company’s divestment of a portion of interest in the Bridge Tex pipeline and sale of assets related to the Delaware Basin Pipeline project led to the outperformance. Stronger contribution from Crude Oil and Marine Storage units also aided the results. The bottom line was also a tad higher than the year-ago profit of $1.05 cents a unit.
Quarterly revenues of $628.9 million missed the Zacks Consensus Estimate of $683 million. The top line was also lower than the year-ago level of $678.8 million.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Magellan Midstream Partners, L.P. price-consensus-eps-surprise-chart | Magellan Midstream Partners, L.P. Quote
Segmental Performance
Refined Products: Revenues from the segment came in at $422.6 million, down 14% from the year-ago period owing to lower volumes. Notably, total volumes shipped in the quarter under review totaled 116.1 million barrels versus 118 million barrels a year ago. As such, operating margin also declined to $171.9 million in first-quarter 2019 from $211.4 million in the corresponding period of 2018. Depreciation costs increased 22.8% y/y to $35.5 million. As such, operating profit of the segment declined 41.4% y/y to $108.6 million amid higher costs, and lower volumes and operating margins.
Crude Oil: Quarterly revenues came in at $156.8 million, up 14.7% y/y on the back of higher volumes. Total volumes shipped in the quarter totaled 79.4 million barrels, up from 55.7 million barrels in the year-ago period. As such, operating margin increased to $140.2 million from $127.7 million recorded in the year-ago period. Operating profit came in at $112.3 million, up 9% y/y on the back of higher volumes and margins, partly offset by increased depreciation and G&A costs.
Marine Storage: Revenues from the segment came in at $50.5 million compared with the year-ago period’s $49.5 million. Operating margin increased 28% y/y to $38.4 million on the back of higher other income and lower operating expenses. Operating profit also surged 51% y/y to $23.1 million in the quarter under review.
DCF & Balance Sheet
Distributable cash flows in the first quarter of 2019 came in at $318 million, up from $258.9 million in the year-ago period on the back of divestment gains.
Notably, on Apr 25, the partnership announced first-quarter cash distribution of $1.005 per unit ($4.02 a unit on an annualized basis), representing 7% and 1% yearly and sequential growth, respectively. This represents the 68th distribution hike since the partnership became public. The new distribution will be paid on May 15 to unitholders of record as of May 8.
As of Mar 31, the partnership had cash and cash equivalents of $13.5 million, and long-term debt of $4.279.7 million (with a debt-to-capital ratio of 62%).
Guidance Up
For the full year, management now expects to generate distributable cash flows of approximately $1.18 billion versus prior forecast of $1.14 billion. Also, it is targeting annual distribution growth of 5%.Magellan Midstream projects second-quarter earnings per unit to be$1.13 cents. Full-year earnings per unit are now revised upward to $4.05 from the previous guidance of $3.80.The partnership plans to spend approximately $1.1 billion on expansion projects in 2019.
Zacks Rank and Key Picks
Currently, Magellan Midstream has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Meanwhile, investors interested in the energy space can consider some better-ranked players such as:
Devon Energy Corporation (DVN - Free Report) : Devon’s 2019 earnings are expected to grow 68.2% on a year-over-year basis.
Murphy Oil Corporation (MUR - Free Report) : Murphy surpassed earnings estimates in three out of the trailing four quarters, with average positive surprise of 17.33%. The company’s 2019 earnings are expected to grow 26.2%.
Bonanza Creek Energy, Inc. : The company delivered average positive earnings surprise of 3.99% in the trailing four quarters. Bonanza Creek’s 2019 revenues are expected to grow 23.1% y/y.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
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