Back to top

Analyst Blog

Pipeline operator Magellan Midstream Partners LP (MMP - Analyst Report) announced mixed first-quarter 2013 results, with solid contribution from the Refined Products segment.

The Tulsa, Oklahoma-based oil distributor reported earnings per unit (EPU) of 51 cents (excluding mark-to-market commodity-related pricing adjustments), surpassing the Zacks Consensus Estimate of 49 cents and the prior-year quarter profit of 47 cents.

Total revenue of $432.4 million was down 12.4% year over year and short of the Zacks Consensus Estimate of $530.0 million.

Stock Split

In mid-Oct 2012, Magellan Midstream completed the split of its limited partner units in the 2:1 ratio. The quarterly results reflect the effects of the stock split.

Quarterly Distribution

Recently, Magellan Midstream raised its first-quarter 2013 cash distribution by 2% sequentially and 21% year over year to 50.75 cents per unit ($2.03 per unit annualized). Magellan Midstream’s new distribution is payable on May 15 to unitholders of record as on May 8, 2013.

Segmental Performance

Refined Products: In this segment, quarterly operating profits (before affiliate G&A and D&A expenses) were a record $160.2 million, up 27.7% year over year. The 13% increase in transportation volumes and higher gasoline and distillate shipments mainly contributed to the revenue growth.

Crude Oil: In this segment, operating margin was $22.7 million, down 5.5% year over year due to higher operating expenses. This was partially offset by increased crude oil transportation volumes and rates.

Marine Storage: This segment’s operating margin fell 9.4% year over year to $25.3 million, due to increased expenses and a lower utilization level.

Guidance Raised

Management at Magellan Midstream expects to generate distributable cash flows of approximately $580 million for full-year 2013 and is targeting an annual distribution growth of 10%. The partnership plans to achieve an annual payout hike of at least 10% in 2014. Magellan guided toward second quarter and full-year 2013 earnings per unit of 52 cents and $2.25, respectively.

Magellan Midstream plans to spend approximately $900 million on growth projects in 2013, with expenditures of an additional $320 million in 2014 to complete the projects. Moreover, the partnership is looking to put in more than $500 million in potential growth projects.

Zacks Rating

Magellan Midstream currently retains a Zacks Rank #2 (Buy), implying that it is expected to outperform the broader U.S. equity market over the next 1 to 3 months.

In addition to Magellan Midstream, there are other pipeline operators that are expected to perform well in the coming 1 to 3 months. These include Copano Energy LLC with Zacks Rank #1 (Strong Buy), and Energy Transfer Partners LP (ETP - Analyst Report) and Summit Midstream Partners LP (SMLP - Snapshot Report) with Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SUPER MICRO… SMCI 27.00 +10.25%
CANADIAN SO… CSIQ 38.34 +8.18%
CENTURY ALU… CENX 26.97 +7.97%
WILLDAN GRO… WLDN 11.38 +5.86%
AROTECH COR… ARTX 3.78 +5.59%