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Magellan Midstream (MMP) Q2 Earnings and Sales Lag Estimates
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Magellan Midstream Partners, L.P. reported second-quarter 2020 adjusted earnings per unit of 65 cents, missing the Zacks Consensus Estimate of 73 cents as well as the year-ago profit of $1.20. Lower refined products transportation volumes and a decline in crude oil shipments due to coronavirus-induced shutdowns and disruptions hampered results.
Moreover, quarterly revenues of $460.4 million not only fell from the year-ago sales of $701.7 million but also lagged the Zacks Consensus Estimate of $596 million.
Segmental Performance
Refined Products: Revenues of $315.7 million were down from the year-ago period’s $534 million. Notably, total volumes shipped in the quarter under review were 105.3 million barrels compared with 132.4 million barrels a year ago. Operating margin from the segment declined to $171.4 million in the second quarter from $251 million in the corresponding period of 2019. The segment’s depreciation costs and general & administration expenses decreased year over year. Operating profit plunged 40.9% year over year to $99.8 million.
Crude Oil: Quarterly revenues grossed $146.2 million, down 13.5% year over year on the back of lower volumes. Total volumes shipped in the quarter were 47.7 million barrels, down from 80.5 million barrels a year ago. Operating margin contracted to $128.3 million from $163.2 million in the prior year. Operating profit of $100.9 million declined 23.5% year over year due to depressed volumes and margins.
DCF & Balance Sheet
Magellan Midstream’s distributable cash flow (DCF) for the second quarter summed $209.5 million, dropping 33.4% from the year-ago level.
Notably, on Jul 23, the partnership announced second-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 1% annual growth. The amount is payable Aug 14 to its unitholders of record as of Aug 7.
As of Jun 30, 2020, the firm had cash and cash equivalents worth $2.86 million, and a long-term debt of $4.79 billion.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
As a result of the coronavirus-caused oil price crash, management expects to generate distributable cash flows in the $1,000-$1,050 million range for the full year and plans to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected third-quarter 2020 earnings per unit between 75 cents and 85 cents while the same for the full year is estimated in the $3.50-$3.70 band.
The firm plans to spend $400 million in the ongoing year and $40 million in 2021 on completing certain expansion projects. Further, Magellan Midstream has stated that they intend to maintain a 1.1-1.14 times distribution coverage for 2020.
Refined products pipeline volumes are anticipated to be persistently affected by the ongoing pandemic woes with average base business volumes — excluding the impact of expansion projects — declining 6% for gasoline, 12% for distillate and 40% for aviation fuel during the second half of 2020, indicating a downside from the levels recorded in the same period of 2019.
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Magellan Midstream (MMP) Q2 Earnings and Sales Lag Estimates
Magellan Midstream Partners, L.P. reported second-quarter 2020 adjusted earnings per unit of 65 cents, missing the Zacks Consensus Estimate of 73 cents as well as the year-ago profit of $1.20. Lower refined products transportation volumes and a decline in crude oil shipments due to coronavirus-induced shutdowns and disruptions hampered results.
Moreover, quarterly revenues of $460.4 million not only fell from the year-ago sales of $701.7 million but also lagged the Zacks Consensus Estimate of $596 million.
Segmental Performance
Refined Products: Revenues of $315.7 million were down from the year-ago period’s $534 million. Notably, total volumes shipped in the quarter under review were 105.3 million barrels compared with 132.4 million barrels a year ago. Operating margin from the segment declined to $171.4 million in the second quarter from $251 million in the corresponding period of 2019. The segment’s depreciation costs and general & administration expenses decreased year over year. Operating profit plunged 40.9% year over year to $99.8 million.
Crude Oil: Quarterly revenues grossed $146.2 million, down 13.5% year over year on the back of lower volumes. Total volumes shipped in the quarter were 47.7 million barrels, down from 80.5 million barrels a year ago. Operating margin contracted to $128.3 million from $163.2 million in the prior year. Operating profit of $100.9 million declined 23.5% year over year due to depressed volumes and margins.
DCF & Balance Sheet
Magellan Midstream’s distributable cash flow (DCF) for the second quarter summed $209.5 million, dropping 33.4% from the year-ago level.
Notably, on Jul 23, the partnership announced second-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 1% annual growth. The amount is payable Aug 14 to its unitholders of record as of Aug 7.
As of Jun 30, 2020, the firm had cash and cash equivalents worth $2.86 million, and a long-term debt of $4.79 billion.
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
2020 Outlook
As a result of the coronavirus-caused oil price crash, management expects to generate distributable cash flows in the $1,000-$1,050 million range for the full year and plans to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected third-quarter 2020 earnings per unit between 75 cents and 85 cents while the same for the full year is estimated in the $3.50-$3.70 band.
The firm plans to spend $400 million in the ongoing year and $40 million in 2021 on completing certain expansion projects. Further, Magellan Midstream has stated that they intend to maintain a 1.1-1.14 times distribution coverage for 2020.
Refined products pipeline volumes are anticipated to be persistently affected by the ongoing pandemic woes with average base business volumes — excluding the impact of expansion projects — declining 6% for gasoline, 12% for distillate and 40% for aviation fuel during the second half of 2020, indicating a downside from the levels recorded in the same period of 2019.
Zacks Rank & Key Picks
Magellan Midstream has a Zacks Rank #3 (Hold), currently. Some better-ranked players in the energy space are Halliburton Company (HAL - Free Report) , Core Laboratories NV (CLB - Free Report) and Pembina Pipeline Corp (PBA - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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