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Why Is Phillips 66 Partners LP (PSXP) Down 0.5% Since Last Earnings Report?

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A month has gone by since the last earnings report for Phillips 66 Partners LP (PSXP - Free Report) . Shares have lost about 0.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Phillips 66 Partners LP due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Phillips 66 Partners Misses Q4 Earnings Estimates, Beats Revenues

Phillips 66 reported fourth-quarter adjusted 2020 earnings per unit of 71 cents, missing the Zacks Consensus Estimate of 88 cents. Moreover, earnings declined from $1.06 per unit in the year-ago quarter.

Revenues of $390 million decreased from $432 million in the year-ago quarter but beat the Zacks Consensus Estimate of $385 million.

Increased costs and expenses, as well as lower throughput volumes of refined petroleum products and crude oil affected the bottom line. Decreased Sand Hills Pipeline volumes added to the woes. However, the negatives were partially offset by higher Bakken Pipeline volumes and increased average terminaling revenue per barrel.

Operating Information

The partnership provides services through Pipelines, Terminals, and Storage Processing & Other activities.

Pipeline: In fourth-quarter 2020, the partnership generated revenues of $111 million, down from $126 million in the prior-year period. The drop was due to lower pipeline volumes of crude oil, refined petroleum products and natural gas liquids from the year-ago period. However, pipeline volumes of 1,720 thousand barrels per day (Mbpd) beat the Zacks Consensus Estimate of 1,640 Mbpd. Notably, average pipeline revenues of 70 cents per barrel increased from 67 cents in the year-ago quarter.

Terminals: The partnership generated $41 million revenues, down from $47 million in the year-ago quarter due to lower throughput volumes of refined petroleum products and crude oil. Terminal throughput volumes came in at 994 Mbpd, lagging the Zacks Consensus Estimate of 1,011 Mbpd.

Notably, average terminaling revenue per barrel was 44 cents for the quarter versus 38 cents in the year-ago quarter.

Storage, Processing & Other activities: Through these activities, the partnership generated revenues of $113 million, down from $118 million in the year-ago quarter.

Costs & Expenses

In the December quarter of 2020, the partnership reported operating and maintenance expenses of $85 million, down from $90 million in the year-ago period. It incurred an impairment charge of $96 million in the quarter. Total costs and expenses increased to $278 million for fourth-quarter 2020 from the year-ago figure of $177 million.

Balance Sheet & Capex

As of Dec 31, 2020, the partnership recorded cash and cash equivalents of $7 million. Total debt at the end of the quarter under review was $3,909 million. Notably, it has $334 million available under the revolving credit facility.

Capital expenditure and investment in the fourth quarter totaled $120 million.

Outlook

The partnership is constructing the 16-inch C2G ethane pipeline, which is expected to be completed by mid-2021. It will connect the partnership’s Clemens Caverns storage facility to Gregory petrochemical facilities, located near Corpus Christi. The partnership expects 2021 capital budget to be $300 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Phillips 66 Partners LP has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Phillips 66 Partners LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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