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Magellan Midstream (MMP) Stock Rises 7% After Q1 Earnings Beat
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Magellan Midstream Partners, L.P. stock has risen 7% since the first-quarter 2022 earnings announcement on May 5.
This increase can be attributed to Magellan Midstream’s first-quarter earnings beating the Zacks Consensus Estimate and higher distributable cash flow (“DCF”) guidance for 2022.
Inside Magellan Midstream’s Earnings
The diversified energy infrastructure provider, Magellan Midstream Partners, reported a first-quarter adjusted net income of $1.08 per unit, higher than the Zacks Consensus Estimate of $1.05. The outperformance reflects higher transportation volumes as the economy reopens amid a sharp pick-up in travel demand along with increased drilling activities spurred by the surge in the commodity price.
However, the bottom line came marginally lower than the year-earlier quarter’s earnings of $1.09 per unit due to mark-to-market adjustments and lower oil sales revenues.
MMP’s revenues of $674.7 million rose about 7% from the first quarter of 2021 but lagged the Zacks Consensus Estimate of $826 million by 18.3%.
Magellan Midstream Partners, L.P. Price, Consensus and EPS Surprise
Refined Products: The operating margin of $235.4 million was down from the year-ago period’s $260.9 million. Transportation and terminal revenues improved 4% to $309.5 million on higher transportation volumes, which continue to rebound from 2020’s pandemic-led dip, and contributions from Magellan Midstream’s Texas pipeline expansion projects. The slump in the product margin could be attributed to the much higher cost of product sales in the reported quarter.
Crude Oil: The operating margin of $103.6 million decreased 5% from the first quarter of 2021 of $109.1 million as transportation and terminal revenues and product sales revenues fell due to the overall lower tariff rates on MMP’s pipeline systems and a reduction in volumes.
Distributable Cash Flow
Magellan Midstream’s DCF for the first quarter was down 4% year over year to $265.4 million.
The company announced a first-quarter cash distribution of $1.0375 per unit ($4.15 on an annualized basis), which was unchanged sequentially. The amount was paid out on May 13 to its unitholders of record as of May 2.
2022 Guidance
Magellan Midstream increased its 2022 DCF guidance by $15 million to $1.09 billion to reflect a higher-than-expected financial performance in the first quarter and a more favorable commodity pricing environment projected for the year.
The partnership maintained its 2022 free cash flow guidance of $1.46 billion or $575 million after distributions.
Based on first-quarter results and the current number of shares outstanding, the net income per unit is estimated at $4.35 for 2022, with the second-quarter guidance of $1.12 per unit.
Matador Resources Company (MTDR - Free Report) reported first-quarter 2022 adjusted earnings of $2.32 per share, beating the Zacks Consensus Estimate of $2.05. The strong quarterly earnings were driven by increased oil-equivalent production volumes and higher commodity price realizations.
As of Mar 31, 2022, Matador had cash and restricted cash of $120.2 million. MTDR’s long-term debt was recorded at $1,498 million, including $50 million in borrowings under its credit agreement. Debt to capitalization was 39.1%.
Halliburton Company (HAL - Free Report) reported a first-quarter 2022 adjusted net income of 35 cents per share, in line with the Zacks Consensus Estimate. The performance reflected a stronger-than-expected profit from Halliburton’s Drilling and Evaluation division.
As of Mar 31, 2022, HAL had $2.2 billion in cash/cash equivalents and $8.5 billion in long-term debt, representing a debt-to-capitalization ratio of 54.8%. The Houston-based company’s cash flow-generating capabilities and balance sheet strength should also ensure increased shareholder returns.
Range Resources Corporation (RRC - Free Report) reported first-quarter 2022 adjusted earnings of $1.18 per share, beating the Zacks Consensus Estimate of $1.15. The strong quarterly earnings can be attributed to the higher realizations of commodity prices.
At the first-quarter end, Range Resources had total debt of $1,829.7 million. It had a debt-to-capitalization ratio of 53.3%. In the first quarter of 2022, RRC’s board of directors approved the authorization of a $500-million share repurchase program.
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Magellan Midstream (MMP) Stock Rises 7% After Q1 Earnings Beat
Magellan Midstream Partners, L.P. stock has risen 7% since the first-quarter 2022 earnings announcement on May 5.
This increase can be attributed to Magellan Midstream’s first-quarter earnings beating the Zacks Consensus Estimate and higher distributable cash flow (“DCF”) guidance for 2022.
Inside Magellan Midstream’s Earnings
The diversified energy infrastructure provider, Magellan Midstream Partners, reported a first-quarter adjusted net income of $1.08 per unit, higher than the Zacks Consensus Estimate of $1.05. The outperformance reflects higher transportation volumes as the economy reopens amid a sharp pick-up in travel demand along with increased drilling activities spurred by the surge in the commodity price.
However, the bottom line came marginally lower than the year-earlier quarter’s earnings of $1.09 per unit due to mark-to-market adjustments and lower oil sales revenues.
MMP’s revenues of $674.7 million rose about 7% from the first quarter of 2021 but lagged the Zacks Consensus Estimate of $826 million by 18.3%.
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
Operational Performance
Refined Products: The operating margin of $235.4 million was down from the year-ago period’s $260.9 million. Transportation and terminal revenues improved 4% to $309.5 million on higher transportation volumes, which continue to rebound from 2020’s pandemic-led dip, and contributions from Magellan Midstream’s Texas pipeline expansion projects. The slump in the product margin could be attributed to the much higher cost of product sales in the reported quarter.
Crude Oil: The operating margin of $103.6 million decreased 5% from the first quarter of 2021 of $109.1 million as transportation and terminal revenues and product sales revenues fell due to the overall lower tariff rates on MMP’s pipeline systems and a reduction in volumes.
Distributable Cash Flow
Magellan Midstream’s DCF for the first quarter was down 4% year over year to $265.4 million.
The company announced a first-quarter cash distribution of $1.0375 per unit ($4.15 on an annualized basis), which was unchanged sequentially. The amount was paid out on May 13 to its unitholders of record as of May 2.
2022 Guidance
Magellan Midstream increased its 2022 DCF guidance by $15 million to $1.09 billion to reflect a higher-than-expected financial performance in the first quarter and a more favorable commodity pricing environment projected for the year.
The partnership maintained its 2022 free cash flow guidance of $1.46 billion or $575 million after distributions.
Based on first-quarter results and the current number of shares outstanding, the net income per unit is estimated at $4.35 for 2022, with the second-quarter guidance of $1.12 per unit.
Zacks Rank
Magellan Midstream Partners currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Glimpse of Q1 Results of Other Energy Companies
Matador Resources Company (MTDR - Free Report) reported first-quarter 2022 adjusted earnings of $2.32 per share, beating the Zacks Consensus Estimate of $2.05. The strong quarterly earnings were driven by increased oil-equivalent production volumes and higher commodity price realizations.
As of Mar 31, 2022, Matador had cash and restricted cash of $120.2 million. MTDR’s long-term debt was recorded at $1,498 million, including $50 million in borrowings under its credit agreement. Debt to capitalization was 39.1%.
Halliburton Company (HAL - Free Report) reported a first-quarter 2022 adjusted net income of 35 cents per share, in line with the Zacks Consensus Estimate. The performance reflected a stronger-than-expected profit from Halliburton’s Drilling and Evaluation division.
As of Mar 31, 2022, HAL had $2.2 billion in cash/cash equivalents and $8.5 billion in long-term debt, representing a debt-to-capitalization ratio of 54.8%. The Houston-based company’s cash flow-generating capabilities and balance sheet strength should also ensure increased shareholder returns.
Range Resources Corporation (RRC - Free Report) reported first-quarter 2022 adjusted earnings of $1.18 per share, beating the Zacks Consensus Estimate of $1.15. The strong quarterly earnings can be attributed to the higher realizations of commodity prices.
At the first-quarter end, Range Resources had total debt of $1,829.7 million. It had a debt-to-capitalization ratio of 53.3%. In the first quarter of 2022, RRC’s board of directors approved the authorization of a $500-million share repurchase program.