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NuStar Energy (NS) Q1 Earnings & Revenues Outpace Estimates
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NuStar Energy reported first-quarter 2023 adjusted earnings per unit of 24 cents, which beat the Zacks Consensus Estimate of 16 cents. The impressive performance can be attributed to strong contributions from Pipeline and Storage segments.
The bottom line also outpaced the year-ago quarter’s level of 19 cents, owing to the outstanding performance of the Pipeline segment.
NS’ revenues of $393.9 million beat the Zacks Consensus Estimate of $374 million. The figure, however, decreased about 3.9% year over year.
Operating profit came in at $160 million compared with $58.4 million in the corresponding period of 2022. This upside was due to better contributions from Pipeline and Storage segments.
NuStar Energy L.P. Price, Consensus and EPS Surprise
Pipeline: Quarterly throughput volumes totaled 1,920,904 barrels per day (Bbl/d), up 2.6% from the year-ago period’s level of 1,872,333 Bbl/d. Throughput volumes from crude oil pipelines rose about 1.2% to 1,309,085 Bbl/d. The same from refined product pipelines increased to 595,622 Bbl/d from 563,248 Bbl/d in the prior-year quarter.
NuStar Energy's Permian Crude System throughput volumes totaled 543,000 Bbl/d, up 6.5% from the year-ago quarter’s number. As a result, the segment’s revenues also increased 13% year over year to $213.2 million.
The Pipeline unit recorded an operating profit of $119.8 million compared with $95.7 million in the prior-year period.
Storage: Throughput volumes for the segment increased to 502,717 Bbl/d from 482,526 Bbl/d in the year-ago quarter. Total revenues declined 8.3% year over year to $80.6 million due to lower storage terminal revenues (down from $87.9 million to $80.6 million). Throughput terminal revenues rose marginally from $26.4 million to $27.3 million. Operating profit came in at $22.7 million against the year-ago quarter’s reported loss of $14.9 million.
Fuels Marketing:
Product sales decreased to $100 million from $133.3 million in the year-ago quarter. The cost of goods also declined about 26.1% from $93.2 million a year ago. Operating earnings totaled $6.6 million compared with $6.5 million in the corresponding quarter of 2022.
Cash Flow, Debt and Financial Position
Distributable cash flow available to limited partners was $100 million (providing 2.27X distribution coverage) for the reported quarter. A coverage ratio of more than 1 implies that NuStar Energy has generated enough cash to cover its distribution.
As of Mar 31, 2023, the company had cash and cash equivalents of $5.2 million and a long-term debt of $3.1 billion, with a debt-to-capitalization of 77%.
Guidance
NuStar Energy expects net income in the range of $257-$295 million for full-year 2023. It also anticipates adjusted EBITDA in the band of $700-$760 million for the same time frame.
The company plans to spend $130-$150 million in strategic capital in 2023. It also expects to spend around $25 million to expand its West Coast Renewable Fuels Network. NS intends to allocate between $45 million and $60 million for the Permian system’s development.
Zacks Rank and Key Picks
Currently, NuStar Energy carries a Zacks Rank #3 (Hold).
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays investors 48 cents per share, or 7.38%, on an annual basis.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.
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NuStar Energy (NS) Q1 Earnings & Revenues Outpace Estimates
NuStar Energy reported first-quarter 2023 adjusted earnings per unit of 24 cents, which beat the Zacks Consensus Estimate of 16 cents. The impressive performance can be attributed to strong contributions from Pipeline and Storage segments.
The bottom line also outpaced the year-ago quarter’s level of 19 cents, owing to the outstanding performance of the Pipeline segment.
NS’ revenues of $393.9 million beat the Zacks Consensus Estimate of $374 million. The figure, however, decreased about 3.9% year over year.
Operating profit came in at $160 million compared with $58.4 million in the corresponding period of 2022. This upside was due to better contributions from Pipeline and Storage segments.
NuStar Energy L.P. Price, Consensus and EPS Surprise
NuStar Energy L.P. price-consensus-eps-surprise-chart | NuStar Energy L.P. Quote
Segmental Updates
Pipeline: Quarterly throughput volumes totaled 1,920,904 barrels per day (Bbl/d), up 2.6% from the year-ago period’s level of 1,872,333 Bbl/d. Throughput volumes from crude oil pipelines rose about 1.2% to 1,309,085 Bbl/d. The same from refined product pipelines increased to 595,622 Bbl/d from 563,248 Bbl/d in the prior-year quarter.
NuStar Energy's Permian Crude System throughput volumes totaled 543,000 Bbl/d, up 6.5% from the year-ago quarter’s number. As a result, the segment’s revenues also increased 13% year over year to $213.2 million.
The Pipeline unit recorded an operating profit of $119.8 million compared with $95.7 million in the prior-year period.
Storage: Throughput volumes for the segment increased to 502,717 Bbl/d from 482,526 Bbl/d in the year-ago quarter. Total revenues declined 8.3% year over year to $80.6 million due to lower storage terminal revenues (down from $87.9 million to $80.6 million). Throughput terminal revenues rose marginally from $26.4 million to $27.3 million. Operating profit came in at $22.7 million against the year-ago quarter’s reported loss of $14.9 million.
Fuels Marketing:
Product sales decreased to $100 million from $133.3 million in the year-ago quarter. The cost of goods also declined about 26.1% from $93.2 million a year ago. Operating earnings totaled $6.6 million compared with $6.5 million in the corresponding quarter of 2022.
Cash Flow, Debt and Financial Position
Distributable cash flow available to limited partners was $100 million (providing 2.27X distribution coverage) for the reported quarter. A coverage ratio of more than 1 implies that NuStar Energy has generated enough cash to cover its distribution.
As of Mar 31, 2023, the company had cash and cash equivalents of $5.2 million and a long-term debt of $3.1 billion, with a debt-to-capitalization of 77%.
Guidance
NuStar Energy expects net income in the range of $257-$295 million for full-year 2023. It also anticipates adjusted EBITDA in the band of $700-$760 million for the same time frame.
The company plans to spend $130-$150 million in strategic capital in 2023. It also expects to spend around $25 million to expand its West Coast Renewable Fuels Network. NS intends to allocate between $45 million and $60 million for the Permian system’s development.
Zacks Rank and Key Picks
Currently, NuStar Energy carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the energy sector are Evolution Petroleum (EPM - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and Archrock (AROC - Free Report) and Murphy USA (MUSA - Free Report) , both holding a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Evolution Petroleum: EPM is worth approximately $219.16 million. EPM currently pays investors 48 cents per share, or 7.38%, on an annual basis.
The company currently has a forward P/E ratio of 6.07. In comparison, its industry has an average forward P/E of 7.50, which means EPM is trading at a discount to the group.
Archrock: AROC is valued at around $1.55 billion. It delivered an average earnings surprise of 26.27% for the last four quarters and its current dividend yield is 6.06%.
Archrock is a provider of natural gas contract compression services and aftermarket services of compression equipment.
Ranger Energy Services: RNGR is valued at around $183.61 million. In the past year, its shares have gained 13.8%.
Ranger Energy Services currently has a forward P/E ratio of 5.30. In comparison, its industry has an average forward P/E of 11.60, which means RNGR is trading at a discount to the group.