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Magellan Midstream (MMP) Q2 Earnings, Revenue Beat Estimate

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An Earnings Beat: Pipeline operator Magellan Midstream Partners L.P. (MMP - Free Report) reported adjusted earnings per unit of $1.05, higher than the Zacks Consensus Estimate of $1.00. Strong contribution from the Crude Oil operating segment led to the beat.

Estimate Revision Trend: Investors should note that the Zacks Consensus Estimate for the quarter has been unchanged in the last seven days.

Revenue Outperformance: Magellan Midstream reported revenues of $644.1 million, above the Zacks Consensus Estimate of $618.1 million.

Zacks Rank & Surprise History: Currently, Magellan Midstream carries a Zacks Rank #3 (Hold), which is subject to change following the earnings announcement.

(You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.)

Coming to earnings surprise history, the company has a mixed record: its beaten estimates in two of the last four quarters.

Key Stats: Operating margin from the Refined Products segment was $191.4 million compared with $214.4 million in the year-ago quarter.

Magellan Midstream’s Crude Oil unit generated $152 million of operating margin in the quarter compared to $105.8 million for the same period in 2017.

For the Marine Storage division, operating margin was $28.3 million, 12.2% lower than the $32.2 million earned in the year-ago period.

Magellan Midstream reported that its distributable cash flow (DCF) for second-quarter 2018 came in at $266.6 million, up 6.5% from the year-ago quarter.

Guidance: Management expects to generate record distributable cash flows of approximately $1.1 billion million for the full year and is sticking to its targeted annual distribution growth of 8%. Magellan guided towards third-quarter and full-year earnings per unit of $1.00 and $4.10, respectively.

The partnership plans to spend approximately $950 million on expansion projects in 2018 and 2019 each, with expenditures of $200 million thereafter required to complete these projects. Additionally, the partnership continues to look out for more than $500 million of potential organic growth projects in the earlier stages of development.

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