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NuStar's (NS) Q3 Earnings Beat by a Whisker, Sales Up Y/Y

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NuStar Energy L.P. (NS - Free Report) recently reported third-quarter 2018 loss per limited partner unit of $3.49, marginally narrower than the Zacks Consensus Estimate of $3.50 on higher-than-expected revenues. After posting a string of earnings per unit over several years, the partnership posted quarterly loss this time around amid one-time costs related to its merger with general partner, NuStar GP Holdings. However, excluding this charge, its earnings per unit would have amounted to 13 cents, which is also lower than 15 cents recorded in the prior-year quarter.

NuStar’s operating income was $95.3 million, up 3.8% from the prior-year quarter. Moreover, the partnership recorded a net income of $48.1 million in the quarter under review compared with $38.6 million in the year-ago quarter.

Quarterly revenues of $490.4 million also surpassed the Zacks Consensus Estimate of $462 million. Moreover, the top line was higher than the year-ago level of $440.6 million.

Nustar Energy L.P. Price, Consensus and EPS Surprise

 

Nustar Energy L.P. Price, Consensus and EPS Surprise | Nustar Energy L.P. Quote

Distributable Cash Flow

Per NuStar’s latest earnings release, distributable cash flow (DCF) available to limited partners was $88.5 million (providing 1.38x distribution coverage), increasing more than 32% from $66.9 million (providing 0.66x distribution coverage) in the year-ago quarter.

Segmental Performance

Pipeline: Total quarterly throughput volumes in the segment were 1,481,770 barrels per day (Bbl/d), up 22.7% from the year-ago period. While throughput volumes in the crude oil pipelines jumped 34.5% (owing to higher contribution from the Permian crude system) from the year-ago quarter to 914,450 Bbl/d, throughput from the refined product pipelines inched up from 527,148 Bbl/d in the year-ago period to 567,320 Bbl/d. As a result, throughput and other revenues rose 18.5% year over year to $162.8 million. Concurrently, the segment’s operating income of $77 million was up from the year-ago figure of $61.1 million.

Storage: Throughput volumes in the Storage segment rose 13.7% year over year to 335,118 Bbl/d. The unit’s quarterly revenues fell to $154.1 million from $158.1 in the third quarter of 2017, due to a plunge in storage terminal revenues (from 136.9 million in third-quarter 2017 to $132.9 million in third-quarter 2018). Moreover, depreciation and operating costs recorded an increase. As a result, the segment's operating income decreased 21.6% to stand at $46.5 in the reported quarter.

Fuels Marketing: Product sales and other revenues from this segment increased to $175.1 million from $147.5 million in the year-ago quarter. Operating costs decreased 50%, resulting in income from the segment to come in at $1,890 million, turning around from the year-ago period’s loss of $1,532 million.

Balance Sheet

As of Sep 30, 2018, the partnership’s total debt was $3,387 million, representing a debt-to-capitalization ratio of 53.8%.

Guidance

For the full year, the partnership downwardly revised its EBITDA guidance to the range of $670-$720 million from prior expectation of $700-$750 million.

Zacks Rank & Key Picks

Currently, San Antonio, TX-based NuStar has a Zacks Rank #3 (Hold).

Investors interested in the Energy sector can opt for some better-ranked stocks like Bonanza Creek Energy, Inc. (BCEI - Free Report) , Murphy Oil Corporation (MUR - Free Report) and Hess Corporation (HES - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bonanza Creek delivered average positive earnings surprise of 74.88% in the last four reported quarters.

Murphy Oil recorded a positive earnings surprise in each of the trailing four quarters, with average beat of 96.50%.

Hess pulled off average positive earnings surprise of 230.48% in the trailing four reported quarters.

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