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Why Is MPLX LP (MPLX) Down 20.3% Since Last Earnings Report?
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A month has gone by since the last earnings report for MPLX LP (MPLX - Free Report) . Shares have lost about 20.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MPLX 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 its most recent earnings report in order to get a better handle on the important drivers.
MPLX Misses Q4 Earnings Estimates
MPLX LP reported fourth-quarter adjusted earnings of 55 cents per unit, missing the Zacks Consensus Estimate of 61 cents. However, the figure increased by 3 cents from the year-ago level.
Revenues of $2,316 million were higher than fourth-quarter 2018 sales of $2,295 million. Also, the top line beat the Zacks Consensus Estimate of $2,226 million.
The lower-than-expected earnings were due to reduced Logistics and Storage throughput volumes and non-cash impairment charges from the Andeavor Logistics acquisition. This was partially offset by strong performance of core business and higher average tariff rates from pipelines.
Total 2019 revenues were recorded at $9,041 million, higher than the 2018 level of $7,005 million.
Segmental Highlights
MPLX’s operating income from the Logistics and Storage segment increased from $637 million a year ago to $677 million. The year-over-year upside is attributable to higher average tariff rates from pipelines. However, the reported figure missed the Zacks Consensus Estimate of $852 million. Total pipeline throughput volume of 5,119 thousand barrels per day decreased from the year-ago level of 5,157 thousand barrels.
Operating loss from the Gathering and Processing segment was recorded at $1,023 million against $254 million profit in the prior-year quarter. The reported figure missed the Zacks Consensus Estimate of earnings of $438 million. The quarterly loss can be attributed to an impairment charge related to goodwill associated with the acquisition of Andeavor Logistics’ gathering and processing businesses.
Costs and Expenses
Total costs and expenses in the quarter were recorded at $2,662 million, significantly up from the year-ago level of $1,404 million. Higher impairment expenses related to goodwill, associated with the Andeavor Logistics acquisition, led to the rise in costs, while lower operating expenses partially offset the effects from the same.
Cash Flow
Distributable cash flow available to limited partners in fourth-quarter 2019 was $1,045 million, providing 1.42x distribution coverage, up from $701 million in the year-ago period. Distribution per unit was 68.75 cents in the reported quarter. This marks a 6.2% hike from the year-ago period and sequential growth of a penny, representing the 28th consecutive quarterly distribution increase.
Net cash flow from operating activities in the quarter under review increased to $1,092 million from $1,044 million recorded in the corresponding period of 2018. Notably, MPLX generated net cash of $4.1 billion from operating activities in 2019, which enabled it to return capital of around $2.8 billion to unitholders.
Balance Sheet
As of Dec 31, 2019, the partnership’s cash and cash equivalents were $15 million. Its total debt amounted to $20.3 billion, while debt-to-capitalization ratio was 55%.
Outlook
The partnership expects to complete the Omega 2 processing facility in first-quarter 2020. The Preakness and Smithburg 1 processing facilities are expected to be in service in the second and third quarters of 2020, respectively. MPLX now expects capital expenditure of around $1.5 billion for growth purposes in 2020, which is $500 million lower than the previous guidance.
It expects the Wink-to-Webster crude oil pipeline project to be completed in first-half 2021. In the Permian, the Whistler pipeline is expected to come online in second-half 2021. The partnership expects to generate positive free cash flow in 2021 with the help of growth projects.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, MPLX LP has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, MPLX 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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Why Is MPLX LP (MPLX) Down 20.3% Since Last Earnings Report?
A month has gone by since the last earnings report for MPLX LP (MPLX - Free Report) . Shares have lost about 20.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is MPLX 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 its most recent earnings report in order to get a better handle on the important drivers.
MPLX Misses Q4 Earnings Estimates
MPLX LP reported fourth-quarter adjusted earnings of 55 cents per unit, missing the Zacks Consensus Estimate of 61 cents. However, the figure increased by 3 cents from the year-ago level.
Revenues of $2,316 million were higher than fourth-quarter 2018 sales of $2,295 million. Also, the top line beat the Zacks Consensus Estimate of $2,226 million.
The lower-than-expected earnings were due to reduced Logistics and Storage throughput volumes and non-cash impairment charges from the Andeavor Logistics acquisition. This was partially offset by strong performance of core business and higher average tariff rates from pipelines.
Total 2019 revenues were recorded at $9,041 million, higher than the 2018 level of $7,005 million.
Segmental Highlights
MPLX’s operating income from the Logistics and Storage segment increased from $637 million a year ago to $677 million. The year-over-year upside is attributable to higher average tariff rates from pipelines. However, the reported figure missed the Zacks Consensus Estimate of $852 million. Total pipeline throughput volume of 5,119 thousand barrels per day decreased from the year-ago level of 5,157 thousand barrels.
Operating loss from the Gathering and Processing segment was recorded at $1,023 million against $254 million profit in the prior-year quarter. The reported figure missed the Zacks Consensus Estimate of earnings of $438 million. The quarterly loss can be attributed to an impairment charge related to goodwill associated with the acquisition of Andeavor Logistics’ gathering and processing businesses.
Costs and Expenses
Total costs and expenses in the quarter were recorded at $2,662 million, significantly up from the year-ago level of $1,404 million. Higher impairment expenses related to goodwill, associated with the Andeavor Logistics acquisition, led to the rise in costs, while lower operating expenses partially offset the effects from the same.
Cash Flow
Distributable cash flow available to limited partners in fourth-quarter 2019 was $1,045 million, providing 1.42x distribution coverage, up from $701 million in the year-ago period. Distribution per unit was 68.75 cents in the reported quarter. This marks a 6.2% hike from the year-ago period and sequential growth of a penny, representing the 28th consecutive quarterly distribution increase.
Net cash flow from operating activities in the quarter under review increased to $1,092 million from $1,044 million recorded in the corresponding period of 2018. Notably, MPLX generated net cash of $4.1 billion from operating activities in 2019, which enabled it to return capital of around $2.8 billion to unitholders.
Balance Sheet
As of Dec 31, 2019, the partnership’s cash and cash equivalents were $15 million. Its total debt amounted to $20.3 billion, while debt-to-capitalization ratio was 55%.
Outlook
The partnership expects to complete the Omega 2 processing facility in first-quarter 2020. The Preakness and Smithburg 1 processing facilities are expected to be in service in the second and third quarters of 2020, respectively. MPLX now expects capital expenditure of around $1.5 billion for growth purposes in 2020, which is $500 million lower than the previous guidance.
It expects the Wink-to-Webster crude oil pipeline project to be completed in first-half 2021. In the Permian, the Whistler pipeline is expected to come online in second-half 2021. The partnership expects to generate positive free cash flow in 2021 with the help of growth projects.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
VGM Scores
Currently, MPLX LP has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, MPLX LP has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.