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Magellan Midstream (MMP) Q1 Earnings and Sales Top Estimates

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Magellan Midstream Partners, L.P. reported first-quarter 2020 adjusted earnings per unit of $1.28, surpassing the Zacks Consensus Estimate of $1.03 as well as the year-ago profit of $1.06. Strong contribution from Refined Products unit aided results.

Quarterly revenues of $783 million not only rose from the year-ago level of $629 million but also outpaced the Zacks Consensus Estimate of $679 million.

Segmental Performance  

Refined Products: Revenues from the segment came in at $629 million, up from $468.5 million recorded in the year-ago period. Notably, total volumes shipped in the quarter under review were 119.8 million barrels compared with 116.1 million barrels a year ago. Operating margin from the segment expanded to $305.8 million in the first quarter from $207.4 million in the corresponding period of 2019. While depreciation costs increased year over year, general & administration expenses decreased. Operating profit of the segment increased 78.6% year over year to $233 million.   

Crude Oil: Quarterly revenues grossed $164.5 million, up 6% year over year on the back of higher volumes. Total volumes shipped in the quarter were 75.1 million barrels, down from 79.4 million barrels a year ago. Operating margin decreased to $119.9 million from $142.8 million in the prior year. Operating profit of $93.7 million declined 17.6% year over year due to lower volumes and margins.

DCF & Balance Sheet

Magellan Midstream reported that its distributable cash flow (DCF) for the first quarter summed $306.5 million, dipping 3.6% from the year-ago level.

Notably, on Apr 23, the partnership announced first-quarter cash distribution of $1.0275 per unit ($4.11 on an annualized basis), representing 2% annual growth. The amount is payable May 15 to unitholders of record as of May 8.

As of Mar 31, 2020, the partnership had cash and cash equivalents worth $139 million, and a long-term debt of $4.75 billion.

2020 Outlook

As a result of the coronavirus-caused oil price plunge, management expects to generate distributable cash flows in the $1,000-$1,075 million range for the full year and is planning to retain the current level of cash distribution for the rest of the year. Magellan Midstream projected second-quarter 2020 earnings per unit between 35 cents and 50 cents while for the full year, earnings are estimated in the $3.35-$3.70 band.

The firm plans to spend $400 million on completing certain expansion projects in the ongoing year. Additionally, Magellan Midstream continues to look out for more than $500 million worth of potential organic growth projects in their nascent stages of development.

Zacks Rank & Stocks to Consider

Magellan Midstream has a Zacks Rank #3 (Hold). Some better-ranked players in the energy space are CNX Resources Corporation. (CNX - Free Report) , Cheniere Energy Inc. (LNG - Free Report) and KLR Energy Acquisition Corp. (ROSE - Free Report) , all three carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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