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Sunoco Logistics Posts Mixed 4Q

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Energy pipelines and terminals operator Sunoco Logistics Partners LP posted mixed fourth-quarter 2012 results, owing to consistent good results from crude oil business and lower interest cost, offset by the increase in selling, general and administrative expenses.

The partnership's diluted earnings per unit ("EPU") came in at $1.10, significantly ahead of the Zacks Consensus Estimate of 91 cents and the year-ago period adjusted profit of 99 cents.

However, revenues of $3,194.0 million were down 5.5% from the fourth quarter of 2011 and also failed to match the Zacks Consensus Estimate of $3,451.0 million due to weak performance by Refined Products Pipelines and Crude Oil Acquisition and Marketing segments.

Quarterly Distribution

The partnership raised its quarterly distribution by 5.0% sequentially and 30.0% year over year to 54.50 cents per unit or $2.18 per unit annualized. Distributable cash flow increased 39.8% year over year to $165 million.

Segmental Performance

Refined Products Pipeline System: Adjusted earnings before interest, taxes, depreciation and amortization expense (EBITDA) in the ‘Refined Products Pipeline System’ segment were $ 14.0 million, down by 17.7% from the fourth quarter of 2011. The weak performance was mainly due to the shift to shorter pipelines at low tariff. Additionally high selling, general and administrative expenses also led to the weak result.

Terminal Facilities: The partnership's 'Terminal Facilities' business segment had an adjusted EBITDA of $52.0 million, up 44.4% year over year. This impressive outcome can be mainly attributed to improved results from Sunoco Logistics' refined products acquisition and marketing initiatives. Moreover, contributions from the partnership’s organic projects for improving the services at the Eagle Point and Nederland terminals also aided the upsurge.  

Crude Oil Pipeline System: Adjusted EBITDA in the Crude Oil Pipeline System segment shot up 24.1% from the year-earlier level to $72.0 million, driven by enhanced mix of pipeline movements along with growth in organic projects and better tariff rates.

Crude Oil Acquisition and Marketing: Adjusted EBITDA in this segment was $81 million, 19.1% above the fourth-quarter 2011 level. This reflects wider crude oil margins, supported by contribution from the increase in crude oil trucking fleet and the purchase of Texon L.P.'s crude oil purchasing and marketing business in the third quarter of 2011.

Capital Expenditure & Balance Sheet

The partnership's maintenance capital expenditure and expansion capital expenditure for the reported quarter totaled $21.0 million and $118.0 million, respectively. As of Dec 31, 2012, Sunoco had $1,732.0 million in total debt (consisting of $139.0 million of borrowing under the partnership's credit facility), representing a debt-to-capitalization ratio of approximately 21.9%.

Stocks to Consider

Sunoco Logistics currently carries a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader U.S. equity market over the next one to three months.  

Meanwhile, one can look at other energy firms like Calumet Specialty Products Partners LP (CLMT - Free Report) , NGL Energy Partners LP (NGL - Free Report) and Global Partners LP (GLP - Free Report) as attractive investments. All these firms – sporting a Zacks Rank #1 (Strong Buy) – offer value and are worth accumulating at current levels.

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Calumet Specialty Products Partners, L.P. (CLMT) - free report >>

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