San Antonio-based publicly traded partnership
NuStar Energy L.P.
(
NS
) announced weak third quarter profits, hamstrung by lower
margins in its asphalt and fuels marketing business.
The owner and operator of crude oil and refined products
pipelines and storage facilities reported earnings per unit (EPU)
- excluding special items - of 19 cents, well below the Zacks
Consensus Estimate of 50 cents and the year-ago profit of 92
cents.
However, revenue of $1,744.8 million surpassed our expectation of
$1,430.0 million on the back of strong service sales but was 4.4%
below the year-earlier level.
Quarterly Distribution
NuStar announced a quarterly distribution of $1.095 per unit
($4.38 per unit annualized), which remains unchanged from the
year-earlier as well as previous-quarter distributions. The
distribution is payable on November 14 to unitholders of record
as on November 9, 2012.
Distributable cash flow (DCF) available to limited partners for
the third quarter was $54.6 million or 75 cents per unit
(providing 0.68x distribution coverage), compared with $80.3
million or $1.24 per unit in the year-earlier quarter.
Segmental Performance
Transportation:
Quarterly throughput volumes in the Transportation segment were
up 5.7% year over year to 890,101 barrels per day. The
improvement can be attributed to higher crude oil pipelines
throughput that benefited from the completion of the new pipeline
system to transport Eagle Ford shale crude to Corpus
Christi.
The increased throughput, together with higher pipeline tariffs
pushed the segment operating income up by 11.4% year over year to
$42.6 million. Operating revenue increased 14.5% to $93.7
million.
Storage:
Throughput volumes in the Storage segment rose 8.2% year over
year to 780,560 barrels per day. Revenues increased approximately
5.0% to $148.9 million on the back of a 4.6% hike in the storage
lease revenue (that makes up 84% of the total revenues).
Quarterly operating income reached $50.4 million (up 3.4%
year-over-year), driven by higher rates on new and existing
contracts and contributions from NuStar's recent project
completions.
Asphalt and Fuels Marketing:
As a result of weak asphalt margins and muted demand, the Asphalt
and Fuels Marketing segment recorded weak performance compared
with the year-earlier quarter. The unit reported operating loss
of $15.7 million, as against the profit of $25.4 million achieved
during the third quarter of 2011.
Late last month, NuStar closed the previously announced sale of
50% interest in its asphalt operations to privately held
investment firm Lindsay Goldberg LLC.
Rating & Recommendation
NuStar - which was spun off from the U.S. refiner
Valero Energy Corp.
(
VLO
) in 2006 - currently retains a Zacks #3 Rank (short-term Hold
rating). We are also maintaining our long-term Neutral
recommendation on the unit.
NUSTAR ENERGY (NS): Free Stock Analysis
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