Crude oil pipelines and terminals operator
Sunoco Logistics Partners L.P.
) announced impressive fourth-quarter and fiscal 2011 results,
driven by well performing crude pipelines and terminals
The partnership's diluted earnings per unit (
) - excluding one-time items - came in at 99 cents, breezing past
the Zacks Consensus Estimate of 63 cents and the year-ago profit of
For the full year, diluted EPU stood at $2.54, missing our
projection of $2.58. Comparing year over year, earnings declined
18.3% from $3.11.
Revenues of $3,380.0 million in the quarter shot up 51.7% year
over year from $2,228.0 million and also beat our projection by
Sunoco Logistics generated revenue of $10,918 million in fiscal
2011, against $7,838 million in 2010. The result also surpassed the
Zacks Consensus Estimate of $10,067 million.
The partnership announced a quarterly dividend of 42 cents or
$1.68 per unit annualized. The dividend will be paid on February
14, 2012 to unit holders of record as of February 8, 2012.
Distributable cash flow escalated approximately 59.4% year over
year to a record $110.0 million.
Effective fourth quarter, the partnership is reporting in four
segments: Refined Products Pipelines, Terminal Facilities, Crude
Oil Pipelines and the newly formed, Crude Oil Acquisition and
Refined Products Pipeline System:
Operating income from the segment was $9.0 million in the quarter,
down 10% from the fourth quarter of 2010. The negative variance was
due to reduced profits from the Partnership's joint venture
pipelines and steeper operating costs.
The partnership's Terminal Facilities business segment experienced
a quarterly operating loss of $11.0 million, against a profit of
$21.0 million in the prior-year period. This was mainly due to
expenses associated with the impairment of certain terminal
Crude Oil Pipelines:
In the fourth quarter, operating income of the Crude Oil Pipelines
segment was up by 44.4% from the year-earlier level to $52.0
million, driven by improved pipeline fees, increased demand for
West Texas crude oil along with lowered operating costs.
Crude Oil Acquisition and Marketing:
The brand new segment registered an operating income of $62 million
that skyrocketed 287.5% from the prior-year quarter, supported by
increased crude oil volumes and margins plus benefits of the
Capital Expenditure & Balance Sheet
For the fiscal year, the partnership's maintenance capital
expenditure and expansion capital expenditure (including
acquisition) totaled $42.0 million and $665.0 million,
As of December 31, 2011, Sunoco had $1,698.0 million in total
debt, representing a debt-to-capitalization ratio of approximately
During the fourth quarter, Sunoco Logistics completed a
three-for-one split of the partnership's common units and Class A
Going forward, Sunoco Logistics expects to reap significant
benefits from the growing fee-based businesses. Management remains
optimistic about the collaboration with
) - Mariner West project that will likely come online by July 2013.
The partnership has hiked its organic capital expenditure to
approximately $300 million and targets to derive more from the
existing assets such as Eagle Point and Nederland.
Sunoco Logistics owns a high-quality and diverse portfolio of
midstream assets that generate stable and recurring revenues by way
of long-term fee-based contracts. With its low-risk and stable cash
flow-generating energy infrastructure assets, the partnership
offers investors an opportunity to capture income growth through
steadily rising cash distributions and capital appreciation. We are
maintaining our 'Outperform' recommendation on the stock for the
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