Magellan Midstream Partners LP
) announced mixed first-quarter 2013 results, with solid
contribution from the Refined Products segment.
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The Tulsa, Oklahoma-based oil distributor reported earnings per
unit (EPU) of 51 cents (excluding mark-to-market
commodity-related pricing adjustments), surpassing the Zacks
Consensus Estimate of 49 cents and the prior-year quarter profit
of 47 cents.
Total revenue of $432.4 million was down 12.4% year over year and
short of the Zacks Consensus Estimate of $530.0 million.
In mid-Oct 2012, Magellan Midstream completed the split of its
limited partner units in the 2:1 ratio. The quarterly results
reflect the effects of the stock split.
Recently, Magellan Midstream raised its first-quarter 2013 cash
distribution by 2% sequentially and 21% year over year to 50.75
cents per unit ($2.03 per unit annualized). Magellan Midstream's
new distribution is payable on May 15 to unitholders of record as
on May 8, 2013.
In this segment, quarterly operating profits (before affiliate
G&A and D&A expenses) were a record $160.2 million, up
27.7% year over year. The 13% increase in transportation volumes
and higher gasoline and distillate shipments mainly contributed
to the revenue growth.
In this segment, operating margin was $22.7 million, down 5.5%
year over year due to higher operating expenses. This was
partially offset by increased crude oil transportation volumes
This segment's operating margin fell 9.4% year over year to $25.3
million, due to increased expenses and a lower utilization level.
Management at Magellan Midstream expects to generate
distributable cash flows of approximately $580 million for
full-year 2013 and is targeting an annual distribution growth of
10%. The partnership plans to achieve an annual payout hike of at
least 10% in 2014. Magellan guided toward second quarter and
full-year 2013 earnings per unit of 52 cents and $2.25,
Magellan Midstream plans to spend approximately $900 million on
growth projects in 2013, with expenditures of an additional $320
million in 2014 to complete the projects. Moreover, the
partnership is looking to put in more than $500 million in
potential growth projects.
Magellan Midstream currently retains a Zacks Rank #2 (Buy),
implying that it is expected to outperform the broader U.S.
equity market over the next 1 to 3 months.
In addition to Magellan Midstream, there are other pipeline
operators that are expected to perform well in the coming 1 to 3
months. These include
Copano Energy LLC
) with Zacks Rank #1 (Strong Buy), and
Energy Transfer Partners LP
Summit Midstream Partners LP
) with Zacks Rank #2 (Buy).