Sunoco Logistics Beats Q2 Earnings on Improved Segments - Analyst Blog

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Energy pipelines and terminals operator, Sunoco Logistics Partners LP ( SXL ) reported better-than-expected second-quarter 2014 earnings after the closing bell on Aug 6. The stock gained about 1.5% the following day, settling at $45.40 per unit.

Earnings per unit (EPU) of 53 cents were substantially higher than the Zacks Consensus Estimate of 36 cents on the back of improved performance by almost all its business segments.

However, the bottom line was lower than the year-ago quarter level of 54 cents per unit primarily due to decreased profits from the Crude Oil Acquisition and Marketing segment.

Sunoco Logistics Partners L P - Earnings Surprise | FindTheBest


Quarterly revenues of $4,821 million were up 11.8% from second-quarter 2013 but failed to meet the Zacks Consensus Estimate of $5,143 million.

Sunoco Logistics' distributable cash flow (DCF) increased 21.2% year over year to $223 million.

Unit-Split

The partnership completed the previously announced two-for-one unit split on Jun 12.

Quarterly Distribution

Last month, Sunoco Logistics raised its quarterly distribution by 5% sequentially and 22% year over year to 36.50 cents per unit or $1.46 per unit annualized.

Segmental Performance

Crude Oil Pipelines: Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the segment moved up 18.2% to $104 million from the year-earlier level of $88 million, driven by higher throughput volumes.

Crude Oil Acquisition and Marketing: Adjusted EBITDA in this segment came in at $53 million, down 24.3% from the second-quarter 2013 level. The decline resulted from lower crude oil margins.

Terminal Facilities: The segment's EBITDA was $97 million, up 38.6% year over year. Higher volume and improved margins, which stemmed from acquiring refined products, marketing operations and better performance by marine terminals drove the performance.

Refined Products Pipeline System: Adjusted EBITDA in this segment totaled $26 million, compared with $16 million in second-quarter 2013. The Mariner West project, which started operations in the fourth quarter of last year, was the key growth driver.

Operating Expenses

Operating expenses for the reported quarter were $23 million as against $25 million in the second quarter of 2013.

Capital Expenditure & Balance Sheet

As of Jun 30, Sunoco Logistics' maintenance capital expenditure and expansion capital expenditure totaled $31 million and $1,092 million, respectively.  

As of Jun 30, 2014, Sunoco Logistics had $116 million cash and cash equivalents. The partnership had $3,368 million in total debt (consisting of $285 million of borrowing under the partnership's credit facility), representing a debt-to-capitalization ratio of approximately 34.2%.       

Capex Guidance

Sunoco Logistics stated that it expects about $2 billion of organic growth in 2014, higher than the previous guidance. Maintenance capital spending for the full year is expected to be around $70 million.

Other News

Sunoco Logistics announced the commencement of a binding open season for the Permian Longview and Louisiana Extension project. The project, with an expected initial transport capacity of about 100,000 barrels per day, is likely to start operations in the latter half of 2016.

Zacks Rank & Other 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 consider better-ranked players in the oil and gas pipeline master limited partnership sector like Atlas Pipeline Partners, L.P. ( APL ), Magellan Midstream Partners LP ( MMP ) and Kinder Morgan Management LLC ( KMR ). All these stocks hold a Zacks Rank #2 (Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: EPU , SXL , MMP , APL , KMR

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