Energy pipelines and terminals operator,
Sunoco Logistics Partners LP
) 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
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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.
The partnership completed the previously announced two-for-one unit
split on Jun 12.
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.
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
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.
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
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
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
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
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. (
), Magellan Midstream Partners LP (
) and Kinder Morgan Management LLC (
). All these stocks hold a Zacks Rank #2 (Buy).
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SUNOCO LOGISTIC (SXL): Free Stock Analysis
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