Energy pipelines and terminals operator
Sunoco Logistics Partners L.P.
(
SXL
) announced a jump in its second quarter 2012 profits, driven by
strong demand for its crude oil business.
The partnership's diluted earnings per unit ("EPU") came in at
$1.28, significantly ahead of the Zacks Consensus Estimate of 72
cents and the year-ago period profit of 80 cents. Revenues of
$3,318.0 million were up 36.7% from the second quarter of 2011 and
also beat our projection by 3.9%.
Quarterly Distribution
Importantly, the partnership raised its quarterly distribution by
9.9% sequentially and 16.0% year over year to 47 cents per unit or
$1.88 per unit annualized, representing the twenty-ninth
consecutive quarterly distribution increase. Distributable cash
flow increased 56.6% year over year to a record $166.0 million.
Segmental Performance
Refined Products Pipeline System:
Operating income in the 'Refined Products Pipeline System' segment
was $7.0 million, down 12.5% from the second quarter of 2011. The
negative variance can be attributed to lower pipeline revenues due
to the shutdown of the Marcus Hook refinery in the fourth quarter
of 2011, partially offset by increased contribution from the May
2011 acquisition of a controlling interest in fuel transporter firm
Inland Corporation.
Terminal Facilities:
The partnership's 'Terminal Facilities' business segment had an
operating income of $61.0 million - a quarterly record - up by a
whopping 79.4% year over year. This growth can be mainly attributed
to improved results from Sunoco Logistics' refined products
acquisition and marketing initiatives. Contributions from the last
year's purchases of the Eagle Point tank farm from parent
Sunoco Inc.
(
SUN
) and a refined products terminal in East Boston from energy major
from
ConocoPhillips
(
COP
) also aided the upsurge.
Crude Oil Pipeline System:
Operating income in the Crude Oil Pipeline System segment was up by
36.2% from the year-earlier level to a record $64.0 million, driven
by higher pipeline fees and lower operating expenses.
Crude Oil Acquisition and Marketing:
Operating income for the April-June period was a record $52
million, 62.5% above the second quarter of 2011 level. This
reflects wider crude oil volumes/margins, further supported by
contribution from the purchase of Texon L.P.'s crude oil purchasing
and marketing business in the third quarter of 2011.
Capital Expenditure & Balance Sheet
The partnership's maintenance capital expenditure and expansion
capital expenditure for the quarter totaled $11.0 million and $73.0
million, respectively. As of June 30, 2012, Sunoco had $1,559.0
million in total debt (consisting of $111.0 million of borrowing
under the partnership's credit facility), representing a
debt-to-capitalization ratio of approximately 54.0%.
Rating & Recommendation
Sunoco Logistics Partners currently retains a Zacks #1 Rank
(short-term Strong Buy rating). We are also maintaining our
long-term Outperform recommendation on the unit.
CONOCOPHILLIPS (COP): Free Stock Analysis
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SUNOCO INC (SUN): Free Stock Analysis Report
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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