Energy pipelines and terminals operator,
Sunoco Logistics Partners LP
) reported third quarter 2013 diluted earnings per unit (EPU) of
45 cents, down 58.7% from the prior-year quarter level of $1.09
per unit. It also failed to beat the Zacks Consensus Estimate of
86 cents. The weak results were primarily due to poor performance
by the Crude Oil Acquisition and Marketing segment, partially
offset by the Crude Oil Pipelines segment.
However, revenues of $4,528.0 million were up 41.2% from third
quarter 2012 and comfortably surpassed the Zacks Consensus
Estimate of $3,587.0 million. Increase in volume thanks to
expansion projects, higher pipeline tariffs and crude oil demand
growth contributed to the strong top line.
Sunoco's distributable cash flow (DCF) decreased 17.1% year over
year to $121.0 million.
Last month, Sunoco raised its quarterly distribution by 5%
sequentially and 22% year over year to 63 cents per unit or $2.52
per unit annualized, representing the thirty-fourth consecutive
quarterly distribution hike.
Refined Products Pipeline System:
Adjusted earnings before interest, taxes, depreciation and
amortization expenses (EBITDA) in this segment were $18.0
million, down 28.0% from $25.0 million in third quarter 2012. A
$6 million non-recurring gain registered in the comparable
quarter last year was the primary reason for the difference in
results. Higher expenses also contributed to the results,
however, it was significantly offset by increased tariffs.
The segment had an adjusted EBITDA (excluding one-time items) of
$47.0 million, down 9.6% year over year. This outcome was mainly
due to weak results from the acquisition and marketing
initiatives of Sunoco's refined products. However, better
performances at the Eagle Point and Nederland terminals and
support from the Marcus Hook facility partially offset the
Crude Oil Pipelines:
Adjusted EBITDA in the segment moved up 34.3% to $98.0 million
from the year-earlier level of $73.0 million, driven by enhanced
throughput volumes as a result of project expansions, higher
demand for West Texas crude oil and increased pipeline tariff.
However, it was partially dampened by increased operating
Crude Oil Acquisition and Marketing:
Adjusted EBITDA in this segment was $18 million, 66.7% below the
third-quarter 2012 level. The deterioration was due to narrower
crude oil margins, partially offset by higher volumes, supported
by contribution from the increase in crude oil trucking fleet.
Operating expenses in the reported quarter were $36.0 million,
representing a drop of 7.7% from the third quarter of 2012.
Capital Expenditure & Balance Sheet
Sunoco's maintenance capital expenditure and expansion capital
expenditure for the reported quarter totaled $37.0 million and
$598.0 million, respectively. The partnership incurred additional
cost of $60.0 million as acquisition expenses. In accordance with
its successful open seasons, Sunoco has increased its expansion
capital expenditure to about $900 million.
As of Sep 30, 2013, Sunoco had $2.0 million cash and cash
equivalents compared with $3.0 million in the year-ago quarter.
Sunoco had $2,311.0 million in total debt (consisting of $35.0
million of borrowing under the partnership's credit facility),
representing a total debt-to-capitalization ratio of
Stocks to Consider
Sunoco currently carries a Zacks Rank #4 (Sell), implying that
it is expected to underperform the broader U.S. equity market
over the next one to three months.
Meanwhile, one can consider other oil and gas pipeline master
limited partners (MLP) which have good growth potential. These
Pioneer Southwest Energy Partner
) which currently sports a Zacks Rank #1 (Strong Buy) or
Energy Transfer Equity, L.P.
Magellan Midstream Partners LP
) which hold a Zacks Rank #2 (Buy).
ENERGY TRAN EQT (ETE): Free Stock Analysis
MAGELLAN MDSTRM (MMP): Free Stock Analysis
PIONEER SW EGY (PSE): Free Stock Analysis
SUNOCO LOGISTIC (SXL): Free Stock Analysis
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