Magellan Midstream Up on Stellar Q3 Earnings & Revenues
Pipeline operator Magellan Midstream Partners LPMMP announced strong third-quarter 2015 results. Record shipment of refined products along with improved profits from the Houston crude oil pipeline led to the outperformance. Following the announcement, the partnership rose more than 6% on the NYSE.
The Tulsa, OK-based oil distributor reported earnings per unit (EPU) - excluding mark-to-market commodity-related pricing adjustments - of 86 cents, breezing past the Zacks Consensus Estimate of 73 cents and improving from the year-ago adjusted figure of 71 cents.
Total revenues of $577.2 million also outperformed the Zacks Consensus Estimate of $520 million and improved from $521.6 million generated in third-quarter 2014.
Distributable Cash Flow
Magellan Midstream reported distributable cash flow of $230 million, up 25.4% from the year-ago quarter.
Last month, Magellan Midstream declared its board of director's approval to increase the third-quarter cash distribution. The new payout of 76.25 cents per unit represents a sequential hike of 3% and a year-over-year improvement of 14%. The distribution is payable on Nov 13 to unitholders of record as of Nov 2.
Refined Products: In this segment, quarterly operating profits (before affiliate G&A and D&A expenses) were recorded at $241.6 million, up 20.5% from the year-ago quarter. Record shipments of refined products aided the results.
Crude Oil: The unit's operating margin was approximately $94.7 million, up 34.7% from the prior-year quarter. Significant profit from the Houston crude oil pipeline, which stretches over roughly 40 miles, led to the improvement.
Marine Storage: This segment's operating margin increased about 16.7% year over year to $32.2 million owing to increased throughput fees and lower operating expenses.
Magellan Midstream now projects 2015 distributable cash flows of $920 million, reflecting a $40 million increase from the previous guidance. Moreover, the partnership again reaffirmed its target of annual distribution growth by 15% in 2015 and at least 10% in 2016. Magellan Midstream guided fourth-quarter earnings per unit of 84 cents and increased the 2015 earnings projection to $3.53 per unit.
Magellan Midstream currently carries a Zacks Rank #3 (Hold). Some better-ranked players in the energy sector are Sprague Resources LP SRLP , Seadrill Partners LLC SDLP and Natural Gas Services Group Inc. NGS . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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