COST: 155 $MM
COST: 1.438 $B
TULSA, Okla., Feb. 2, 2021 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $183.9 million for fourth quarter 2020 compared to $286.4 million for fourth quarter 2019. The decrease in fourth-quarter 2020 net income continued to be driven by reduced demand for refined products from the ongoing impact of COVID-19 and related restrictions, the negative impact of the lower commodity price environment on various aspects of the partnership's business as well as lower volumes and average rates on its crude oil pipelines.
Diluted net income per common unit was 82 cents in fourth quarter 2020 and $1.25 in fourth quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 94 cents for fourth quarter 2020 was higher than the 80-cent guidance provided by management last fall, primarily due to incremental revenues from the partnership's refined products pipeline system as a result of higher-than-expected shipments and average tariff rates.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $269.7 million for fourth quarter 2020 compared to $357.8 million for fourth quarter 2019.
"Despite the backdrop of the most challenging industry and economic conditions experienced in our 20-year history as a public company, Magellan produced solid financial results during 2020 while ensuring continuity of important fuel supply for our country. We also returned nearly $1.2 billion of value to our investors through payment of a consistent cash distribution and equity repurchases," said Michael Mears, chief executive officer. "Magellan's business fundamentals remain sound, and we stand ready to serve the nation as travel and economic activity progress with additional reopening efforts. Magellan enters the new year in a strong position with an investment-grade balance sheet and resilient business model to manage our company for the long term."
An analysis by segment comparing fourth quarter 2020 to fourth quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $249.6 million, a decrease of $46.7 million. Transportation and terminals revenue decreased $18.9 million primarily due to continued lower demand associated with the ongoing impact from COVID-19 and related restrictions as well as reduced drilling activity in response to the lower commodity price environment during 2020. Revenues also decreased due to the sale of three marine terminals in first quarter 2020. These declines were partially offset by contributions from the recently-expanded West Texas pipeline segment that began operations in the third quarter of 2020 and higher tariff rates as a result of the 3.5% average increase that occurred on July 1, 2020.
Operating expenses decreased $11.3 million primarily due to lower throughput activity during the 2020 period, as well as the absence of costs associated with the assets sold in first quarter 2020. Earnings of non-controlled entities decreased slightly between periods as lower financial results from the partnership's Powder Springs Logistics joint venture offset additional contributions from new storage and dock assets placed into service in early 2020 at its Pasadena joint venture marine terminal.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $38.2 million between periods primarily due to lower sales volume and reduced margins on the partnership's gas liquids blending activities as a result of the overall lower commodity price environment.
Crude oil. Crude oil operating margin was $109.8 million, a decrease of $43.2 million. Transportation and terminals revenue decreased $27.1 million due to lower average tariff rates and less volume shipped. Average tariff rates decreased primarily as a result of the recent expiration of several higher-priced contracts on the partnership's Longhorn pipeline, as well as the recognition of deficiency revenue that had benefited the 2019 quarter. Transportation volumes also declined due to those recent Longhorn contract expirations, with much of this volume replaced by activities of Magellan's marketing affiliate. Lower tariff movements on the Houston distribution system due to a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility were largely offset by incremental revenue from the related new terminal transfer fee.
Operating expenses increased $5.6 million due to the timing of planned integrity spending, and other operating expense was unfavorable due to insurance proceeds that positively impacted the 2019 period. Earnings of non-controlled entities declined $8.6 million between periods primarily due to a lower contribution from Saddlehorn following Magellan's sale of a 10% interest in Feb. 2020 and decreased uncommitted shipments on the BridgeTex pipeline.
Other items. G&A expense increased $9.3 million primarily due to severance associated with the partnership's recent early retirement program and higher incentive compensation accruals. Net interest expense increased $3.5 million mainly as a result of lower capitalized interest from less ongoing expansion capital spending. As of Dec. 31, 2020, Magellan had $5.0 billion of debt outstanding and $13 million of cash on hand, with no borrowings outstanding on its commercial paper program or revolving credit facility.
Annual results
For the year ended Dec. 31, 2020, net income was $817.0 million compared to $1,020.8 million in 2019. The annual decline was driven by decreased contributions from both segments. The refined products segment was negatively impacted by lower demand for refined products due to the ongoing impact of COVID-19 as well as reduced drilling activity in response to the lower commodity price environment and the sale of three marine terminals in early 2020. The crude oil segment generated lower financial results primarily due to less third-party spot shipments, which move at a higher rate than shipments made pursuant to long-term commitments, as a result of unfavorable differentials between the Permian Basin and Houston, as well as lower average tariffs on the Longhorn pipeline resulting from the 2020 expiration of a portion of historical contracts. Further, Magellan earned less from Saddlehorn due to the sale of a 10% interest in early 2020.
Full-year diluted net income per common unit was $3.62 in 2020 and $4.46 in 2019. Annual DCF was $1,044.5 million in 2020, or 1.13 times the amount needed to pay distributions related to 2020, compared to $l,297.5 million in 2019.
Financial guidance for 2021
Management currently expects the partnership to generate annual DCF of $1.02 billion for 2021. Guidance assumes that refined products demand will continue to increase during 2021 as vaccines become more readily available, travel and economic activity recover and drilling activity returns due to an improved demand and commodity price environment. Further, Magellan's refined products shipments are expected to benefit from commitments associated with recent expansion projects within the state of Texas, which should drive more volume to the partnership's pipeline system. As a result, current 2021 estimates assume total refined products shipments increase 13% compared to 2020 results, comprised of 16% higher gasoline, 8% higher distillate and 20% higher aviation fuel. For reference, total 2021 refined products shipments are expected to increase 3% versus 2019, which is more representative of historical demand, as improved gasoline volumes from expansion projects are partially offset by lower aviation fuel.
Guidance also assumes long-haul crude oil pipeline shipments generally in-line with customer commitments and lower profits from the partnership's gas liquids blending activities due to compressed margins between the price of gasoline and butane. Further, Magellan has made significant progress on its business optimization effort started more than a year ago, with 2021 guidance including an approximate $50 million benefit from identified efficiencies.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level of $1.0275 per unit for the remainder of 2021. Based on the current distribution amount and number of units outstanding, distribution coverage for 2021 is expected to be 1.1 times the amount necessary to pay cash distributions for the year, generating excess cash of $100 million for 2021.
Management does not intend to provide specific financial guidance beyond 2021 at this time but expects annual DCF to improve over the next few years. Further, management continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices return to more historical levels.
Net income per common unit is estimated to be $3.55 for 2021, with first-quarter guidance of 75 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to expect the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with direct commodity-related activities contributing less than 15% of the partnership's operating margin.
Capital allocation
Magellan remains focused on delivering long-term value for its investors through a disciplined combination of quarterly cash distributions, equity repurchases and capital investments.
During fourth quarter 2020, the partnership repurchased nearly 0.6 million of its units for $25 million, resulting in a total of 5.6 million units repurchased during 2020 for $277 million under its $750 million repurchase program authorized through 2022. The timing, price and actual number of any additional unit repurchases will depend on a number of factors including expected expansion capital spending, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Magellan spent $355 million on expansion capital during 2020 and plans to spend approximately $75 million in 2021 to complete its identified slate of projects. The 2021 estimates now include high-returning projects to expand the truck loading capacity of the partnership's Cheyenne, Wyoming refined products terminal and enhanced connectivity to improve butane sourcing for its Houston-area gas liquids blending activities.
Corporate conversion analysis
To address recent questions and commentary by the investment community on the subject of a potential conversion from a publicly traded partnership to a corporation, management has posted highlights of its analysis and the reasoning behind its conclusions at www.magellanlp.com/investors/webcasts.aspx.
Based on this analysis, management has concluded a corporate conversion is not warranted at this time but will continue to monitor the relative valuations of midstream partnerships and corporations, potential developments in tax policy and investors' thoughts and preferences, while managing Magellan's business with a focus on long-term investor value.
Earnings call details
Management will discuss fourth-quarter 2020 financial results, annual guidance for 2021 and the corporate conversion analysis during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 952-3470, conference code 21988939.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, guides, assume, believe, estimate, expect, become, return, continue, future, target, remain, ready, resilient, intend, long-term, may, will, should and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 497,001 | $ | 451,113 | $ | 1,970,630 | $ | 1,794,854 | |||||||
Product sales revenue | 238,301 | 129,877 | 736,092 | 611,719 | |||||||||||
Affiliate management fee revenue | 5,380 | 5,334 | 21,190 | 21,229 | |||||||||||
Total revenue | 740,682 | 586,324 | 2,727,912 | 2,427,802 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 149,740 | 143,762 | 634,081 | 601,359 | |||||||||||
Cost of product sales | 188,552 | 117,851 | 619,279 | 513,715 | |||||||||||
Depreciation, amortization and impairment | 65,106 | 64,780 | 246,134 | 258,676 | |||||||||||
General and administrative | 47,116 | 56,386 | 196,650 | 173,478 | |||||||||||
Total costs and expenses | 450,514 | 382,779 | 1,696,144 | 1,547,228 | |||||||||||
Other operating income (expense) | 1,437 | (438) | 2,975 | 101 | |||||||||||
Earnings of non-controlled entities | 46,732 | 36,843 | 168,961 | 153,327 | |||||||||||
Operating profit | 338,337 | 239,950 | 1,203,704 | 1,034,002 | |||||||||||
Interest expense | 55,801 | 54,762 | 221,123 | 234,133 | |||||||||||
Interest capitalized | (4,865) | (819) | (19,284) | (11,270) | |||||||||||
Interest income | (639) | (134) | (3,285) | (1,037) | |||||||||||
Gain on disposition of assets | — | — | (28,966) | (12,887) | |||||||||||
Other (income) expense | 2,608 | 1,456 | 11,830 | 5,164 | |||||||||||
Income before provision for income taxes | 285,432 | 184,685 | 1,022,286 | 819,899 | |||||||||||
Provision for income taxes | (1,013) | 765 | 1,437 | 2,934 | |||||||||||
Net income | $ | 286,445 | $ | 183,920 | $ | 1,020,849 | $ | 816,965 | |||||||
Basic net income per common unit | $ | 1.25 | $ | 0.82 | $ | 4.46 | $ | 3.62 | |||||||
Diluted net income per common unit | $ | 1.25 | $ | 0.82 | $ | 4.46 | $ | 3.62 | |||||||
Weighted average number of common units outstanding used for | 228,705 | 223,889 | 228,658 | 225,503 | |||||||||||
Weighted average number of common units outstanding used for | 229,358 | 224,000 | 228,842 | 225,531 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.664 | $ | 1.724 | $ | 1.616 | $ | 1.675 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 73.1 | 71.4 | 280.5 | 270.8 | |||||||||||
Distillates | 45.8 | 47.9 | 184.6 | 175.5 | |||||||||||
Aviation fuel | 11.3 | 4.8 | 41.1 | 21.6 | |||||||||||
Liquefied petroleum gases | 0.8 | 0.4 | 9.7 | 0.9 | |||||||||||
Total volume shipped | 131.0 | 124.5 | 515.9 | 468.8 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 0.898 | $ | 0.714 | $ | 0.939 | $ | 1.028 | |||||||
Volume shipped (million barrels)(1) | 78.1 | 62.0 | 317.2 | 229.9 | |||||||||||
Terminal average utilization (million barrels per month) | 23.2 | 26.6 | 23.0 | 25.2 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 39.0 | 32.1 | 156.3 | 132.0 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 16.7 | 15.1 | 56.1 | 61.6 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 345,870 | $ | 326,959 | $ | 1,355,682 | $ | 1,241,846 | |||||||
Affiliate management fee revenue | 1,634 | 1,594 | 6,719 | 6,270 | |||||||||||
Other operating income (expense) | 537 | 1,024 | 10,185 | 3,247 | |||||||||||
Earnings of non-controlled entities | 7,925 | 6,609 | 8,070 | 32,555 | |||||||||||
Less: Operating expenses | 108,873 | 97,577 | 471,743 | 425,443 | |||||||||||
Transportation and terminals margin | 247,093 | 238,609 | 908,913 | 858,475 | |||||||||||
Product sales revenue | 229,371 | 116,929 | 707,812 | 578,630 | |||||||||||
Less: Cost of product sales | 180,216 | 105,978 | 591,228 | 471,292 | |||||||||||
Product margin | 49,155 | 10,951 | 116,584 | 107,338 | |||||||||||
Operating margin | $ | 296,248 | $ | 249,560 | $ | 1,025,497 | $ | 965,813 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 152,713 | $ | 125,623 | $ | 620,365 | $ | 559,570 | |||||||
Affiliate management fee revenue | 3,746 | 3,740 | 14,471 | 14,959 | |||||||||||
Other operating income (expense) | 900 | (1,462) | (7,210) | (3,146) | |||||||||||
Earnings of non-controlled entities | 38,807 | 30,234 | 160,891 | 120,772 | |||||||||||
Less: Operating expenses | 43,830 | 49,442 | 173,261 | 189,087 | |||||||||||
Transportation and terminals margin | 152,336 | 108,693 | 615,256 | 503,068 | |||||||||||
Product sales revenue | 8,930 | 12,948 | 28,280 | 33,089 | |||||||||||
Less: Cost of product sales | 8,336 | 11,873 | 28,051 | 42,423 | |||||||||||
Product margin | 594 | 1,075 | 229 | (9,334) | |||||||||||
Operating margin | $ | 152,930 | $ | 109,768 | $ | 615,485 | $ | 493,734 | |||||||
Segment operating margin | $ | 449,178 | $ | 359,328 | $ | 1,640,982 | $ | 1,459,547 | |||||||
Add: Allocated corporate depreciation costs | 1,381 | 1,788 | 5,506 | 6,609 | |||||||||||
Total operating margin | 450,559 | 361,116 | 1,646,488 | 1,466,156 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 65,106 | 64,780 | 246,134 | 258,676 | |||||||||||
General and administrative expense | 47,116 | 56,386 | 196,650 | 173,478 | |||||||||||
Total operating profit | $ | 338,337 | $ | 239,950 | $ | 1,203,704 | $ | 1,034,002 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P RECONCILIATION OF NET INCOME AND NET INCOME PER COMMON UNIT EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES (Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
December 31, 2020 | |||||||||||||
Net Income | Basic Net | Diluted Net | |||||||||||
As reported | $ | 183,920 | $ | 0.82 | $ | 0.82 | |||||||
Commodity-related adjustments associated with future | 27,024 | ||||||||||||
Excluding commodity-related adjustments | $ | 210,944 | $ | 0.94 | $ | 0.94 | |||||||
Weighted average number of common units outstanding used for | 223,889 | ||||||||||||
Weighted average number of common units outstanding used for | 224,000 | ||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December 31, | December 31, | 2021 | |||||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||||||
Net income | $ | 286,445 | $ | 183,920 | $ | 1,020,849 | $ | 816,965 | $ | 793,000 | |||||||||
Interest expense, net | 50,297 | 53,809 | 198,554 | 221,826 | 226,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 63,979 | 61,178 | 240,874 | 254,586 | 243,000 | ||||||||||||||
Equity-based incentive compensation(2) | 1,434 | 6,405 | 14,247 | (2,715) | 12,000 | ||||||||||||||
Gain on disposition of assets(3) | — | — | (16,280) | (10,511) | — | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated | 16,022 | 25,541 | 29,690 | 29,275 | |||||||||||||||
Derivative gains (losses) recognized in previous periods | (1) | (4,992) | 71,214 | (20,900) | |||||||||||||||
Inventory valuation adjustments(5) | (3,054) | (3,704) | (12,681) | 5,836 | |||||||||||||||
Total commodity-related adjustments | 12,967 | 16,845 | 88,223 | 14,211 | (18,000) | ||||||||||||||
Distributions from operations of non-controlled entities in excess | 18,719 | 18,112 | 34,641 | 54,273 | 72,000 | ||||||||||||||
Adjusted EBITDA | 433,841 | 340,269 | 1,581,108 | 1,348,635 | 1,328,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (49,442) | (53,054) | (186,942) | (205,446) | (223,000) | ||||||||||||||
Maintenance capital(7) | (26,566) | (17,558) | (96,702) | (98,718) | (85,000) | ||||||||||||||
Distributable cash flow | $ | 357,833 | $ | 269,657 | $ | 1,297,464 | $ | 1,044,471 | $ | 1,020,000 | |||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense includes debt prepayment costs of $8.3 million in the year ended December 31, 2019 and $12.9 million in the year ended December 31, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 26, 2021 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period Oct. 1 through Dec. 31, 2020.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Feb. 12 to unitholders of record at the close of business on Feb. 5.
For the year, Magellan declared distributions of $4.11 per unit for 2020, or 1% higher than distributions of $4.065 per unit for 2019. The partnership has increased its annual distribution payout each of the 19 years since its initial public offering in 2001.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 3, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the Wells Fargo Virtual Midstream and Utility Symposium at 2:00 p.m. Eastern on Tues., Dec. 8.
The virtual session will be moderated by Praneeth Satish, Wells Fargo equity research analyst, with a webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 2, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $300 million of its 3.95% senior notes due 2050. The notes, which are additional notes of the series originally issued on Aug. 19, 2019, were priced at 109.678% of par, with a re-offer yield of 3.418%. The partnership intends to use the net proceeds from this offering of approximately $322 million, after deducting underwriting discounts, estimated offering expenses and accrued interest, for general partnership purposes, which may include repayment of indebtedness, including borrowings under its revolving credit facility and commercial paper program, capital expenditures and repurchases of its common units.
The offering is expected to close on Dec. 16, 2020 and is subject to the satisfaction of customary closing conditions. Wells Fargo Securities, LLC, Barclays Capital Inc., PNC Capital Markets LLC, TD Securities (USA) LLC and Truist Securities, Inc. are joint book-running managers for the debt offering, with J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: estimated, expected, intends, may, subject, conditions and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Nov. 9, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it plans to participate in the following virtual investor conferences during November:
The live webcasts will be available on the partnership's website at www.magellanlp.com/investors/webcasts.aspx, with replays available for at least 30 days.
In addition, management will be hosting virtual meetings with institutional investors during the conferences. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-upcoming-virtual-investor-conferences-301168975.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today the publication of its inaugural sustainability report.
"Magellan's first sustainability report demonstrates that Moving What Moves America® is more than just our motto. It represents who we are and our commitment to safely and reliably deliver petroleum products that are essential and beneficial to everyday life," noted Michael Mears, chief executive officer. "Sustainability is not new to Magellan. For nearly two decades as a public company, we have focused on long-term, sustainable operations and disciplined management, and publication of this report emphasizes our commitment to provide transparency around how we manage and measure our environmental, social and governance performance."
In developing its inaugural report, Magellan conducted a materiality assessment to better understand the most critical topics for key internal and external stakeholders, guided by the Global Reporting Initiative standards for sustainability reporting.
Magellan's sustainability report is available on its website at www.magellanlp.com/sustainability/.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $211.6 million for third quarter 2020 compared to $273.0 million for third quarter 2019. The decrease in third-quarter 2020 net income was primarily driven by reduced demand for refined products due to the ongoing impact from COVID-19 and related restrictions as well as the negative impact of the lower commodity price environment on various aspects of the partnership's business.
Diluted net income per common unit was 94 cents in third quarter 2020 and $1.19 in third quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 97 cents for third quarter 2020 was higher than the range of 75 cents to 85 cents previously provided by management in late July. Actual results benefited from lower expenses and higher-than-expected commodity profits from additional sales volume. Other results, including refined products pipeline and terminals revenue, trended slightly better than the partnership's projections for the quarter.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $258.8 million for third quarter 2020 compared to $306.8 million for third quarter 2019.
"Magellan continues to generate solid results during a difficult year for both our industry and nation, reinforcing the resilient nature of our business that focuses on the safe and reliable delivery of petroleum products that are essential and beneficial to everyday life," said Michael Mears, chief executive officer. "Magellan is a strong company on firm financial footing, with our investment-grade balance sheet providing strength to weather the current challenging environment and build for the future."
An analysis by segment comparing third quarter 2020 to third quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $239.0 million, a decrease of $31.5 million. Transportation and terminals revenue decreased $31.8 million primarily due to lower demand during third quarter 2020 associated with the ongoing impact from COVID-19 and related restrictions as well as reduced drilling activity in response to the lower commodity price environment. Revenues also decreased due to the sale of three marine terminals in first quarter 2020 and discontinuation of the ammonia pipeline operations in late 2019. These declines were partially offset by an increase in the average tariff rate in the current period as well as contributions from the recently-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019 and the West Texas expansion that began operations in the third quarter of 2020. Average tariff rates increased as a result of the 3.5% average mid-year adjustment that occurred on July 1, 2020 as well as reduced short-haul shipments on the South Texas segment, which move at a lower rate.
Operating expenses decreased $8.7 million primarily due to the timing of planned integrity spending as well as no costs in the current period associated with the sold or discontinued assets, partially offset by less favorable product overages (which reduce operating expenses). Other operating income declined $3.1 million due to insurance proceeds received in third quarter 2019 related to Hurricane Harvey.
Earnings of non-controlled entities increased by $3.0 million due to contributions from the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal, partially offset by lower earnings from its Powder Springs Logistics joint venture.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $8.2 million between periods due to the recognition of unrealized losses in third quarter 2020 compared to gains in 2019 on futures contracts used to economically hedge the partnership's commodity-related activities, partially offset by higher sales volume related to its fractionation activities.
Crude oil. Crude oil operating margin was $135.8 million, a decrease of $20.7 million. Transportation and terminals revenue decreased slightly between periods. Lower third-party spot shipments on the partnership's Longhorn pipeline due to less favorable differentials between the Permian Basin and Houston were largely offset by the activities of Magellan's marketing affiliate. Average tariff rates increased as a result of lower shipments on the partnership's Houston distribution system, which move at a lower rate than longer-haul shipments. Lower transportation volume on the Houston distribution system resulted primarily from a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility, and was offset by incremental revenue from the related new terminal transfer fee. The 2020 period also benefited from increased storage revenues as more contract storage was utilized at higher rates.
Operating expenses increased $2.0 million due to the timing of planned integrity spending and less favorable product overages. Earnings of non-controlled entities declined $14.0 million between periods primarily due to decreased spot volumes and customer use of previously earned credits on the BridgeTex pipeline as well as lower contribution from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020. Product margin decreased $4.6 million primarily as a result of the reclassification of affiliate marketing activities to transportation revenue to conform with the current period's presentation.
Other items. Depreciation, amortization and impairment expense increased $15.2 million between periods primarily due to the impairment in third quarter 2020 of certain terminalling assets and more assets placed into service, and G&A expense decreased $13.1 million primarily due to lower incentive compensation accruals.
Gain on disposition of assets was $2.5 million unfavorable due to additional gain recorded in the prior year related to the partnership's discontinued Delaware Basin pipeline construction project that was sold to a third party.
Net interest expense increased $5.4 million primarily due to lower capitalized interest as a result of lower ongoing construction project spending and higher outstanding debt. As of Sept. 30, 2020, Magellan had $4.95 billion of debt outstanding, including $248 million outstanding on its commercial paper program, with $9 million of cash on hand.
Financial guidance for 2020
As the nation's reopening efforts progress, travel and economic activity have continued to improve from their spring lows, although the pace of recovery to more historically-normal levels of refined products demand still remains unclear. Assuming recent trends continue for refined products demand for the remainder of the year, management currently estimates annual 2020 DCF to be $1.025 billion. This estimate assumes no additional lockdowns occur in the markets served by Magellan, with average base business volumes (excluding the impact of expansion projects) expected to be lower by approximately 13% during the fourth quarter of 2020 compared to the same period in 2019, comprised of 8% lower gasoline, 12% lower distillate and 50% lower aviation fuel. Including the expected contribution from recent expansion projects, which have been ramping a bit slower than initially anticipated due to current market conditions, total refined products volumes during fourth quarter 2020 are expected to be down approximately 7% compared to fourth quarter 2019.
Including actual results so far this year, net income per unit is estimated to be $3.60 for 2020, which results in fourth-quarter guidance of 80 cents. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding, distribution coverage for 2020 is expected to be approximately 1.11 times the amount necessary to pay cash distributions for the year, generating excess cash of more than $100 million for 2020.
Continuing its historical approach, Magellan plans to provide guidance specific to 2021 early next year in conjunction with reporting year-end 2020 financial results. However, management currently intends to target cash distributions for 2021 consistent with the current payout level. Further, management continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices stabilize and return to more historical levels.
Capital allocation
Management remains focused on executing its long-term strategy to maximize value for Magellan's investors. In addition to returning cash to investors via quarterly distributions, Magellan intends to deliver incremental value to its investors by utilizing unit repurchases and investments that meet its disciplined risk/reward profile.
During third quarter 2020, the partnership repurchased nearly 1.4 million of its units for $50 million. So far in 2020, Magellan has repurchased a total of 5.0 million units for $252 million under its $750 million repurchase program authorized through 2022. The timing, price and actual number of any additional unit repurchases will depend on a number of factors including expected expansion capital spending needs, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Based on the progress of projects already under construction, the partnership expects to spend approximately $400 million in 2020 (of which $310 million had been spent through third quarter) and $40 million in 2021 to complete its current slate of expansion projects, with its largest projects now in-service. Of its remaining projects, the 100,000 barrel-per-day expansion of the Saddlehorn pipeline is still expected to be complete by the end of 2020.
Earnings call details
Management will discuss third-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:00 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (877) 256-4701, conference code 21969538.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: plan, guidance, weather, believe, estimate, anticipate, expect, continue, future, target, remain, resilient, intend, long-term, may, will, should and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 506,432 | $ | 473,531 | $ | 1,473,629 | $ | 1,343,741 | |||||||
Product sales revenue | 144,807 | 119,445 | 497,791 | 481,842 | |||||||||||
Affiliate management fee revenue | 5,357 | 5,288 | 15,810 | 15,895 | |||||||||||
Total revenue | 656,596 | 598,264 | 1,987,230 | 1,841,478 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 169,387 | 161,982 | 484,341 | 457,597 | |||||||||||
Cost of product sales | 108,757 | 96,119 | 430,727 | 395,864 | |||||||||||
Depreciation, amortization and impairment | 56,627 | 71,822 | 181,028 | 193,896 | |||||||||||
General and administrative | 51,156 | 38,016 | 149,534 | 117,092 | |||||||||||
Total costs and expenses | 385,927 | 367,939 | 1,245,630 | 1,164,449 | |||||||||||
Other operating income (expense) | (379) | (2,863) | 1,538 | 539 | |||||||||||
Earnings of non-controlled entities | 50,189 | 39,135 | 122,229 | 116,484 | |||||||||||
Operating profit | 320,479 | 266,597 | 865,367 | 794,052 | |||||||||||
Interest expense | 53,750 | 54,212 | 165,322 | 179,371 | |||||||||||
Interest capitalized | (5,831) | (1,272) | (14,419) | (10,451) | |||||||||||
Interest income | (648) | (260) | (2,646) | (903) | |||||||||||
Gain on disposition of assets | (2,532) | — | (28,966) | (12,887) | |||||||||||
Other (income) expense | 2,602 | 1,455 | 9,222 | 3,708 | |||||||||||
Income before provision for income taxes | 273,138 | 212,462 | 736,854 | 635,214 | |||||||||||
Provision for income taxes | 100 | 824 | 2,450 | 2,169 | |||||||||||
Net income | $ | 273,038 | $ | 211,638 | $ | 734,404 | $ | 633,045 | |||||||
Basic net income per common unit | $ | 1.19 | $ | 0.94 | $ | 3.21 | $ | 2.80 | |||||||
Diluted net income per common unit | $ | 1.19 | $ | 0.94 | $ | 3.21 | $ | 2.80 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,720 | 225,222 | 228,642 | 226,045 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,754 | 225,222 | 228,667 | 226,045 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.618 | $ | 1.719 | $ | 1.600 | $ | 1.658 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 74.5 | 71.9 | 207.4 | 199.4 | |||||||||||
Distillates | 47.0 | 42.5 | 138.8 | 127.6 | |||||||||||
Aviation fuel | 11.1 | 4.7 | 29.8 | 16.8 | |||||||||||
Liquefied petroleum gases | 3.8 | 0.1 | 8.9 | 0.5 | |||||||||||
Total volume shipped | 136.4 | 119.2 | 384.9 | 344.3 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 0.935 | $ | 1.401 | $ | 0.952 | $ | 1.145 | |||||||
Volume shipped (million barrels)(1) | 79.2 | 45.1 | 239.1 | 167.9 | |||||||||||
Terminal average utilization (million barrels per month) | 22.9 | 25.9 | 22.7 | 24.7 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 40.8 | 30.6 | 117.3 | 99.9 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 17.0 | 15.1 | 39.4 | 46.5 | |||||||||||
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. | ||||||||||||||
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. | ||||||||||||||
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2019 | 2020 | 2019 | 2020 | |||||||||||||
Refined products: | ||||||||||||||||
Transportation and terminals revenue | $ | 352,611 | $ | 320,809 | $ | 1,009,812 | $ | 914,887 | ||||||||
Affiliate management fee revenue | 1,764 | 1,579 | 5,085 | 4,676 | ||||||||||||
Other operating income (expense) | 3,249 | 193 | 9,648 | 2,223 | ||||||||||||
Earnings of non-controlled entities | 4,142 | 7,134 | 145 | 25,946 | ||||||||||||
Less: Operating expenses | 127,328 | 118,579 | 362,870 | 327,866 | ||||||||||||
Transportation and terminals margin | 234,438 | 211,136 | 661,820 | 619,866 | ||||||||||||
Product sales revenue | 136,464 | 114,252 | 478,441 | 461,701 | ||||||||||||
Less: Cost of product sales | 100,416 | 86,356 | 411,012 | 365,314 | ||||||||||||
Product margin | 36,048 | 27,896 | 67,429 | 96,387 | ||||||||||||
Operating margin | $ | 270,486 | $ | 239,032 | $ | 729,249 | $ | 716,253 | ||||||||
Crude oil: | ||||||||||||||||
Transportation and terminals revenue | $ | 155,377 | $ | 154,652 | $ | 467,652 | $ | 433,947 | ||||||||
Affiliate management fee revenue | 3,593 | 3,709 | 10,725 | 11,219 | ||||||||||||
Other operating income (expense) | (3,628) | (3,056) | (8,110) | (1,684) | ||||||||||||
Earnings of non-controlled entities | 46,047 | 32,001 | 122,084 | 90,538 | ||||||||||||
Less: Operating expenses | 44,961 | 46,956 | 129,431 | 139,645 | ||||||||||||
Transportation and terminals margin | 156,428 | 140,350 | 462,920 | 394,375 | ||||||||||||
Product sales revenue | 8,343 | 5,193 | 19,350 | 20,141 | ||||||||||||
Less: Cost of product sales | 8,341 | 9,763 | 19,715 | 30,550 | ||||||||||||
Product margin | 2 | (4,570) | (365) | (10,409) | ||||||||||||
Operating margin | $ | 156,430 | $ | 135,780 | $ | 462,555 | $ | 383,966 | ||||||||
Segment operating margin | $ | 426,916 | $ | 374,812 | $ | 1,191,804 | $ | 1,100,219 | ||||||||
Add: Allocated corporate depreciation costs | 1,346 | 1,623 | 4,125 | 4,821 | ||||||||||||
Total operating margin | 428,262 | 376,435 | 1,195,929 | 1,105,040 | ||||||||||||
Less: | ||||||||||||||||
Depreciation, amortization and impairment expense | 56,627 | 71,822 | 181,028 | 193,896 | ||||||||||||
General and administrative expense | 51,156 | 38,016 | 149,534 | 117,092 | ||||||||||||
Total operating profit | $ | 320,479 | $ | 266,597 | $ | 865,367 | $ | 794,052 | ||||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | ||||||||||||||||||
Three Months Ended | ||||||||||||||||||
September 30, 2020 | ||||||||||||||||||
Net Income | Basic Net | Diluted Net | ||||||||||||||||
As reported | $ | 211,638 | $ | 0.94 | $ | 0.94 | ||||||||||||
Commodity-related adjustments associated with future transactions(1) | 6,633 | |||||||||||||||||
Excluding commodity-related adjustments | $ | 218,271 | $ | 0.97 | $ | 0.97 | ||||||||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 225,222 | |||||||||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 225,222 | |||||||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | 2020 | |||||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||||||
Net income | $ | 273,038 | $ | 211,638 | $ | 734,404 | $ | 633,045 | $ | 810,000 | |||||||||
Interest expense, net | 47,271 | 52,680 | 148,257 | 168,017 | 221,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 57,972 | 71,822 | 176,895 | 193,408 | 258,000 | ||||||||||||||
Equity-based incentive compensation(2) | 6,773 | 1,169 | 12,813 | (9,120) | (5,000) | ||||||||||||||
Gain on disposition of assets(3) | — | — | (16,280) | (10,511) | (11,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | (1,720) | 5,839 | 13,669 | 6,741 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (5,454) | 2,889 | 71,214 | (18,915) | |||||||||||||||
Inventory valuation adjustments(5) | (181) | (18,291) | (9,627) | 9,540 | |||||||||||||||
Total commodity-related adjustments | (7,355) | (9,563) | 75,256 | (2,634) | (9,000) | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 4,893 | 10,811 | 15,922 | 36,161 | 61,000 | ||||||||||||||
Adjusted EBITDA | 382,592 | 338,557 | 1,147,267 | 1,008,366 | 1,325,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (46,441) | (51,933) | (137,500) | (152,392) | (205,000) | ||||||||||||||
Maintenance capital(7) | (29,313) | (27,858) | (70,136) | (81,160) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 306,838 | $ | 258,766 | $ | 939,631 | $ | 774,814 | $ | 1,025,000 | |||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. | ||||||||||||||||||
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. | ||||||||||||||||||
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. | ||||||||||||||||||
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. | ||||||||||||||||||
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. | ||||||||||||||||||
(6) | Interest expense includes debt prepayment costs of $8.3 million in the nine months ended September 30, 2019 and $12.9 million in the nine months ended September 30, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. | ||||||||||||||||||
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 22, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period July 1 through Sept. 30, 2020.
The third-quarter 2020 distribution is approximately 1% higher than the third-quarter 2019 distribution of $1.02 per unit and same as the second-quarter 2020 amount.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Nov. 13 to unitholders of record at the close of business on Nov. 6.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 1, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2020 before the market opens on Fri., Oct. 30. Management will discuss third-quarter 2020 earnings and outlook for the remainder of 2020 during a conference call with analysts at 1:00 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (877) 256-4701, conference code 21969538.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2020-financial-results-on-oct-30-301143694.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Sept. 3, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the Barclays CEO Energy-Power Conference at 4:25 p.m. Eastern on Wed., Sept. 9.
The virtual session will be moderated by Theresa Chen, Barclays equity research analyst, with a webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for at least 30 days at www.magellanlp.com.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact:
Paula Farrell
(918) 574-7650
paula.farrell@magellanlp.com
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-participate-in-barclays-virtual-investor-conference-301123714.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $133.8 million for second quarter 2020 compared to $253.7 million for second quarter 2019. The decrease in second-quarter 2020 net income was primarily driven by reduced demand for refined products due to travel and economic restrictions related to COVID-19 and the negative impact of the lower commodity price environment on various aspects of the partnership's business.
Diluted net income per common unit was 59 cents in second quarter 2020 and $1.11 in second quarter 2019. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of 65 cents for second quarter 2020 was higher than the range of 35 cents to 50 cents previously provided by management in early May. Actual results benefited from additional product overages, higher-than-expected commodity prices and lower operating expenses, which more than offset the $12.9 million, or 6-cent per unit, prepayment costs associated with the early extinguishment of the partnership's notes due Feb. 2021 that had not been assumed in the previous guidance. Other results, including refined products and crude oil pipeline volumes, generally trended in line with the partnership's expectations for the quarter.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $209.5 million for second quarter 2020 compared to $314.8 million for second quarter 2019.
"Magellan delivered results against the backdrop of a challenging environment for our industry and our nation that exceeded our expectations for the quarter," said Michael Mears, chief executive officer. "Our resilient business model and strong financial position allow us to confidently manage through current challenges while remaining focused on executing our long-term strategy to maximize value for Magellan's investors."
Beginning in first quarter 2020, the partnership reorganized its reporting segments to reflect changes to its business in conjunction with the sale of three of its marine terminals during March 2020. Historical financial results have been restated to conform to the new segment presentation.
An analysis by segment comparing second quarter 2020 to second quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $171.4 million, a decrease of $79.6 million. Transportation and terminals revenue decreased $67.9 million primarily due to lower demand during second quarter 2020 associated with travel and economic restrictions related to COVID-19 and reduced drilling activity in response to the lower commodity price environment. Revenues also decreased due to the sale of three marine terminals in first quarter 2020 and discontinuation of the ammonia pipeline in late 2019. These declines were partially offset by an increase in the average tariff rate in the current period as a result of the 2019 mid-year adjustment of 4.3% as well as contributions from the recently-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019.
Operating expenses decreased $29.4 million primarily due to the timing of planned integrity spending and more favorable product overages (which reduce operating expenses) as well as no costs in the current period associated with the sold or discontinued assets.
Earnings of non-controlled entities increased by $7.5 million due to additional earnings related to the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal as well as lower unrealized losses recognized in the current period on futures contracts used to hedge commodity-related activities at its Powder Springs Logistics joint venture.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $47.7 million between periods due to the recognition of higher unrealized losses in the 2020 period on futures contracts used to economically hedge the partnership's commodity-related activities as well as lower gas liquids sales volumes as a result of lower economic blending opportunities and the impact of lower commodity prices on the partnership's other commodity-related activities.
Crude oil. Crude oil operating margin was $128.3 million, a decrease of $34.9 million. Transportation and terminals revenue decreased $26.5 million primarily due to lower transportation revenue on the partnership's Longhorn pipeline as a result of less third-party spot shipments because of unfavorable differentials between the Permian Basin and Houston as well as the recent assignment of a customer contract to Magellan's marketing affiliate, with the related marketing activity recognized as product margin instead of transportation revenue. Lower tariff volume on Magellan's Houston distribution system resulted primarily from a change in the way customers now contract for services at the partnership's Seabrook joint venture export facility, and was offset by incremental revenue from the related new terminal transfer fee as well as by more contract storage utilized at higher rates.
Operating expenses increased $7.2 million due to the timing of planned integrity spending, and other operating income was $9.8 million favorable primarily due to unrealized gains on a basis derivative agreement during the current period compared to losses in the 2019 quarter.
Earnings of non-controlled entities declined $14.6 million between periods primarily due to decreased spot volumes on the BridgeTex pipeline and lower contribution from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020.
Product margin increased slightly as a result of crude oil marketing activities conducted to facilitate intrastate shipments during the current period.
Other items. Depreciation, amortization and impairment expense decreased slightly between periods following the recently sold assets, and G&A expense decreased $10.2 million primarily due to lower incentive compensation accruals.
Gain on disposition of assets was $4.6 million unfavorable due to the 2019 period benefiting from the sale of an inactive terminal along the partnership's refined products pipeline system.
Net interest expense increased $18.9 million due to a $12.9 million debt prepayment cost during the current period and higher average outstanding borrowings, primarily as a result of borrowings made to fund the partnership's recent expansion capital projects. As of June 30, 2020, Magellan had $4.84 billion of debt outstanding, including $141 million outstanding on its commercial paper program, with $3 million of cash on hand.
Financial guidance for 2020
As reopening efforts continue, travel and economic activity have increased from their April lows. However, the pace of recovery and length of time for the markets served by Magellan to return to more historical levels of refined products demand remain unclear. Management currently estimates annual 2020 DCF to be in the range of $1.0 to $1.05 billion. The midpoint of this range includes the following key assumptions for the second half of the year:
Including actual results so far this year, net income per unit is estimated to be between $3.50 and $3.70 for 2020 based on the latest DCF forecast range, with third-quarter guidance ranging from 75 cents to 85 cents depending on the progress of continued recovery in the markets served by the partnership. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
As previously announced, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding as well as the latest DCF forecast for the year, distribution coverage for 2020 is expected to be approximately 1.1 to 1.14 times the amount necessary to pay cash distributions for the year, generating excess cash of $75 to $125 million for 2020. Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage of at least 1.2 times once refined products demand and commodity prices stabilize and return to more historical levels.
Capital allocation
Management remains focused on managing Magellan's business for the long term and delivering value for its investors utilizing its historical disciplined approach. The partnership continues to make significant progress on its existing large-scale construction projects, which are nearing completion, and to evaluate well in excess of $500 million of potential organic growth projects to create incremental value for unitholders over the long term.
Based on the progress of projects now underway, the partnership expects to spend approximately $400 million in 2020 and $40 million in 2021 to complete its current slate of expansion projects. A number of new, low-risk smaller projects were recently launched and expected to meet or exceed management's 6 to 8 times EBITDA multiple target.
Magellan's west Texas refined products pipeline expansion began operations on July 1, with an additional 75,000 barrels per day (bpd) of capacity now available. The related new refined products terminal in Midland, Texas began service this week as well. Further, expansion of the Saddlehorn pipeline continues to progress, with an incremental 100,000 bpd of capacity expected to be available by the end of 2020.
During 2020, Magellan's board of directors authorized the repurchase of up to $750 million of common units through 2022. Through June 30, 2020, the partnership had repurchased 3.6 million units for $202 million, with no incremental units purchased during the second quarter. The timing, price and actual number of units repurchased will depend on a number of factors including expected expansion capital spending needs, excess cash available, balance sheet metrics, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Earnings call details
Management will discuss second-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 954-0628, conference code 21965325.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, plan, target, forecast, guidance, believe, estimate, expect, continue, commit, future, remain, resilient, intend, nearing, term, may, will and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Transportation and terminals revenue | $ | 506,405 | $ | 411,815 | $ | 967,197 | $ | 870,210 | |||||||
Product sales revenue | 189,989 | 43,277 | 352,984 | 362,397 | |||||||||||
Affiliate management fee revenue | 5,305 | 5,316 | 10,453 | 10,607 | |||||||||||
Total revenue | 701,699 | 460,408 | 1,330,634 | 1,243,214 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 168,929 | 146,107 | 314,954 | 295,615 | |||||||||||
Cost of product sales | 152,876 | 50,509 | 321,970 | 299,745 | |||||||||||
Depreciation, amortization and impairment | 62,530 | 58,540 | 124,401 | 122,074 | |||||||||||
General and administrative | 52,383 | 42,168 | 98,378 | 79,076 | |||||||||||
Total costs and expenses | 436,718 | 297,324 | 859,703 | 796,510 | |||||||||||
Other operating income (expense) | (5,024) | 3,913 | 1,917 | 3,402 | |||||||||||
Earnings of non-controlled entities | 40,785 | 33,689 | 72,040 | 77,349 | |||||||||||
Operating profit | 300,742 | 200,686 | 544,888 | 527,455 | |||||||||||
Interest expense | 51,406 | 69,259 | 111,572 | 125,159 | |||||||||||
Interest capitalized | (5,134) | (4,228) | (8,588) | (9,179) | |||||||||||
Interest income | (338) | (223) | (1,998) | (643) | |||||||||||
Gain on disposition of assets | (4,646) | — | (26,434) | (12,887) | |||||||||||
Other (income) expense | 4,570 | 1,446 | 6,620 | 2,253 | |||||||||||
Income before provision for income taxes | 254,884 | 134,432 | 463,716 | 422,752 | |||||||||||
Provision for income taxes | 1,181 | 589 | 2,350 | 1,345 | |||||||||||
Net income | $ | 253,703 | $ | 133,843 | $ | 461,366 | $ | 421,407 | |||||||
Basic net income per common unit | $ | 1.11 | $ | 0.59 | $ | 2.02 | $ | 1.86 | |||||||
Diluted net income per common unit | $ | 1.11 | $ | 0.59 | $ | 2.02 | $ | 1.86 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,647 | 225,351 | 228,603 | 226,461 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,688 | 225,351 | 228,623 | 226,461 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.606 | $ | 1.675 | $ | 1.590 | $ | 1.626 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 70.8 | 61.3 | 132.9 | 127.5 | |||||||||||
Distillates | 47.2 | 41.3 | 91.8 | 85.1 | |||||||||||
Aviation fuel | 9.9 | 2.7 | 18.7 | 12.1 | |||||||||||
Liquefied petroleum gases | 4.5 | — | 5.1 | 0.4 | |||||||||||
Total volume shipped | 132.4 | 105.3 | 248.5 | 225.1 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped(1) | $ | 0.977 | $ | 1.048 | $ | 0.961 | $ | 0.970 | |||||||
Volume shipped (million barrels)(1)(2) | 80.5 | 47.7 | 159.9 | 122.8 | |||||||||||
Terminal average utilization (million barrels per month) | 22.9 | 25.5 | 22.6 | 24.1 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(3) | 38.8 | 32.2 | 76.5 | 69.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(4) | 13.4 | 15.1 | 22.4 | 31.4 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | Volume shipped in 2020 reflects a change in the way the partnership's customers contract for its services pursuant to which customers are able to utilize crude oil storage capacity at East Houston and dock access at Seabrook. Subsequent to this change, the services the partnership provides no longer include a transportation element. Therefore, revenues related to these services are reflected entirely as terminalling revenues and the related volumes are no longer reflected in the partnership's calculation of transportation volumes. |
(3) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(4) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2019 | 2020 | 2019 | 2020 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 347,630 | $ | 279,759 | $ | 657,201 | $ | 594,078 | |||||||
Affiliate management fee revenue | 1,659 | 1,513 | 3,321 | 3,097 | |||||||||||
Other operating income (expense) | 1,031 | 138 | 6,399 | 2,030 | |||||||||||
Earnings (loss) of non-controlled entities | (2,950) | 4,592 | (3,997) | 18,812 | |||||||||||
Less: Operating expenses | 132,850 | 103,405 | 235,542 | 209,287 | |||||||||||
Transportation and terminals margin | 214,520 | 182,597 | 427,382 | 408,730 | |||||||||||
Product sales revenue | 184,695 | 34,463 | 341,977 | 347,449 | |||||||||||
Less: Cost of product sales | 148,166 | 45,616 | 310,596 | 278,958 | |||||||||||
Product margin | 36,529 | (11,153) | 31,381 | 68,491 | |||||||||||
Operating margin | $ | 251,049 | $ | 171,444 | $ | 458,763 | $ | 477,221 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 160,116 | $ | 133,637 | $ | 312,275 | $ | 279,295 | |||||||
Affiliate management fee revenue | 3,646 | 3,803 | 7,132 | 7,510 | |||||||||||
Other operating income (expense) | (6,055) | 3,775 | (4,482) | 1,372 | |||||||||||
Earnings of non-controlled entities | 43,735 | 29,097 | 76,037 | 58,537 | |||||||||||
Less: Operating expenses | 38,764 | 45,917 | 84,470 | 92,689 | |||||||||||
Transportation and terminals margin | 162,678 | 124,395 | 306,492 | 254,025 | |||||||||||
Product sales revenue | 5,294 | 8,814 | 11,007 | 14,948 | |||||||||||
Less: Cost of product sales | 4,710 | 4,893 | 11,374 | 20,787 | |||||||||||
Product margin | 584 | 3,921 | (367) | (5,839) | |||||||||||
Operating margin | $ | 163,262 | $ | 128,316 | $ | 306,125 | $ | 248,186 | |||||||
Segment operating margin | $ | 414,311 | $ | 299,760 | $ | 764,888 | $ | 725,407 | |||||||
Add: Allocated corporate depreciation costs | 1,344 | 1,634 | 2,779 | 3,198 | |||||||||||
Total operating margin | 415,655 | 301,394 | 767,667 | 728,605 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 62,530 | 58,540 | 124,401 | 122,074 | |||||||||||
General and administrative expense | 52,383 | 42,168 | 98,378 | 79,076 | |||||||||||
Total operating profit | $ | 300,742 | $ | 200,686 | $ | 544,888 | $ | 527,455 | |||||||
Note: | Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
Three Months Ended | |||||||||||||
June 30, 2020 | |||||||||||||
Net Income | Basic Net | Diluted Net | |||||||||||
As reported | $ | 133,843 | $ | 0.59 | $ | 0.59 | |||||||
Commodity-related adjustments associated with future transactions(1) | 12,367 | ||||||||||||
Excluding commodity-related adjustments | $ | 146,210 | $ | 0.65 | $ | 0.65 | |||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 225,351 | ||||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 225,351 | ||||||||||||
(1) | Includes the partnership's net share of commodity-related adjustments for its non-controlled entities. Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, | June 30, | 2020 Annual | |||||||||||||||||||||
2019 | 2020 | 2019 | 2020 | Forecast Range | |||||||||||||||||||
Net income | $ | 253,703 | $ | 133,843 | $ | 461,366 | $ | 421,407 | $ | 790,000 | $ | 835,000 | |||||||||||
Interest expense, net | 45,934 | 64,808 | 100,986 | 115,337 | 220,000 | 220,000 | |||||||||||||||||
Depreciation, amortization and impairment(1) | 59,966 | 58,500 | 118,923 | 121,586 | 251,000 | 251,000 | |||||||||||||||||
Equity-based incentive compensation(2) | 10,890 | 4,256 | 6,040 | (10,289) | (10,000) | (10,000) | |||||||||||||||||
Gain on disposition of assets(3) | (5,280) | — | (16,280) | (10,511) | (11,000) | (11,000) | |||||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 17,627 | 9,982 | 20,843 | (4,938) | |||||||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (1,924) | 47,593 | 71,214 | (15,964) | |||||||||||||||||||
Inventory valuation adjustments(5) | (1,820) | (43,899) | (9,446) | 27,831 | |||||||||||||||||||
Total commodity-related adjustments | 13,883 | 13,676 | 82,611 | 6,929 | (13,000) | (8,000) | |||||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (793) | 14,267 | 11,029 | 25,350 | 66,000 | 66,000 | |||||||||||||||||
Adjusted EBITDA | 378,303 | 289,350 | 764,675 | 669,809 | 1,293,000 | 1,343,000 | |||||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (45,184) | (50,827) | (91,059) | (100,459) | (203,000) | (203,000) | |||||||||||||||||
Maintenance capital(7) | (18,325) | (28,982) | (40,823) | (53,302) | (90,000) | (90,000) | |||||||||||||||||
Distributable cash flow | $ | 314,794 | $ | 209,541 | $ | 632,793 | $ | 516,048 | $ | 1,000,000 | $ | 1,050,000 | |||||||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based long-term incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense includes debt prepayment costs of $8.3 million in the six months ended June 20, 2019 and $12.9 million in the three and six months ended June 30, 2020, which are excluded from DCF as they are financing activities and not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 23, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period April 1 through June 30, 2020.
The second-quarter 2020 distribution is 1% higher than the second-quarter 2019 distribution of $1.0125 per unit and consistent with the first-quarter 2020 amount.
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid Aug. 14 to unitholders of record at the close of business on Aug. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., July 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for second quarter 2020 before the market opens on Thurs., July 30. Management will discuss second-quarter 2020 earnings and outlook for the remainder of the year during a conference call with analysts at 1:30 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 954-0628, conference code 21965325.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., June 15, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to participate in a question and answer session about Magellan at the J.P. Morgan Energy, Power & Renewables Virtual Conference at 10:10 a.m. Eastern on Wed., June 17.
The session will be moderated by Jeremy Tonet, J.P. Morgan equity research analyst, with an audio webcast available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
In addition, management will be hosting virtual meetings with institutional investors during the conference. The slides used for these meetings also will be available at www.magellanlp.com/investors/webcasts.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 6, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 3.25% senior notes due 2030. The notes were priced at 99.88% of par to yield 3.264% to maturity. The partnership intends to use the net proceeds from this offering of approximately $495.4 million, after deducting underwriting discounts and estimated offering expenses, for general partnership purposes, which may include capital projects and repayment of indebtedness, including borrowings under its revolving credit facility and commercial paper program and redemption of its 4.25% senior notes due 2021.
The offering is expected to close on May 20, 2020 and is subject to the satisfaction of customary closing conditions. J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. are joint book-running managers for the debt offering, with Barclays Capital Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: estimated, expected, intends, may, subject, conditions and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; insufficiency of storage for crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., May 1, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $287.6 million for first quarter 2020 compared to $207.7 million for first quarter 2019. The increase in first quarter 2020 net income was primarily driven by mark-to-market (MTM) adjustments for hedge positions related to the partnership's commodity-related activities.
Diluted net income per common unit was $1.26 in first quarter 2020 and 91 cents in first quarter 2019. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.28 for first quarter 2020 was higher than the $1.08 guidance previously provided by management primarily as a result of lower operating expenses, higher gas liquids blending margins as well as a $12.9 million, or 6-cent per unit, gain on the sale of a portion of the partnership's investment in Saddlehorn Pipeline Company, LLC during Feb. 2020.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $306.5 million for first quarter 2020 compared to $318.0 million for first quarter 2019.
"While we are pleased with our solid financial results for the first quarter of 2020, we remain focused on managing Magellan's business through the current challenging environment. Our employees have ensured Magellan's essential operations remain fully functional to provide continuity of fuel supply to the communities we serve, and we thank them for their professionalism and dedication during this difficult time," said Michael Mears, chief executive officer. "Although we expect near-term financial impacts from the significantly lower commodity prices and unprecedented reductions in refined products demand, Magellan's disciplined management approach, resilient business model and financial strength position us well to respond not only to the short-term industry challenges but to successfully manage our company for the long term."
Beginning in first quarter 2020, the partnership reorganized its reporting segments to reflect changes to its business in conjunction with the sale of three of its marine terminals during March 2020. The partnership's Galena Park, Texas marine terminal and Pasadena, Texas joint venture marine terminal are now shown in the Refined products segment and its Corpus Christi, Texas marine terminal is now included with the Crude oil segment based on the primary products handled at these facilities. Historical financial results have been restated to conform to the new segment presentation, with historical contributions from the divested terminals also included in the Refined products segment.
An analysis by segment comparing first quarter 2020 to first quarter 2019 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $305.8 million, an increase of $98.1 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities.
Transportation and terminals revenue increased $4.7 million due to incremental refined products transportation volume and a higher average transportation rate. Shipments grew mainly as a result of the newly-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019, and the average rate in the current period increased slightly as the 2019 mid-year tariff adjustment of 4.3% was partially offset by more short-haul movements that ship at a lower rate. The impact of these favorable items was offset in part by lower demand during March 2020 associated with travel and economic restrictions related to COVID-19 and reduced drilling activity from the lower commodity price environment.
Operating expenses increased $3.2 million primarily due to higher property taxes, and other operating income decreased $3.5 million as a result of insurance settlements received in first quarter 2019 related to Hurricane Harvey.
Earnings of non-controlled entities increased by $15.3 million due to gains recognized in the current period compared to losses in first quarter 2019 on futures contracts used to hedge commodity-related activities at our Powder Springs Logistics joint venture. The current period also benefited from additional earnings related to the recent start-up of newly-constructed storage and dock assets at the partnership's Pasadena joint venture marine terminal.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $84.8 million between periods primarily due to the recognition of unrealized gains in the 2020 period compared to losses in 2019 on futures contracts used to economically hedge the partnership's commodity-related activities, partially offset by unfavorable lower of cost or net realizable value (LCM) adjustments in the current period resulting from the significant commodity price decline during 2020. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods primarily from improved fractionation contributions.
Crude oil. Crude oil operating margin was $119.9 million, a decrease of $23.0 million. Transportation and terminals revenue decreased $6.5 million primarily due to lower transportation revenue on the partnership's Longhorn pipeline as a result of less third-party spot shipments that move at a higher tariff rate, as the crude oil price differential between the Permian Basin and Houston was lower than the spot rate during the current period.
Operating expenses increased slightly as less favorable product overages (which reduce operating expenses) were mainly offset by lower environmental accruals, and other operating expense was $4.0 million unfavorable primarily due to realized losses on a basis derivative agreement during the current period.
Earnings of non-controlled entities declined $2.9 million between periods primarily due to lower earnings from the Saddlehorn pipeline following Magellan's sale of a 10% interest in Feb. 2020.
Product margin decreased $8.8 million primarily due to an LCM adjustment on the partnership's product overages. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods due to the contribution of crude oil marketing affiliate activities to facilitate intrastate shipments during the current period.
Other items. Depreciation, amortization and impairment expense increased slightly between periods due to the commencement of depreciation for expansion projects placed into service over the past year, whereas G&A expense decreased $9.1 million due to lower incentive compensation accruals.
Gain on disposition of assets was unfavorable $8.9 million. The current period benefited from a $12.9 million gain on the sale of a 10% interest in Saddlehorn compared to a gain of $21.8 million in 2019 associated with the sale of a portion of the partnership's interest in BridgeTex Pipeline Company, LLC and the sale of a discontinued crude oil pipeline construction project.
Net interest expense decreased $4.5 million due to an $8.3 million debt prepayment cost in first quarter 2019, partially offset by higher average outstanding borrowings in the current period used to fund the partnership's expansion capital projects. As of March 31, 2020, Magellan had $4.75 billion of debt outstanding and $139 million of cash on hand with no borrowings outstanding on its commercial paper program or revolving credit facility.
Financial guidance for 2020
The recent restrictions on travel and economic activity and the dramatic decline in commodity prices since the beginning of the year have significantly disrupted the petroleum industry, and Magellan is not immune to their effects. Although a number of states within the partnership's asset footprint are beginning to reopen their economies, the pace of the recovery and length of time until these markets return to more historical levels of refined products demand are not clear. As a result, management is not providing specific guidance for 2020, but instead is providing an estimated annual DCF range for 2020 between $1.0 and $1.075 billion, utilizing the following sensitivity analysis:
($ in millions) | ||||
Original 2020 DCF guidance provided on 1/30/20 | $1,200 | |||
Estimated impacts from quarantine and lower commodity price environment: | ||||
- | Lower blending profits and tenders due to commodity prices, with no fall '20 blending margin forecasted; $10/bbl increase in crude price ~$30mm DCF | (140) | - | (110) |
- | Quarantine impact on base refined products demand. Low end assumes declines of 25% gasoline, 5% distillate and 70% aviation in 2Q20, followed by 1 month of transition (half the 2Q decline) before demand recovers, except aviation decline continues at 25% throughout '20. Upper end assumes less July impact | (70) | - | (60) |
- | Reduced drilling impact on distillate volumes | (30) | - | (20) |
- | Crude oil pipeline, lower uncommitted volume | (10) | - | (10) |
- | Other items, mainly expense savings and higher storage revenues | 50 | - | 75 |
Estimated 2020 DCF range | $1,000 | - | $1,075 |
Including actual results so far this year, net income per unit is now estimated to be between $3.35 and $3.70 for 2020 based on the range of outcomes above. With most of the travel and economic disruptions from the coronavirus expected to impact second-quarter results, the net income forecast for second quarter 2020 is expected to range from 35 cents to 50 cents, depending on how quickly regional economies reopen. The forecast excludes future MTM adjustments on the partnership's commodity-related activities.
In light of the challenging environment and investor feedback, Magellan intends to maintain its quarterly cash distribution at the current level for the remainder of 2020. Based on the current distribution amount and number of units outstanding and considering the above DCF sensitivity analysis, distribution coverage for 2020 is expected to be approximately 1.1 to 1.15 times the amount necessary to pay cash distributions for the year, generating excess cash of $75 to $150 million for 2020. Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage above 1.2 times once refined products demand returns to more historical levels and the commodity price environment stabilizes.
Capital allocation
Management remains focused on managing Magellan's business for the long term and delivering value for its investors. The partnership continues to make significant progress on its existing construction projects, which are nearing completion. Based on the progress of projects now underway, the partnership expects to spend approximately $400 million in 2020 to complete its current slate of expansion projects, with $155 million of that amount already spent during first quarter 2020.
Construction activities for Magellan's west Texas refined products pipeline expansion and new Midland terminal are in the final stages, with both projects expected to begin operations in early third quarter 2020. Further, expansion of the Saddlehorn pipeline is in process, with an incremental 100,000 barrels per day of capacity expected to be available in late 2020.
Even though it is not the top priority at the moment, the partnership continues to evaluate well in excess of $500 million of potential organic growth projects to create incremental value for unitholders over the long term. Management remains committed to the capital discipline that has been a consistent feature of its approach and is pursuing low-risk, fee-based capital projects that are expected to meet or exceed its targeted 6 to 8 times EBITDA multiple.
During 2020, Magellan's board of directors authorized the repurchase of up to $750 million of common units through 2022. Through March 31, 2020, the partnership had repurchased 3.6 million units for $202 million. The timing, price and actual number of units repurchased will depend on a number of factors including expected expansion capital spending needs, alternative investment opportunities, excess cash available, legal and regulatory requirements, market conditions and the trading price of the partnership's common units.
Earnings call details
Management will discuss first-quarter 2020 financial results and outlook for the remainder of the year during a conference call at 1:30 p.m. Eastern today. Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 891-3493, conference code 21959668.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, plan, target, forecast, guidance, believe, estimate, expect, continue, commit, future, remain, intend, nearing, term, may, will and similar references to future periods. Although management believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: impacts from the COVID-19 pandemic; impacts of the oversupply of crude oil and petroleum products; insufficiency of storage for crude oil and petroleum products; claims for force majeure relief by its customers or vendors; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital needs; changes in its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Transportation and terminals revenue | $ | 460,792 | $ | 458,395 | |||
Product sales revenue | 162,995 | 319,120 | |||||
Affiliate management fee revenue | 5,148 | 5,291 | |||||
Total revenue | 628,935 | 782,806 | |||||
Costs and expenses: | |||||||
Operating | 146,025 | 149,508 | |||||
Cost of product sales | 169,094 | 249,236 | |||||
Depreciation, amortization and impairment | 61,871 | 63,534 | |||||
General and administrative | 45,995 | 36,908 | |||||
Total costs and expenses | 422,985 | 499,186 | |||||
Other operating income (expense) | 6,941 | (511) | |||||
Earnings of non-controlled entities | 31,255 | 43,660 | |||||
Operating profit | 244,146 | 326,769 | |||||
Interest expense | 60,166 | 55,900 | |||||
Interest capitalized | (3,454) | (4,951) | |||||
Interest income | (1,660) | (420) | |||||
Gain on disposition of assets | (21,788) | (12,887) | |||||
Other (income) expense | 2,050 | 807 | |||||
Income before provision for income taxes | 208,832 | 288,320 | |||||
Provision for income taxes | 1,169 | 756 | |||||
Net income | $ | 207,663 | $ | 287,564 | |||
Basic net income per common unit | $ | 0.91 | $ | 1.26 | |||
Diluted net income per common unit | $ | 0.91 | $ | 1.26 | |||
Weighted average number of common units outstanding used for basic net income per unit calculation | 228,558 | 227,571 | |||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 228,558 | 227,571 | |||||
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Refined products: | |||||||
Transportation revenue per barrel shipped | $ | 1.572 | $ | 1.582 | |||
Volume shipped (million barrels): | |||||||
Gasoline | 62.1 | 66.2 | |||||
Distillates | 44.6 | 43.8 | |||||
Aviation fuel | 8.8 | 9.4 | |||||
Liquefied petroleum gases | 0.6 | 0.4 | |||||
Total volume shipped | 116.1 | 119.8 | |||||
Crude oil: | |||||||
Magellan 100%-owned assets: | |||||||
Transportation revenue per barrel shipped(1) | $ | 0.945 | $ | 0.918 | |||
Volume shipped (million barrels)(1) | 79.4 | 75.1 | |||||
Terminal average utilization (million barrels per month) | 22.2 | 22.7 | |||||
Select joint venture pipelines: | |||||||
BridgeTex - volume shipped (million barrels)(2) | 37.7 | 37.1 | |||||
Saddlehorn - volume shipped (million barrels)(3) | 9.0 | 16.3 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which is owned 30% by Magellan. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which was owned 40% by Magellan through January 31, 2020 and 30% thereafter. |
MAGELLAN MIDSTREAM PARTNERS, L.P. OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT (Unaudited, in thousands) | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2019 | 2020 | ||||||
Refined products: | |||||||
Transportation and terminals revenue | $ | 309,571 | $ | 314,319 | |||
Affiliate management fee revenue | 1,662 | 1,584 | |||||
Other operating income (expense) | 5,368 | 1,892 | |||||
Earnings (loss) of non-controlled entities | (1,047) | 14,220 | |||||
Less: Operating expenses | 102,692 | 105,882 | |||||
Transportation and terminals margin | 212,862 | 226,133 | |||||
Product sales revenue | 157,282 | 312,986 | |||||
Less: Cost of product sales | 162,430 | 233,342 | |||||
Product margin | (5,148) | 79,644 | |||||
Operating margin | $ | 207,714 | $ | 305,777 | |||
Crude oil: | |||||||
Transportation and terminals revenue | $ | 152,159 | $ | 145,658 | |||
Affiliate management fee revenue | 3,486 | 3,707 | |||||
Other operating income (expense) | 1,573 | (2,403) | |||||
Earnings of non-controlled entities | 32,302 | 29,440 | |||||
Less: Operating expenses | 45,706 | 46,772 | |||||
Transportation and terminals margin | 143,814 | 129,630 | |||||
Product sales revenue | 5,713 | 6,134 | |||||
Less: Cost of product sales | 6,664 | 15,894 | |||||
Product margin | (951) | (9,760) | |||||
Operating margin | $ | 142,863 | $ | 119,870 | |||
Segment operating margin | $ | 350,577 | $ | 425,647 | |||
Add: Allocated corporate depreciation costs | 1,435 | 1,564 | |||||
Total operating margin | 352,012 | 427,211 | |||||
Less: | |||||||
Depreciation, amortization and impairment expense | 61,871 | 63,534 | |||||
General and administrative expense | 45,995 | 36,908 | |||||
Total operating profit | $ | 244,146 | $ | 326,769 | |||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES (Unaudited, in thousands except per unit amounts) | ||||||||||||
Three Months Ended | ||||||||||||
March 31, 2020 | ||||||||||||
Net Income | Basic Net Income | Diluted Net | ||||||||||
As reported | $ | 287,564 | $ | 1.26 | $ | 1.26 | ||||||
Unrealized derivative (gains) losses associated with future transactions(1) | (66,481) | |||||||||||
Inventory valuation adjustments associated with future transactions | 70,969 | |||||||||||
Excluding commodity-related adjustments(2) | $ | 292,052 | $ | 1.28 | $ | 1.28 | ||||||
Weighted average number of common units outstanding used for basic net income per unit calculation | 227,571 | |||||||||||
Weighted average number of common units outstanding used for diluted net income per unit calculation | 227,571 | |||||||||||
(1) | Includes the partnership's net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME (Unaudited, in thousands) | ||||||||||||||
Three Months Ended | ||||||||||||||
March 31, | 2020 Annual | |||||||||||||
2019 | 2020 | |||||||||||||
Net income | $ | 207,663 | $ | 287,564 | $ | 757,000 | $ | 835,000 | ||||||
Interest expense, net | 55,052 | 50,529 | 211,000 | 211,000 | ||||||||||
Depreciation, amortization and impairment(1) | 58,957 | 63,086 | 262,000 | 262,000 | ||||||||||
Equity-based incentive compensation(2) | (4,850) | (14,545) | — | — | ||||||||||
Gain on disposition of assets(3) | (11,000) | (10,511) | (11,000) | (11,000) | ||||||||||
Commodity-related adjustments: | ||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 25,036 | (66,740) | ||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | 51,318 | (11,737) | ||||||||||||
Inventory valuation adjustments(5) | (7,626) | 71,730 | ||||||||||||
Total commodity-related adjustments | 68,728 | (6,747) | 38,000 | 35,000 | ||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | 11,822 | 11,083 | 41,000 | 41,000 | ||||||||||
Adjusted EBITDA | 386,372 | 380,459 | 1,298,000 | 1,373,000 | ||||||||||
Interest expense, net, excluding debt issuance cost amortization(6) | (45,875) | (49,632) | (208,000) | (208,000) | ||||||||||
Maintenance capital(7) | (22,498) | (24,320) | (90,000) | (90,000) | ||||||||||
Distributable cash flow | $ | 317,999 | $ | 306,507 | $ | 1,000,000 | $ | 1,075,000 | ||||||
(1) | Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of common units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(7) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 23, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has declared a quarterly cash distribution of $1.0275 per unit for the period Jan. 1 through March 31, 2020.
The first-quarter 2020 distribution is 2% higher than the first-quarter 2019 distribution of $1.005 per unit and consistent with the fourth-quarter 2019 amount.
"During this period of unprecedented restrictions on economic activity and commodity price declines, we have heard clearly from our investors that stability of the distribution and healthy distribution coverage remain of utmost importance to them," said Michael Mears, chief executive officer. "Magellan's resilient business model and strong balance sheet position us well to weather this environment; however, given the uncertain timing of the return of refined products demand to more historical levels, we believe it is prudent to maintain our current cash distribution amount at this time out of an abundance of caution."
The distribution, which equates to $4.11 per unit on an annualized basis, will be paid May 15 to unitholders of record at the close of business on May 8.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 13, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for first quarter 2020 before the market opens on Fri., May 1. Management will discuss first-quarter 2020 earnings and outlook for the remainder of the year during a conference call with analysts at 1:30 p.m. Eastern the same day.
Participants are encouraged to listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx. In addition, a limited number of phone lines will be available at (800) 891-3493, conference code 21959668.
A replay of the audio webcast will be available for at least 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., April 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it will host its 2020 annual meeting of limited partners on Thurs., April 23 at 10:00 a.m. Central Time via webcast. Due to the coronavirus pandemic, Magellan changed its previously-planned annual meeting in Tulsa to this webcast event. Unitholders will not be able to attend the annual meeting in person.
Unitholders of record at the close of business on Feb. 24, 2020 are entitled to participate in and vote at the annual meeting. The virtual annual meeting will be held at www.meetingcenter.io/218032134. To access the event, unitholders must enter the password MMP2020 and a Computershare-issued control number. Unitholders that are registered through Computershare, the partnership's transfer agent, can find the control number on the notice they previously received. Unitholders that hold their Magellan units through a broker, bank or other nominee must register with Computershare in advance to attend the virtual annual meeting. To register, the unitholder must contact their broker, bank or other nominee to request proof of ownership via a "legal proxy" and submit the legal proxy, along with the unitholder's name and email address, to Computershare at legalproxy@computershare.com by 4:00 p.m. Central Time on April 17. The unitholder will then receive an email response from Computershare to confirm registration and provide a control number for participation in the virtual annual meeting.
Once admitted to the meeting, unitholders will be able to submit questions electronically and vote by following the instructions on the meeting website. All unitholders are encouraged to vote and submit proxies in advance of the annual meeting by one of the methods described in the annual meeting proxy materials previously made available. The proxy materials contain important information about the matters on which unitholders are being asked to vote. Unitholders are also encouraged to submit proxies as early as possible to avoid processing delays. The proxy card included with the annual meeting proxy materials may still be used to vote units in connection with the annual meeting.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2019 and subsequent reports on Form 8-K. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Feb. 4, 2020 /PRNewswire/ -- Saddlehorn Pipeline Company, LLC ("Saddlehorn") announced today that Black Diamond Gathering LLC ("Black Diamond"), through its majority owner Noble Midstream Partners LP (NASDAQ: NBLX) ("NBLX"), has purchased a 20% membership interest in Saddlehorn for $155 million effective Feb. 1, 2020. As previously announced, an option had been granted to Black Diamond in conjunction with recent volume commitments to the pipeline.
The Saddlehorn pipeline is currently capable of transporting 190,000 barrels per day ("bpd") of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma. Supported by increased volume commitments from shippers, the pipeline's capacity is being increased by 100,000 bpd to a new total capacity of approximately 290,000 bpd, providing shippers enhanced access to market. The higher capacity is expected to be available in late 2020 following the capital-efficient addition of incremental pumping and storage capabilities.
The Saddlehorn pipeline was previously owned jointly by affiliates of Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") and Western Midstream Partners, LP (NYSE: WES) ("WES"). After Black Diamond's purchase, with Magellan and Plains each selling a 10% interest, Magellan and Plains each own a 30% membership interest and Black Diamond and WES each own a 20% membership interest in Saddlehorn. Magellan continues to serve as operator of the Saddlehorn pipeline.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL") and natural gas. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles more than 6 million bpd of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About Western Midstream Partners, LP
Western Midstream Partners, LP (NYSE: WES) is a Delaware master limited partnership formed to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, NGLs and crude oil; and gathering and disposing of produced water for its customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts. More information is available at www.westernmidstream.com.
About Black Diamond Gathering LLC
Black Diamond is a joint venture between Noble Midstream Partners LP (NASDAQ: NBLX) and Greenfield Midstream. NBLX owns 54.4% of Black Diamond and Greenfield Midstream owns the remaining 45.6%. NBLX operates Black Diamond, which includes a large-scale integrated crude oil gathering system in the DJ Basin, consisting of approximately 240 miles of pipeline in operation, 300,000 bpd delivery capacity and 390,000 bpd crude oil storage capacity. The system is connected to every major takeaway pipeline in the DJ Basin, including the White Cliffs Pipeline, the Saddlehorn Pipeline, the Grand Mesa Pipeline and the Pony Express Pipeline. NBLX and Greenfield Midstream jointly provide commercial efforts to bring additional producer dedications to Black Diamond Gathering and pursue expansion opportunities.
Except for statements of historical fact, the information in this news release constitutes forward-looking statements as defined by federal law. Although the statements are based on reasonable assumptions, such forward-looking statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Important factors that could lead to material changes in performance include the risk and uncertainties discussed in filings with the Securities and Exchange Commission by Magellan, NBLX, Plains and WES. This news release speaks only as of the date issued, and the companies undertake no obligation to update any forward-looking statements because of new information, future events or any other factors.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Plains: | Brett Magill, Investor Relations Brad Leone, Media Relations | (866) 809-1291 (866) 809-1290 | |
WES: | Kristen Shults, Investor Relations Abby Dempsey, Investor Relations | (832) 636-6000 (832) 636-6000 | |
Black Diamond: | Park Carrere, Investor Relations Casey Nikoloric, Investor Relations | (281) 872-3208 (303) 433-4397 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 30, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $286.4 million for fourth quarter 2019 compared to $314.1 million for fourth quarter 2018. The decrease in fourth quarter 2019 net income was driven by mark-to-market (MTM) adjustments for hedge positions related to the partnership's commodity-related activities. Contributions from Magellan's core fee-based transportation and terminals activities increased between periods.
Diluted net income per limited partner unit was $1.25 in fourth quarter 2019 and $1.37 in fourth quarter 2018. Diluted net income per unit excluding MTM commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.31 for fourth quarter 2019 was higher than the $1.13 guidance previously provided by management, primarily as a result of lower operating expenses than expected, higher butane blending margins as well as higher demand for the partnership's crude oil services.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was a record $357.8 million for fourth quarter 2019, or 18% higher than the $302.4 million generated in fourth quarter 2018.
"Magellan closed out the year with another strong quarter, generating solid financial results from each of our segments and solidifying 2019 as a record year for our company," said Michael Mears, chief executive officer. "Our conservative business model has consistently proven successful as we focus on providing essential services to move the fuel that keeps America moving while ensuring attractive returns on capital deployed. Magellan's financial strength and discipline will remain key to producing long-term value not only in today's competitive environment but also for years to come."
An analysis by segment comparing fourth quarter 2019 to fourth quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $264.9 million, a decrease of $84.4 million primarily related to the impact of MTM adjustments for exchange-traded futures contracts used to hedge the partnership's commodity-related activities. Excluding these adjustments, financial results from this segment's fee-based activities increased between periods and represented a quarterly record.
Transportation and terminals revenue increased due to incremental refined products transportation volume and a higher average transportation rate. Shipments grew 3% mainly as a result of the newly-constructed East Houston-to-Hearne pipeline segment that became operational in late 2019, and the average rate in the current period increased slightly as the 2019 mid-year tariff adjustment of 4.3% was partially offset by more short-haul movements that ship at a lower rate. The impact of these favorable items was reduced in part by lower ammonia revenues in the current period due to decommissioning of the ammonia pipeline in late 2019.
Operating expenses decreased $10.7 million primarily due to lower spending for asset integrity as a result of maintenance work timing and less asset retirements in the current period, partially offset by less favorable product overages (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) decreased $93.9 million between periods primarily due to the recognition of significant unrealized gains in the 2018 period on futures contracts used to economically hedge the partnership's commodity-related activities. Details of these and other commodity-related adjustments can be found on the Distributable Cash Flow Reconciliation to Net Income schedule that accompanies this news release. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods mainly due to additional sales volume for its butane blending activities.
Earnings of non-controlled entities were also lower due to MTM adjustments for exchange-traded futures contracts used to hedge commodity-related activities for Powder Springs Logistics, LLC, which is owned 50% by Magellan.
Crude oil. Crude oil operating margin was $151.3 million, an increase of $21.5 million. Transportation and terminals revenue increased $7.4 million primarily due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the current period, as well as higher fees from increased customer activity at the partnership's crude oil facilities. Higher transportation volumes on the partnership's Houston distribution system due to increased movements to the export facility owned by its Seabrook Logistics, LLC joint venture were offset by lower transportation revenue on the Longhorn pipeline. As expected, the pricing differential between the Permian Basin and Houston declined during the final months of 2019, limiting demand for spot shipments on the Longhorn pipeline and resulting in both lower transportation volume and lower average rates.
Operating expenses decreased $15.6 million due to a number of favorable items, including lower environmental accruals, reduced spending for asset integrity as a result of maintenance work timing and less asset retirements than the 2018 period, which included the write-off of costs incurred for a cancelled pipeline project.
Earnings of non-controlled entities were relatively unchanged between periods as contributions from new commitments received in connection with the expansion of the Saddlehorn pipeline were offset by lower average tariffs on the BridgeTex pipeline, as shipments at the published spot tariff were replaced by volume at lower incentive rates.
Marine storage. Marine storage operating margin was $32.9 million, an increase of $2.3 million. Transportation and terminals revenue increased due to additional fees mainly related to new dock capacity and rail connectivity at the partnership's Galena Park, Texas facility, partially offset by lower storage utilization resulting from timing of maintenance work and a slightly lower average storage rate due to contract renewals at lower rates, primarily at its Wilmington, Delaware terminal. Operating expenses increased due to additional asset integrity spending and higher property taxes.
Other items. Depreciation, amortization and impairment expense decreased significantly between periods primarily related to a $49.1 million impairment to the partnership's ammonia pipeline system in 2018 as a result of management's decision to decommission this asset during 2019.
Net interest expense increased due to higher average outstanding borrowings to fund the partnership's expansion capital projects, partially offset by a lower average interest rate. As of Dec. 31, 2019, Magellan had $4.8 billion of debt outstanding and $58 million of cash on hand with no borrowings outstanding on its commercial paper program.
Annual results
For the year ended Dec. 31, 2019, net income was $1,020.8 million compared to $1,333.9 million in 2018, or $980.1 million excluding the $353.8 million gain on sale of a portion of BridgeTex. Primary drivers for the increase excluding the BridgeTex sale gain included higher contributions from fee-based activities due to continued strong demand for Magellan's refined products and crude oil transportation and storage services, partially offset by lower profits from the partnership's commodity-related activities due to favorable MTM adjustments for related hedge positions during 2018. Full-year diluted net income per limited partner unit was $4.46 in 2019 and $5.84 in 2018. Annual DCF was a record $1,297.5 million in 2019, or 1.4 times the amount needed to pay distributions related to 2019, compared to $1,109.7 million in 2018.
Expansion capital projects
Magellan continues to make significant progress on its current construction projects, spending $990 million on organic growth capital during 2019. Based on the progress of projects already underway, the partnership expects to spend approximately $400 million in 2020 to complete its current slate of expansion projects.
Construction of the second phase of the partnership's Pasadena, Texas joint venture marine terminal was essentially complete by year-end as expected. Commercial service has now commenced for the new dock and approximately half of the 4 million barrels of new storage, with full operations expected over the coming month as final permits are received.
Seabrook has now placed 800,000 barrels of recently-constructed storage into operation, with new dock capabilities expected to come online in mid-2020. In addition, another 750,000 barrels of storage is being built at Seabrook with an anticipated in-service date of early 2021.
Construction activities are progressing well for Magellan's west Texas refined products pipeline expansion and new Midland terminal, with both projects expected to begin operations in mid-2020. Further, expansion of the Saddlehorn pipeline is in process, with an incremental 100,000 barrels per day (bpd) of capacity expected to be available in late 2020.
The partnership continues to evaluate well in excess of $500 million of potential organic growth projects that would create incremental value for unitholders, including a cost-efficient solution to meet industry demand to transport crude oil from Cushing, Oklahoma to the Houston Gulf Coast region as well as a number of refined products and marine storage expansion opportunities. Management remains committed to the capital discipline that has been a consistent feature of its approach and is pursuing capital projects that are expected to meet or exceed its targeted 6 to 8 times EBITDA multiple.
Financial guidance for 2020
Management expects to increase annual cash distributions by 3% for 2020 and currently expects the partnership to generate annual DCF of $1.2 billion in 2020, resulting in 1.25 times the amount needed to pay cash distributions for the year. Current 2020 DCF guidance assumes a less favorable commodity price environment than that experienced in 2019, and in particular that the pricing differential between the Permian Basin and Houston will not be sufficient to encourage spot shipments on the Longhorn and BridgeTex pipelines, which provided considerable benefit to 2019 results.
Specific to the Longhorn pipeline, Magellan has made substantial progress on its re-contracting efforts and has secured a significant new 10-year take-or-pay customer agreement. The volume commitment in this new agreement ramps up over the next few years. Magellan plans to utilize its own marketing activities to facilitate intrastate shipments in the interim, and to that end has recently secured multi-year third-party commitments to backstop its marketing affiliate's use of transportation services on Longhorn. As a result of these transactions, Magellan expects total committed volumes to average approximately 230,000 bpd on Longhorn during 2020, with a current weighted-average contract life of approximately 7 years. Based on commitments secured to date, committed volume on Longhorn over the next 5 years is currently expected to average nearly 200,000 bpd. Advanced discussions continue with other third parties for additional commitments, and Magellan believes it is likely the committed volumes on Longhorn will increase over time.
Shipments on the BridgeTex pipeline are expected to average approximately 400,000 bpd based on a combination of third-party committed volume, incremental movements due to recently-implemented incentive tariff rates and marketing activities of the BridgeTex owners.
Further, guidance assumes the recently announced sale of the partnership's marine terminals in New Haven, Connecticut, Wilmington, Delaware and Marrero, Louisiana closes at the end of first quarter. The 2019 cash contribution from these facilities was less than $20 million on a combined basis.
Management does not intend to provide financial guidance beyond 2020 at this time but continues to target distribution coverage above 1.2 times for the foreseeable future.
"Managing our business in a prudent manner for the long-term benefit of our investors remains our top priority," added Mears. "While our business has continued to perform very well and demand for our services remains strong, recent outperformance has been driven in part by favorable conditions for our crude oil business that we do not think are likely to persist. As a result, we are taking a conservative approach to projected future increases in our quarterly cash distributions."
Mears continued, "Balanced with our stated intent to opportunistically utilize additional tools, such as the recently-announced unit repurchase program and potential special distributions, we believe annual distribution growth of 3% for 2020 with targeted annual distribution coverage above 1.2 times for the foreseeable future provides a healthy mix of stability and growth to maximize value for Magellan's investors."
Net income per limited partner unit is estimated to be $4.30 for 2020, with first-quarter guidance of $1.08. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management continues to expect the large majority of the partnership's operating margin will be generated by fee-based transportation and terminals services, with commodity-related activities contributing less than 15% of the partnership's operating margin.
Earnings call details
An analyst call with management to discuss fourth-quarter 2019 financial results and annual guidance for 2020 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 895-8003 and provide code 21938575. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Feb. 5. To access the replay, dial (800) 633-8284 and provide code 21938575. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of a company.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: potential, projected, plan, target, guidance, believe, estimate, expect, continue, commit, foreseeable, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; the occurrence of operational hazards or unforeseen interruptions; the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; an increase in the competition the partnership's operations encounter; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; its capital needs, cash flows and availability of cash to fund unit repurchases or distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 486,028 | $ | 497,001 | $ | 1,878,988 | $ | 1,970,630 | |||||||
Product sales revenue | 374,428 | 238,301 | 927,220 | 736,092 | |||||||||||
Affiliate management fee revenue | 5,227 | 5,380 | 20,365 | 21,190 | |||||||||||
Total revenue | 865,683 | 740,682 | 2,826,573 | 2,727,912 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 174,180 | 149,740 | 649,436 | 634,081 | |||||||||||
Cost of product sales | 230,532 | 188,552 | 704,313 | 619,279 | |||||||||||
Depreciation, amortization and impairment | 103,351 | 65,106 | 265,077 | 246,134 | |||||||||||
General and administrative | 47,048 | 47,116 | 194,283 | 196,650 | |||||||||||
Total costs and expenses | 555,111 | 450,514 | 1,813,109 | 1,696,144 | |||||||||||
Other operating income (expense) | — | 1,437 | — | 2,975 | |||||||||||
Earnings of non-controlled entities | 50,274 | 46,732 | 181,117 | 168,961 | |||||||||||
Operating profit | 360,846 | 338,337 | 1,194,581 | 1,203,704 | |||||||||||
Interest expense | 52,444 | 55,801 | 220,979 | 221,123 | |||||||||||
Interest capitalized | (4,101) | (4,865) | (17,455) | (19,284) | |||||||||||
Interest income | (1,550) | (639) | (3,010) | (3,285) | |||||||||||
Gain on disposition of assets | — | — | (353,797) | (28,966) | |||||||||||
Other (income) expense | 3,569 | 2,608 | 13,868 | 11,830 | |||||||||||
Income before provision for income taxes | 310,484 | 285,432 | 1,333,996 | 1,022,286 | |||||||||||
Provision for income taxes | (3,588) | (1,013) | 71 | 1,437 | |||||||||||
Net income | $ | 314,072 | $ | 286,445 | $ | 1,333,925 | $ | 1,020,849 | |||||||
Basic net income per limited partner unit | $ | 1.38 | $ | 1.25 | $ | 5.84 | $ | 4.46 | |||||||
Diluted net income per limited partner unit | $ | 1.37 | $ | 1.25 | $ | 5.84 | $ | 4.46 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,403 | 228,705 | 228,377 | 228,658 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 229,052 | 229,358 | 228,573 | 228,842 |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.652 | $ | 1.664 | $ | 1.556 | $ | 1.616 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 67.9 | 73.1 | 286.9 | 280.5 | |||||||||||
Distillates | 49.0 | 45.8 | 181.7 | 184.6 | |||||||||||
Aviation fuel | 9.7 | 11.3 | 31.0 | 41.1 | |||||||||||
Liquefied petroleum gases | 0.6 | 0.8 | 11.0 | 9.7 | |||||||||||
Total volume shipped | 127.2 | 131.0 | 510.6 | 515.9 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped(1) | $ | 0.945 | $ | 0.898 | $ | 1.208 | $ | 0.939 | |||||||
Volume shipped (million barrels)(1) | 74.4 | 78.1 | 242.8 | 317.2 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 17.6 | 20.8 | 16.5 | 20.6 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(2) | 38.2 | 39.0 | 138.2 | 156.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(3) | 8.9 | 16.7 | 27.4 | 56.1 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 23.2 | 22.9 | 22.7 | 23.6 |
(1) | Volume shipped includes shipments related to the partnership's crude oil marketing activities. Revenues from those activities are reflected as product sales revenue in its consolidated financial statements. Transportation revenue per barrel shipped reflects average rates on third-party volumes only. |
(2) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(3) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December, 31, | December 31, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 300,488 | $ | 303,264 | $ | 1,151,980 | $ | 1,186,966 | |||||||
Affiliate management fee revenue | 512 | 433 | 1,512 | 1,747 | |||||||||||
Other operating income (expense) | — | 157 | — | 2,555 | |||||||||||
Earnings of non-controlled entities | 10,425 | 6,415 | 16,039 | 4,140 | |||||||||||
Less: Operating expenses | 105,181 | 94,521 | 424,851 | 411,849 | |||||||||||
Transportation and terminals margin | 206,244 | 215,748 | 744,680 | 783,559 | |||||||||||
Product sales revenue | 358,510 | 226,644 | 872,144 | 699,766 | |||||||||||
Less: Cost of product sales | 215,439 | 177,457 | 650,071 | 582,271 | |||||||||||
Product margin | 143,071 | 49,187 | 222,073 | 117,495 | |||||||||||
Operating margin | $ | 349,315 | $ | 264,935 | $ | 966,753 | $ | 901,054 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 140,520 | $ | 147,942 | $ | 549,849 | $ | 602,045 | |||||||
Affiliate management fee revenue | 3,504 | 3,747 | 14,832 | 14,471 | |||||||||||
Other operating income (expense) | — | 899 | — | (7,213) | |||||||||||
Earnings of non-controlled entities | 39,354 | 38,807 | 162,233 | 160,891 | |||||||||||
Less: Operating expenses | 56,250 | 40,667 | 166,213 | 164,236 | |||||||||||
Transportation and terminals margin | 127,128 | 150,728 | 560,701 | 605,958 | |||||||||||
Product sales revenue | 14,380 | 8,929 | 46,767 | 28,280 | |||||||||||
Less: Cost of product sales | 11,727 | 8,336 | 44,128 | 28,051 | |||||||||||
Product margin | 2,653 | 593 | 2,639 | 229 | |||||||||||
Operating margin | $ | 129,781 | $ | 151,321 | $ | 563,340 | $ | 606,187 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 45,958 | $ | 47,377 | $ | 180,850 | $ | 187,036 | |||||||
Affiliate management fee revenue | 1,211 | 1,200 | 4,021 | 4,972 | |||||||||||
Other operating income (expense) | — | 381 | — | 7,633 | |||||||||||
Earnings of non-controlled entities | 495 | 1,510 | 2,845 | 3,930 | |||||||||||
Less: Operating expenses | 15,175 | 17,515 | 68,010 | 68,919 | |||||||||||
Transportation and terminals margin | 32,489 | 32,953 | 119,706 | 134,652 | |||||||||||
Product sales revenue | 1,538 | 2,728 | 8,309 | 8,046 | |||||||||||
Less: Cost of product sales | 3,366 | 2,759 | 10,114 | 8,957 | |||||||||||
Product margin | (1,828) | (31) | (1,805) | (911) | |||||||||||
Operating margin | $ | 30,661 | $ | 32,922 | $ | 117,901 | $ | 133,741 | |||||||
Segment operating margin | $ | 509,757 | $ | 449,178 | $ | 1,647,994 | $ | 1,640,982 | |||||||
Add: Allocated corporate depreciation costs | 1,488 | 1,381 | 5,947 | 5,506 | |||||||||||
Total operating margin | 511,245 | 450,559 | 1,653,941 | 1,646,488 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 103,351 | 65,106 | 265,077 | 246,134 | |||||||||||
General and administrative expense | 47,048 | 47,116 | 194,283 | 196,650 | |||||||||||
Total operating profit | $ | 360,846 | $ | 338,337 | $ | 1,194,581 | $ | 1,203,704 |
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||
Three Months Ended | |||||||||||
December 31, 2019 | |||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||
As reported | $ | 286,445 | $ | 1.25 | $ | 1.25 | |||||
Unrealized derivative (gains) losses associated with future transactions(1) | 15,713 | ||||||||||
Inventory valuation adjustments associated with future transactions | (1,335) | ||||||||||
Excluding commodity-related adjustments(2) | $ | 300,823 | $ | 1.32 | $ | 1.31 | |||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,705 | ||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 229,358 |
(1) | Includes the partnership's net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||||||
December, 31, | December 31, | 2020 | |||||||||||||||||
2018 | 2019 | 2018 | 2019 | Guidance | |||||||||||||||
Net income | $ | 314,072 | $ | 286,445 | $ | 1,333,925 | $ | 1,020,849 | $ | 985,000 | |||||||||
Interest expense, net | 46,793 | 50,297 | 200,514 | 198,554 | 208,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 104,540 | 63,979 | 272,522 | 240,874 | 250,000 | ||||||||||||||
Equity-based incentive compensation(2) | 7,441 | 1,434 | 22,768 | 14,247 | 7,000 | ||||||||||||||
Gain on disposition of assets(3) | — | — | (351,215) | (16,280) | — | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | (81,930) | 16,022 | (71,548) | 29,690 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (24,315) | (1) | (39,646) | 71,214 | |||||||||||||||
Inventory valuation adjustments(5) | 9,011 | (3,054) | 9,207 | (12,681) | |||||||||||||||
Total commodity-related adjustments | (97,234) | 12,967 | (101,987) | 88,223 | 5,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (1,523) | 18,719 | 15,584 | 34,641 | 45,000 | ||||||||||||||
Other(6) | — | — | 3,644 | — | — | ||||||||||||||
Adjusted EBITDA | 374,089 | 433,841 | 1,395,755 | 1,581,108 | 1,500,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (46,019) | (49,442) | (197,274) | (186,942) | (205,000) | ||||||||||||||
Maintenance capital(8) | (25,633) | (26,566) | (88,736) | (96,702) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 302,437 | $ | 357,833 | $ | 1,109,745 | $ | 1,297,464 | $ | 1,200,000 |
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and excluded for DCF purposes. The amounts above have been reduced by cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 amounts above are net of gains on the disposition of residual assets from expansion projects, which are considered ongoing in nature, and as such are included in DCF. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 21, 2020 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.0275 per unit for the period Oct. 1 through Dec. 31, 2019, representing the 71st distribution increase since its initial public offering in 2001.
The fourth-quarter 2019 distribution is 3% higher than the fourth-quarter 2018 distribution of 99.75 cents per unit and represents an approximate 1% increase over the third-quarter 2019 distribution of $1.02. For the year, Magellan declared distributions of $4.065 per unit for 2019, or 5% higher than distributions of $3.87 per unit for 2018.
The new distribution, which equates to $4.11 per unit on an annualized basis, will be paid Feb. 14 to unitholders of record at the close of business on Feb. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, the information in this news release constitutes forward-looking statements as defined by federal law. Although management believes the statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Important factors that could lead to material changes in performance include the risk and uncertainties described in the partnership's filings with the Securities and Exchange Commission, including its annual report on Form 10-K for the year ended Dec. 31, 2018 and subsequent reports. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the headings "Risk Factors" and "Forward-Looking Statements." This news release speaks only as of the date issued, and the partnership undertakes no obligation to update any forward-looking statements because of new information, future events or any other factors.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 21, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an agreement to sell three marine terminals to Buckeye Partners, L.P. for $250 million. The terminals are located in New Haven, Connecticut, Wilmington, Delaware and Marrero, Louisiana.
"Magellan remains focused on capital discipline and managing our business for the long term," said Michael Mears, chief executive officer. "Optimization of our asset portfolio, including divestiture of facilities outside our strategic footprint, is an important element to maximize unitholder value and our strong financial position."
Mears continued, "I would also like to personally and on behalf of the organization express our gratitude for the contributions from all employees supporting these facilities through the years and during this time of transition."
The sale is expected to close by late first quarter or early second quarter 2020, subject to regulatory approvals.
The partnership intends to provide 2020 financial guidance as part of its fourth-quarter 2019 earnings release on Jan. 30 but does not expect the terminals sale to have a material impact on its future financial results.
Jefferies served as financial advisor and GableGotwals served as legal counsel to Magellan in connection with the transaction.
Unit repurchase program
The partnership also announced that its board of directors has authorized the repurchase of up to $750 million of common units through 2022. Magellan intends to purchase its common units from time-to-time through a variety of methods, including open market purchases and negotiated transactions, all in compliance with the rules of the Securities and Exchange Commission and other applicable legal requirements.
"Magellan remains committed to our long-standing disciplined approach to financing our business and pursuing attractive projects," confirmed Mears. "In addition, we intend to opportunistically utilize additional tools, including the unit repurchase program announced today as well as potential special distributions, to accomplish our core goal of maximizing value for our investors."
The timing, price and actual number of common units repurchased will depend on a number of factors including the partnership's expected expansion capital spending needs, alternative investment opportunities, excess cash available, legal and regulatory requirements, market conditions and the trading price of its common units. The repurchase program does not obligate the partnership to acquire any particular amount of common units, and the repurchase program may be suspended or discontinued at any time at the partnership's discretion.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Except for statements of historical fact, this news release constitutes forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, such statements necessarily involve known and unknown risks and uncertainties that may cause actual outcomes to be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations, financial condition and transactions described in this news release are: its ability to obtain all required regulatory approvals; its ability to complete the contemplated divestiture; its ability to identify growth projects with acceptable expected returns and to complete projects on time and at expected costs; changes in price or demand for refined petroleum products, crude oil and natural gas liquids, or for transportation, storage, blending or processing of those commodities through its existing or planned facilities; changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; the occurrence of operational hazards or unforeseen interruptions; disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; its capital needs, cash flows and availability of cash to fund unit repurchases or special distributions; and failure of customers to meet or continue contractual obligations to the partnership. Additional factors that could lead to material changes in performance are described in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors" and "Forward-Looking Statements." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect future events or circumstances.
Contact: | Investors: | Media: |
Paula Farrell | Bruce Heine | |
(918) 574-7650 | (918) 574-7010 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Jan. 7, 2020 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for fourth quarter 2019 before the market opens on Thurs., Jan. 30. Management will discuss fourth-quarter 2019 earnings, annual guidance for 2020 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 895-8003 and provide code 21938575. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Jan. 30 through midnight on Feb. 5. To access the replay, dial (800) 633-8284 and provide code 21938575. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 20, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today an extension of the supplemental open season to solicit additional commitments for transportation volume on the western leg of its refined petroleum products pipeline system in Texas. Binding commitments are now due by 5:00 p.m. Central Time on Jan. 3, 2020. The extension provides interested shippers additional time to make commitments.
Magellan is in the process of expanding the capacity of its west Texas refined products pipeline system to approximately 175,000 barrels per day (bpd) from its current capacity of 100,000 bpd. In addition, the partnership is currently building a new refined products terminal in Midland, Texas.
Based on the timing of current construction activities, Magellan expects both the west Texas refined products pipeline expansion and new Midland terminal to be operational in mid-2020.
Magellan's west Texas pipeline system primarily transports gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas as well as New Mexico. The pipeline system also can access markets in Arizona and Mexico via connections to third-party pipelines.
Subject to the results of the supplemental open season, Magellan is considering the addition of another 25,000 bpd of capacity on the west Texas pipeline, for a total capacity up to 200,000 bpd, which could be operational by the end of 2021.
For customer inquiries about the open season, please contact Trey Barrow at (918) 574-7480 or trey.barrow@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of operational hazards or unforeseen interruptions; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Investors: | Media: | |
Paula Farrell | Bruce Heine | ||
(918) 574-7650 | (918) 574-7010 | ||
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Dec. 5, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that Michael Mears, chief executive officer, is scheduled to present at the Wells Fargo Midstream Symposium at 3:25 p.m. Eastern on Wed., Dec. 11 in New York City.
A copy of the slide presentation and audio webcast will be available live on the day of the event on the partnership's website at www.magellanlp.com/investors/webcasts.aspx. A replay of the webcast also will be available for 30 days at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
DALLAS, Nov. 26, 2019 /PRNewswire/ -- Cushing® Asset Management, LP, and Swank Capital, LLC, announce an upcoming interim change to constituents of The Cushing® MLP High Income Index (the "Index"). On September 15, 2019, Index constituents SemGroup Corporation (NYSE: SEMG) and Energy Transfer LP (NYSE: ET) entered into an Agreement and Plan of Merger ("Merger Agreement") that would result in SEMG common shares ceasing to be publicly traded, subject to the approval of the holders of at least a majority of the SEMG common and preferred shares. A special meeting of SEMG stockholders will be held on December 4, 2019, for the purpose of voting on the Merger Agreement. Per the Index's methodology guide, this event will result in a constituent replacement. Accordingly, after the market closes on December 4, 2019, and effective on December 5, 2019, Magellan Midstream Partners, L.P. (NYSE: MMP) will replace SEMG as a constituent of the Index at SEMG's then-current weight.
There will be no changes to the remaining constituents of the Index due to this event.
ABOUT THE CUSHING® MLP HIGH INCOME INDEX
The Cushing® MLP High Income Index provides a benchmark that is designed to track the performance of 30 higher-yielding publicly traded midstream energy infrastructure companies, including master limited partnerships (MLPs) and non-MLP energy midstream corporations (each, a "Midstream Company" and collectively, "Midstream Companies"). Constituents are chosen according to a three-tiered proprietary weighting system developed by Cushing® Asset Management, LP. The Cushing® MLP High Income Index is calculated by S&P Dow Jones Indices and reported on a real-time basis under the Bloomberg ticker "MLPY".
ABOUT CUSHING® ASSET MANAGEMENT AND SWANK CAPITAL
Cushing® Asset Management, LP ("Cushing"), a subsidiary of Swank Capital, LLC, is an SEC-registered investment adviser headquartered in Dallas, Texas. Cushing serves as investment adviser to affiliated funds and managed accounts, providing active management in markets where inefficiencies exist.
Cushing is also dedicated to serving the needs of MLP and energy income investors by sponsoring a variety of industry benchmarks, including The Cushing® 30 MLP Index (Bloomberg Ticker: MLPX), The Cushing® MLP Market Cap Index (Bloomberg Ticker: CMCI), The Cushing® Energy Index (Bloomberg Ticker: CENI), The Cushing® Energy Supply Chain Index (Bloomberg Ticker: CSCI), The Cushing® Transportation Index (Bloomberg Ticker: CTRI) and The Cushing® Utility Index (Bloomberg Ticker: CUTI). For more information, please visit http://www.cushingasset.com/indices.
Contact:
Brian Atwood
214-692-6334
www.cushingasset.com
The Cushing® MLP High Income Index (the "Index") is the exclusive property of Swank Capital, LLC, and Cushing® Asset Management, LP, which has contracted with S&P Opco, LLC (a subsidiary of S&P Dow Jones Indices LLC) ("S&P Dow Jones Indices") to maintain and calculate the Index. S&P® is a registered trademark of Standard & Poor's Financial Services LLC ("SPFS"); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC ("Dow Jones"); and these trademarks have been licensed to S&P Dow Jones Indices. "Calculated by S&P Dow Jones Indices" and its related stylized mark(s) have been licensed for use by Swank Capital, LLC, and Cushing® Asset Management, LP. Neither S&P Dow Jones Indices, SPFS, Dow Jones S&P nor any of their affiliates sponsor and promote the Index and none shall be liable for any errors or omissions in calculating the Index.
CUSH-MLPY
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SOURCE Cushing® Asset Management, LP; Swank Capital, LLC
TULSA, Okla., Nov. 11, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today a supplemental open season to solicit additional commitments for transportation volume on the western leg of its refined petroleum products pipeline system in Texas. Binding commitments are due from interested customers by 5:00 p.m. Central Time on Dec. 20, 2019.
Magellan is in the process of expanding the capacity of its west Texas refined products pipeline system to approximately 175,000 barrels per day (bpd) from its current capacity of 100,000 bpd. In addition, the partnership is currently building a new refined products terminal in Midland, Texas.
Based on the timing of current construction activities, Magellan expects both the west Texas refined products pipeline expansion and new Midland terminal to be operational in mid-2020.
Magellan's west Texas pipeline system primarily transports gasoline and diesel fuel to demand centers in Abilene, Midland/Odessa and El Paso, Texas as well as New Mexico. The pipeline system also can access markets in Arizona and Mexico via connections to third-party pipelines.
Subject to the results of the supplemental open season launched today, Magellan is considering the addition of another 25,000 bpd of capacity on the west Texas pipeline, for a total capacity up to 200,000 bpd, which could be operational by the end of 2021.
For customer inquiries about the open season, please contact Trey Barrow at (918) 574-7480 or trey.barrow@magellanlp.com. More information about the open season is available at www.magellanlp.com/whatwedo/liquidpipelinetariffs.aspx.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the opportunity described in this news release are: (1) the ability to negotiate and sign definitive agreements with potential customers; (2) the ability to obtain all required rights-of-way, permits and other governmental approvals on a timely basis; (3) price fluctuations and overall demand for refined petroleum products; (4) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (5) the occurrence of operational hazards or unforeseen interruptions; (6) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending and (7) willingness to incur or failure of customers or vendors to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Investors: | Media: |
Paula Farrell | Bruce Heine | |
(918) 574-7650 | (918) 574-7010 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 31, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $273.0 million for third quarter 2019 compared to $594.5 million for third quarter 2018, or $240.7 million excluding the $353.8 million gain related to the sale of a portion of the partnership's ownership interest in BridgeTex Pipeline Company, LLC in the year-ago period.
Diluted net income per limited partner unit was $1.19 in third quarter 2019 and $2.60 in third quarter 2018, or $1.05 excluding the $1.55 favorable impact of the BridgeTex gain. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, was also $1.19 for third quarter 2019 and higher than the $1.03 guidance provided by management in early August primarily due to more favorable product overages, the timing of operating expenses and demand for the partnership's crude oil services.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $306.8 million for third quarter 2019 compared to $281.8 million for third quarter 2018.
"Magellan continued its positive trend in 2019, generating stronger financial results than expected during the third quarter and keeping us on track for another record year," said Michael Mears, chief executive officer. "Further, we are pleased with the significant progress of our large-scale construction projects, including commercial start-up of our new East Houston-to-Hearne refined products pipeline during mid-September. Magellan remains focused on delivering stable, fee-based transportation and terminals services and ensuring capital discipline for future investments to support Magellan's long-term success."
An analysis by segment comparing third quarter 2019 to third quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $240.1 million, an increase of $25.4 million. Transportation and terminals revenue increased $10.4 million due to 4% higher transportation volumes, representing record refined products shipments, and a slightly higher average transportation rate. Volumes increased due to continued solid demand for refined products coupled with incremental shipments associated with a recent connection near El Paso, Texas and the newly-constructed East Houston-to-Hearne pipeline segment. The average rate per barrel in the current period benefited from the 2019 mid-year tariff adjustment of 4.3%, partially offset by more short-haul movements that ship at a lower rate.
Operating expenses decreased slightly due to lower spending for asset integrity as a result of maintenance work timing, partially offset by higher property taxes in part due to a favorable adjustment in the 2018 period.
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $13.4 million between periods primarily due to higher gains on futures contracts used to economically hedge the partnership's commodity-related activities. The partnership's cash product margin, which reflects only transactions that physically settled during the quarter, increased between periods mainly due to lower costs for its butane blending activities.
Crude oil. Crude oil operating margin was $154.4 million, a slight increase of $0.5 million. Transportation and terminals revenue increased $5.8 million primarily due to fees earned from recently-constructed storage tanks at Cushing, Oklahoma and Corpus Christi, Texas as well as storage capacity Magellan leases at the export facility owned by its Seabrook Logistics, LLC joint venture. Higher transportation volumes on the partnership's Houston distribution system primarily due to the increased activity at Seabrook were more than offset by reduced transportation revenue on the Longhorn pipeline as a result of lower average rates following long-term contract renewals in late 2018. Overall, the average crude oil rate per barrel decreased between periods due to significantly more volumes on the Houston distribution system, which move at a lower rate, and the lower average Longhorn tariff.
Operating expenses decreased $2.7 million primarily due to lower environmental accruals and more favorable product overages (which reduce operating expenses), partially offset by additional fees paid to Seabrook for storage and dock services that Magellan utilized to provide services to its customers. Other operating expense was $3.6 million in 2019 primarily resulting from MTM adjustments associated with a new basis derivative agreement with a joint venture co-owner's affiliate that committed intrastate transportation volume to the joint venture pipeline.
Earnings of non-controlled entities decreased $3.4 million between periods. Following Magellan's sale of a 20% interest in BridgeTex during Sept. 2018, contributions from BridgeTex were lower in the current period, partially offset by higher earnings from Saddlehorn Pipeline Company, LLC due to new commitments received in connection with the recently-announced expansion of the Saddlehorn pipeline as well as additional volume from recent incentive tariff arrangements.
Marine storage. Marine storage operating margin was $32.4 million, an increase of $3.4 million. Transportation and terminals revenue increased due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the current period, and additional fees from new dock capacity at the partnership's Galena Park, Texas facility. Operating expenses increased slightly due to additional asset integrity spending and higher property taxes, and other operating income included the remaining insurance proceeds related to Hurricane Harvey that were recognized in the third quarter of 2019.
Other items. G&A expense increased primarily due to higher compensation costs resulting from an increase in employee headcount to support Magellan's growth. Gain on disposition of assets was lower due to the 2018 benefit from the $353.8 million gain on the sale of a 20% interest in BridgeTex.
Net interest expense decreased due to lower average outstanding borrowings and a slightly lower average interest rate due to recent debt refinancings. As of Sept. 30, 2019, the partnership had $4.8 billion of debt outstanding and $135 million of cash on hand with no borrowings outstanding on its commercial paper program.
Expansion capital projects
Magellan continues to make progress on its significant construction projects, with commercial operations commencing for the partnership's East Houston-to-Hearne refined products pipeline in Texas during mid-September.
The second phase of the partnership's Pasadena, Texas joint venture marine terminal is in the final stages of completion and testing, with an additional 4 million barrels of storage and supporting dock and pipeline infrastructure expected to be in-service during December.
Storage and export capabilities at Seabrook are progressing as well and expected to be operational in early 2020, with another 750,000 barrels of storage now approved for construction and expected to be operational in early 2021. Construction continues for Magellan's west Texas refined products pipeline expansion and new Midland terminal with both projects expected to begin operations in mid-2020.
Based on the progress of expansion projects underway, the partnership expects to spend approximately $1.0 billion in 2019 and $400 million in 2020 to complete its current slate of construction projects. As previously announced, these spending estimates now include Magellan's estimated share to expand the Saddlehorn pipeline by 100,000 barrels per day to be operational by late 2020. In addition, these estimates include a number of new projects supported by customer commitments and expected to generate returns meeting or exceeding the partnership's targeted return multiple of 6 to 8 times EBITDA, including pipeline enhancements to transport incremental refined products in West Texas and additional crude oil storage in the Permian Basin.
Magellan remains focused on identifying additional opportunities for future growth, with well in excess of $500 million of potential organic growth projects still under review for future investment. Capital discipline remains a priority for Magellan's management.
Financial guidance for 2019
As a result of continued strong financial performance so far this year, management is increasing its annual DCF guidance by $40 million to $1.26 billion for 2019, or 1.35 times the amount needed to pay projected cash distributions for 2019. As previously indicated and as evidenced by the current pricing environment, guidance continues to assume the pricing differential between the Permian Basin and Houston will not be sufficient to encourage spot shipments on the Longhorn and BridgeTex pipelines during the fourth quarter. However, guidance does assume that shipments above committed levels will move on these systems due to recently-implemented incentive tariff rates and as needed, Magellan's own crude oil marketing activities to facilitate intrastate shipments within the state of Texas.
Including actual results so far this year, net income per limited partner unit is now estimated to be $4.34 for 2019, which results in fourth-quarter guidance of $1.13. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Management remains committed to its stated goal of increasing annual cash distributions by 5% for 2019 and targeting distribution coverage of at least 1.2 times for the foreseeable future. Consistent with its historical approach, management plans to provide guidance specific to 2020 early next year in conjunction with reporting year-end 2019 financial results.
Earnings call details
An analyst call with management to discuss third-quarter financial results and outlook for the remainder of 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 909-4795 and provide code 21930394. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Nov. 6. To access the replay, dial (800) 633-8284 and provide code 21930394. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: trend, potential, possible, projected, outlook, plan, goal, target, guidance, believe, estimate, expect, continue, commit, foreseeable, future, may, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(In thousands, except per unit amounts) | |||||||||||||||
(Unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 488,775 | $ | 506,432 | $ | 1,392,960 | $ | 1,473,629 | |||||||
Product sales revenue | 144,403 | 144,807 | 552,792 | 497,791 | |||||||||||
Affiliate management fee revenue | 4,842 | 5,357 | 15,138 | 15,810 | |||||||||||
Total revenue | 638,020 | 656,596 | 1,960,890 | 1,987,230 | |||||||||||
Costs and expenses: | |||||||||||||||
Operating | 172,115 | 169,387 | 475,256 | 484,341 | |||||||||||
Cost of product sales | 120,510 | 108,757 | 473,781 | 430,727 | |||||||||||
Depreciation, amortization and impairment | 56,228 | 56,627 | 161,726 | 181,028 | |||||||||||
General and administrative | 47,389 | 51,156 | 147,235 | 149,534 | |||||||||||
Total costs and expenses | 396,242 | 385,927 | 1,257,998 | 1,245,630 | |||||||||||
Other operating income (expense) | — | (379) | — | 1,538 | |||||||||||
Earnings of non-controlled entities | 53,795 | 50,189 | 130,843 | 122,229 | |||||||||||
Operating profit | 295,573 | 320,479 | 833,735 | 865,367 | |||||||||||
Interest expense | 55,133 | 53,750 | 168,535 | 165,322 | |||||||||||
Interest capitalized | (3,099) | (5,831) | (13,354) | (14,419) | |||||||||||
Interest income | (501) | (648) | (1,460) | (2,646) | |||||||||||
Gain on disposition of assets | (353,797) | (2,532) | (353,797) | (28,966) | |||||||||||
Other (income) expense | 1,694 | 2,602 | 10,299 | 9,222 | |||||||||||
Income before provision for income taxes | 596,143 | 273,138 | 1,023,512 | 736,854 | |||||||||||
Provision for income taxes | 1,609 | 100 | 3,659 | 2,450 | |||||||||||
Net income | $ | 594,534 | $ | 273,038 | $ | 1,019,853 | $ | 734,404 | |||||||
Basic net income per limited partner unit | $ | 2.60 | $ | 1.19 | $ | 4.47 | $ | 3.21 | |||||||
Diluted net income per limited partner unit | $ | 2.60 | $ | 1.19 | $ | 4.46 | $ | 3.21 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,397 | 228,720 | 228,368 | 228,642 | |||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,449 | 228,754 | 228,412 | 228,667 | |||||||||||
MAGELLAN MIDSTREAM PARTNERS, L.P | |||||||||||||||
OPERATING STATISTICS | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.600 | $ | 1.618 | $ | 1.524 | $ | 1.600 | |||||||
Volume shipped (million barrels): | |||||||||||||||
Gasoline | 73.4 | 74.5 | 219.0 | 207.4 | |||||||||||
Distillates | 45.6 | 47.0 | 132.7 | 138.8 | |||||||||||
Aviation fuel | 8.1 | 11.1 | 21.3 | 29.8 | |||||||||||
Liquefied petroleum gases | 4.4 | 3.8 | 10.4 | 8.9 | |||||||||||
Total volume shipped | 131.5 | 136.4 | 383.4 | 384.9 | |||||||||||
Crude oil: | |||||||||||||||
Magellan 100%-owned assets: | |||||||||||||||
Transportation revenue per barrel shipped | $ | 1.266 | $ | 0.935 | $ | 1.325 | $ | 0.952 | |||||||
Volume shipped (million barrels) | 62.8 | 79.2 | 168.4 | 239.1 | |||||||||||
Crude oil terminal average utilization (million barrels per month) | 16.0 | 20.5 | 16.1 | 20.3 | |||||||||||
Select joint venture pipelines: | |||||||||||||||
BridgeTex - volume shipped (million barrels)(1) | 36.5 | 40.8 | 100.0 | 117.3 | |||||||||||
Saddlehorn - volume shipped (million barrels)(2) | 6.7 | 17.0 | 18.5 | 39.4 | |||||||||||
Marine storage: | |||||||||||||||
Marine terminal average utilization (million barrels per month) | 22.6 | 23.6 | 22.6 | 23.8 | |||||||||||
(1) | These volumes reflect the total shipments for the BridgeTex pipeline, which was owned 50% by Magellan through September 28, 2018 and 30% thereafter. |
(2) | These volumes reflect the total shipments for the Saddlehorn pipeline, which is owned 40% by Magellan. |
MAGELLAN MIDSTREAM PARTNERS, L.P | |||||||||||||||
OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT | |||||||||||||||
(Unaudited, in thousands) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Refined products: | |||||||||||||||
Transportation and terminals revenue | $ | 300,034 | $ | 310,482 | $ | 851,492 | $ | 883,702 | |||||||
Affiliate management fee revenue | 351 | 432 | 1,000 | 1,314 | |||||||||||
Other operating income (expense) | — | 1,046 | — | 2,398 | |||||||||||
Earnings (losses) of non-controlled entities | 3,393 | 3,373 | 5,614 | (2,275) | |||||||||||
Less: Operating expenses | 112,279 | 111,839 | 319,670 | 317,328 | |||||||||||
Transportation and terminals margin | 191,499 | 203,494 | 538,436 | 567,811 | |||||||||||
Product sales revenue | 129,926 | 134,755 | 513,634 | 473,122 | |||||||||||
Less: Cost of product sales | 106,756 | 98,144 | 434,632 | 404,814 | |||||||||||
Product margin | 23,170 | 36,611 | 79,002 | 68,308 | |||||||||||
Operating margin | $ | 214,669 | $ | 240,105 | $ | 617,438 | $ | 636,119 | |||||||
Crude oil: | |||||||||||||||
Transportation and terminals revenue | $ | 145,118 | $ | 150,926 | $ | 409,329 | $ | 454,103 | |||||||
Affiliate management fee revenue | 3,463 | 3,592 | 11,328 | 10,724 | |||||||||||
Other operating income (expense) | — | (3,629) | — | (8,112) | |||||||||||
Earnings of non-controlled entities | 49,420 | 46,047 | 122,879 | 122,084 | |||||||||||
Less: Operating expenses | 45,195 | 42,529 | 109,963 | 123,569 | |||||||||||
Transportation and terminals margin | 152,806 | 154,407 | 433,573 | 455,230 | |||||||||||
Product sales revenue | 12,666 | 8,343 | 32,387 | 19,351 | |||||||||||
Less: Cost of product sales | 11,590 | 8,341 | 32,401 | 19,715 | |||||||||||
Product margin | 1,076 | 2 | (14) | (364) | |||||||||||
Operating margin | $ | 153,882 | $ | 154,409 | $ | 433,559 | $ | 454,866 | |||||||
Marine storage: | |||||||||||||||
Transportation and terminals revenue | $ | 44,546 | $ | 46,580 | $ | 134,892 | $ | 139,659 | |||||||
Affiliate management fee revenue | 1,028 | 1,333 | 2,810 | 3,772 | |||||||||||
Other operating income (expense) | — | 2,204 | — | 7,252 | |||||||||||
Earnings of non-controlled entities | 982 | 769 | 2,350 | 2,420 | |||||||||||
Less: Operating expenses | 17,178 | 17,921 | 52,835 | 51,404 | |||||||||||
Transportation and terminals margin | 29,378 | 32,965 | 87,217 | 101,699 | |||||||||||
Product sales revenue | 1,811 | 1,709 | 6,771 | 5,318 | |||||||||||
Less: Cost of product sales | 2,164 | 2,272 | 6,748 | 6,198 | |||||||||||
Product margin | (353) | (563) | 23 | (880) | |||||||||||
Operating margin | $ | 29,025 | $ | 32,402 | $ | 87,240 | $ | 100,819 | |||||||
Segment operating margin | $ | 397,576 | $ | 426,916 | $ | 1,138,237 | $ | 1,191,804 | |||||||
Add: Allocated corporate depreciation costs | 1,614 | 1,346 | 4,459 | 4,125 | |||||||||||
Total operating margin | 399,190 | 428,262 | 1,142,696 | 1,195,929 | |||||||||||
Less: | |||||||||||||||
Depreciation, amortization and impairment expense | 56,228 | 56,627 | 161,726 | 181,028 | |||||||||||
General and administrative expense | 47,389 | 51,156 | 147,235 | 149,534 | |||||||||||
Total operating profit | $ | 295,573 | $ | 320,479 | $ | 833,735 | $ | 865,367 | |||||||
Note: Amounts may not sum to figures shown on the consolidated statements of income due to intersegment eliminations and allocated corporate depreciation costs. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||
RECONCILIATION OF NET INCOME AND NET INCOME PER LIMITED PARTNER UNIT | |||||||||||||
EXCLUDING COMMODITY-RELATED ADJUSTMENTS TO GAAP MEASURES | |||||||||||||
(Unaudited, in thousands except per unit amounts) | |||||||||||||
Three Months Ended | |||||||||||||
September 30, 2019 | |||||||||||||
Net Income | Basic Net Income | Diluted Net | |||||||||||
As reported | $ | 273,038 | $ | 1.19 | $ | 1.19 | |||||||
Unrealized derivative (gains) losses associated with future transactions(1) | (2,333) | ||||||||||||
Inventory valuation adjustments associated with future transactions | 1,310 | ||||||||||||
Excluding commodity-related adjustments(2) | $ | 272,015 | $ | 1.19 | $ | 1.19 | |||||||
Weighted average number of limited partner units outstanding used for basic net income per unit calculation | 228,720 | ||||||||||||
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation | 228,754 | ||||||||||||
(1) | Includes our net share of unrealized derivative gains and losses from the partnership's non-controlled entities. |
(2) | Please see Distributable Cash Flow ("DCF") Reconciliation to Net Income for further descriptions of commodity-related adjustments. |
MAGELLAN MIDSTREAM PARTNERS, L.P. | |||||||||||||||||||
DISTRIBUTABLE CASH FLOW RECONCILIATION TO NET INCOME | |||||||||||||||||||
(Unaudited, in thousands) | |||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||
September 30, | September 30, | 2019 | |||||||||||||||||
2018 | 2019 | 2018 | 2019 | Guidance | |||||||||||||||
Net income | $ | 594,534 | $ | 273,038 | $ | 1,019,853 | $ | 734,404 | $ | 992,000 | |||||||||
Interest expense, net | 51,533 | 47,271 | 153,721 | 148,257 | 200,000 | ||||||||||||||
Depreciation, amortization and impairment(1) | 57,898 | 57,972 | 167,982 | 176,895 | 238,000 | ||||||||||||||
Equity-based incentive compensation(2) | 7,933 | 6,773 | 15,327 | 12,813 | 19,000 | ||||||||||||||
Gain on disposition of assets(3) | (351,215) | — | (351,215) | (16,280) | (16,000) | ||||||||||||||
Commodity-related adjustments: | |||||||||||||||||||
Derivative (gains) losses recognized in the period associated with future transactions(4) | 13,017 | (1,720) | 33,945 | 13,669 | |||||||||||||||
Derivative gains (losses) recognized in previous periods associated with transactions completed in the period(4) | (14,993) | (5,454) | (38,894) | 71,214 | |||||||||||||||
Inventory valuation adjustments(5) | 456 | (181) | 196 | (9,627) | |||||||||||||||
Total commodity-related adjustments | (1,520) | (7,355) | (4,753) | 75,256 | 80,000 | ||||||||||||||
Distributions from operations of non-controlled entities in excess of (less than) earnings | (506) | 4,893 | 17,107 | 15,922 | 32,000 | ||||||||||||||
Other(6) | — | — | 3,644 | — | — | ||||||||||||||
Adjusted EBITDA | 358,657 | 382,592 | 1,021,666 | 1,147,267 | 1,545,000 | ||||||||||||||
Interest expense, net, excluding debt issuance cost amortization(7) | (50,741) | (46,441) | (151,255) | (137,500) | (190,000) | ||||||||||||||
Maintenance capital(8) | (26,143) | (29,313) | (63,103) | (70,136) | (95,000) | ||||||||||||||
Distributable cash flow | $ | 281,773 | $ | 306,838 | $ | 807,308 | $ | 939,631 | $ | 1,260,000 | |||||||||
(1) | Prior year amounts have been reclassified to conform with the current year's presentation. Depreciation, amortization and impairment expense is excluded from DCF to the extent it represents a non-cash expense. |
(2) | Because the partnership intends to satisfy vesting of unit awards under its equity-based incentive compensation plan with the issuance of limited partner units, expenses related to this plan generally are deemed non-cash and added back for DCF purposes. The year-to-date amounts above have been reduced by $9.3 million and $9.8 million for 2018 and 2019, respectively, for cash payments associated with the plan, which are primarily related to tax withholdings. |
(3) | Gains on disposition of assets are excluded from DCF to the extent they are not related to the partnership's ongoing operations. The 2019 period includes a $12.7 million gain on the sale of residual assets related to the development of expansion projects which are considered ongoing in nature, and as such are included in DCF. The 2018 period includes the portion of the gain recognized from the sale of the partnership's interest in BridgeTex that is not related to its ongoing operations. |
(4) | Certain derivatives have not been designated as hedges for accounting purposes and the mark-to-market changes of these derivatives are recognized currently in net income. The partnership excludes the net impact of these derivatives from its determination of DCF until the transactions are settled and, where applicable, the related products are sold. In the period in which these transactions are settled and any related products are sold, the net impact of the derivatives is included in DCF. |
(5) | The partnership adjusts DCF for lower of average cost or net realizable value adjustments related to inventory and firm purchase commitments as well as market valuation of short positions recognized each period as these are non-cash items. In subsequent periods when the partnership physically sells or purchases the related products, it adjusts DCF for the valuation adjustments previously recognized. |
(6) | Other adjustments in 2018 include a $3.6 million adjustment recorded to partners' capital as required by the partnership's adoption of Accounting Standards Update 2014-09, Revenue from Contracts with Customers. The amount represents cash that the partnership had previously received for deficiency payments but did not yet recognize in net income under the previous revenue recognition standard. |
(7) | Interest expense in 2019 includes $8.3 million of debt prepayment premiums which are excluded from DCF as they are financing activities and are not related to the partnership's ongoing operations. |
(8) | Maintenance capital expenditures maintain existing assets of the partnership and do not generate incremental DCF (i.e. incremental returns to the unitholders). For this reason, the partnership deducts maintenance capital expenditures to determine DCF. |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 24, 2019 /PRNewswire/ -- The board of directors of Magellan Midstream Partners, L.P. (NYSE: MMP) has increased the partnership's quarterly cash distribution to $1.02 per unit for the period July 1 through Sept. 30, 2019, representing the 70th distribution increase since its initial public offering in 2001.
The third-quarter 2019 distribution is 4% higher than the third-quarter 2018 distribution of 97.75 cents per unit and represents an approximate 1% increase over the second-quarter 2019 distribution of $1.0125.
The new distribution, which equates to $4.08 per unit on an annualized basis, will be paid Nov. 14 to unitholders of record at the close of business on Nov. 7.
This announcement is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Portions of this document constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors."
Contact: | Paula Farrell |
(918) 574-7650 | |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Oct. 3, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) plans to announce financial results for third quarter 2019 before the market opens on Thurs., Oct. 31. Management will discuss third-quarter earnings, outlook for the remainder of 2019 and the status of significant expansion projects during a conference call with analysts at 1:30 p.m. Eastern the same day.
To join the conference call, dial (800) 909-4795 and provide code 21930394. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern on Oct. 31 through midnight on Nov. 6. To access the replay, dial (800) 633-8284 and provide code 21930394. The replay also will be available at www.magellanlp.com.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Contact: | Paula Farrell |
(918) 574-7650 | |
View original content to download multimedia:http://www.prnewswire.com/news-releases/magellan-midstream-to-announce-third-quarter-2019-financial-results-on-oct-31-300930601.html
SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 29, 2019 /PRNewswire/ -- Saddlehorn Pipeline Company, LLC ("Saddlehorn") announced today a further expansion of the Saddlehorn pipeline. Following a successful open season during July and subsequent increased volume commitments from shippers, the pipeline's capacity will be increased by a total of 100,000 barrels per day ("bpd") to a new total capacity of approximately 290,000 bpd. The higher capacity is expected to be available in late 2020 following the addition of incremental pumping and storage capabilities.
The Saddlehorn pipeline, which is jointly owned by affiliates of Magellan Midstream Partners, L.P. (NYSE: MMP) ("Magellan"), Plains All American Pipeline, L.P. (NYSE: PAA) ("Plains") and Western Midstream Partners, LP (NYSE: WES) ("WES"), is currently capable of transporting 190,000 bpd of crude oil and condensate from the DJ and Powder River Basins to storage facilities in Cushing, Oklahoma owned by Magellan and Plains. Magellan serves as operator of the Saddlehorn pipeline.
In conjunction with the increased volume commitments, Noble Midstream Partners LP (NYSE: NBLX) ("NBLX"), through its affiliate Black Diamond Gathering LLC, has an option to buy up to a 20% ownership interest in Saddlehorn, with Magellan and Plains each selling up to a 10% interest to NBLX if the option were exercised.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. Magellan owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
About Plains All American Pipeline, L.P.
Plains All American Pipeline, L.P. (NYSE: PAA) is a publicly traded master limited partnership that owns and operates midstream energy infrastructure and provides logistics services for crude oil, natural gas liquids ("NGL") and natural gas. Plains owns an extensive network of pipeline transportation, terminalling, storage and gathering assets in key crude oil and NGL producing basins and transportation corridors and at major market hubs in the United States and Canada. On average, Plains handles more than 6 million barrels per day of crude oil and NGL in its Transportation segment. Plains is headquartered in Houston, Texas. More information is available at www.plainsallamerican.com.
About Western Midstream Partners, LP
Western Midstream Partners, LP (NYSE: WES) is a Delaware master limited partnership formed to acquire, own, develop and operate midstream assets. With midstream assets located in the Rocky Mountains, North-central Pennsylvania, Texas and New Mexico, WES is engaged in the business of gathering, compressing, treating, processing and transporting natural gas; gathering, stabilizing and transporting condensate, NGLs and crude oil; and gathering and disposing of produced water for its customers. In addition, in its capacity as a processor of natural gas, WES also buys and sells natural gas, NGLs and condensate on behalf of itself and as agent for its customers under certain of its contracts. More information is available at www.westernmidstream.com.
This press release includes certain statements concerning expectations for the future that are forward-looking statements as defined by federal law. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual results or outcomes to differ materially from results or outcomes anticipated in the forward-looking statements. Important risks, uncertainties and other factors that could affect future results or outcomes are discussed in filings with the Securities and Exchange Commission by Magellan, Plains and WES. The companies undertake no obligation to update or revise any forward-looking statement to reflect new information or events occurring after today's date.
Contact Information:
Magellan: | Paula Farrell, Investor Relations Bruce Heine, Media Relations | (918) 574-7650 (918) 574-7010 | |
Plains: | Roy Lamoreaux, Investor Relations Brad Leone, Media Relations | (866) 809-1291 (866) 809-1290 | |
WES: | Jack Spinks, Investor Relations | (832) 636-6000 |
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SOURCE Magellan Midstream Partners, L.P.
DALLAS, Aug. 9, 2019 /PRNewswire/ -- Alerian reported, as of June 28, 2019, total products directly tied to and tracking the Alerian indices was $13.7 billion.
Exchange traded funds, exchange traded notes, return of capital notes, and variable insurance portfolios represent $12.7 billion of the total $13.7 billion. Below is a list of energy master limited partnership (MLP) positions, as of June 28, 2019, in the $12.7 billion of such assets tracking Alerian's indices.
Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | Ticker | Exposure in Alerian Linked-Products ($) | Exposure in Alerian Linked-Products (Units) | |
AM | 2,402,831 | 209,671 | HESM | 7,694,422 | 394,586 | |
AMID | 4,919,211 | 951,492 | MMLP | 5,598,671 | 784,128 | |
ANDX | 403,075,523 | 11,094,840 | MMP | 1,276,581,260 | 19,946,582 | |
BPL | 782,332,474 | 19,058,038 | MPLX | 1,273,711,451 | 39,568,545 | |
BPMP | 18,205,543 | 1,176,069 | NBLX | 89,522,800 | 2,691,606 | |
CEQP | 220,495,699 | 6,164,263 | NGL | 214,053,630 | 14,492,460 | |
CNXM | 14,513,491 | 1,032,989 | NS | 331,580,260 | 12,217,401 | |
CQP | 214,074,794 | 5,075,268 | OMP | 5,663,726 | 263,429 | |
DCP | 329,731,673 | 11,253,641 | PAA | 1,305,749,277 | 53,624,200 | |
DKL | 6,791,101 | 212,222 | PAGP | 7,638,294 | 305,899 | |
ENBL | 153,164,680 | 11,171,749 | PBFX | 16,284,545 | 770,319 | |
ENLC | 327,210,823 | 32,429,219 | PSXP | 342,743,828 | 6,945,164 | |
EPD | 1,277,755,891 | 44,258,950 | SHLX | 319,209,192 | 15,405,849 | |
EQM | 462,044,829 | 10,341,200 | SMLP | 7,589,588 | 1,020,106 | |
ET | 1,262,122,882 | 89,639,409 | TCP | 253,540,259 | 6,739,507 | |
GEL | 298,090,775 | 13,611,451 | TGE | 419,509,147 | 19,872,532 | |
GPP | 3,882,098 | 277,293 | USDP | 3,861,679 | 342,044 | |
HEP | 156,422,759 | 5,688,100 | WES | 773,416,245 | 25,135,400 |
About Alerian
Alerian equips investors to make informed decisions about energy infrastructure and Master Limited Partnerships (MLPs). Its benchmarks are widely used by industry executives, investment professionals, research analysts, and national media to analyze relative performance. As of June 28, 2019, nearly $14 billion of products, including exchange traded funds and notes, are directly tied to and tracking the Alerian Index Series. Visit alerian.com to learn more.
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SOURCE Alerian
TULSA, Okla., Aug. 8, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) announced today that it has priced $500 million of its 3.950% senior notes due 2050. The notes were priced at 99.910% of par to yield 3.955% to maturity. The partnership intends to use the net proceeds from this offering of approximately $494.4 million, after deducting underwriting discounts and estimated offering expenses, for general partnership purposes, including expansion capital projects.
The offering is expected to close on August 19, 2019 and is subject to the satisfaction of customary closing conditions. Barclays Capital Inc., PNC Capital Markets LLC, SunTrust Robinson Humphrey, Inc., TD Securities (USA) LLC and Wells Fargo Securities, LLC are joint book-running managers for the debt offering, with J.P. Morgan Securities LLC, Mizuho Securities USA LLC, RBC Capital Markets, LLC, SMBC Nikko Securities America, Inc. and U.S. Bancorp Investments, Inc. acting as co-managers.
The offering is being made only by means of a prospectus supplement and accompanying base prospectus. Copies of these documents may be obtained on EDGAR on the Securities and Exchange Commission website at www.sec.gov. Alternatively, an underwriter participating in this offering will arrange to send a prospectus as supplemented to an investor if requested by contacting:
A registration statement relating to these securities became effective upon filing with the Securities and Exchange Commission. This news release does not constitute an offer to sell or a solicitation of an offer to buy the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil.
Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, actual outcomes may be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.
Contact: | Paula Farrell |
(918) 574-7650 | |
paula.farrell@magellanlp.com |
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SOURCE Magellan Midstream Partners, L.P.
TULSA, Okla., Aug. 1, 2019 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $253.7 million for second quarter 2019 compared to $214.4 million for second quarter 2018.
Diluted net income per limited partner unit was $1.11 in second quarter 2019 and 94 cents in second quarter 2018. Diluted net income per unit excluding mark-to-market (MTM) commodity-related pricing adjustments, a non-generally accepted accounting principles (non-GAAP) financial measure, of $1.20 for second quarter 2019 was higher than the $1.13 guidance provided by management in early May primarily due to incremental revenue from its Texas crude oil pipelines as well as the favorable benefit of an improved commodity pricing environment.
Distributable cash flow (DCF), a non-GAAP financial measure that represents the amount of cash generated during the period that is available to pay distributions, was $314.8 million for second quarter 2019 compared to $266.6 million for second quarter 2018.
"Magellan continues to produce strong results, with each of our business segments generating higher operating margin than the year-ago period driven by increased average refined products pipeline tariff rates, favorable market conditions for our crude oil pipelines and the improved commodity pricing environment overall," said Michael Mears, chief executive officer. "Magellan's solid fundamentals and disciplined approach have proven to be an effective combination to produce consistent and stable results over time while managing our business for the long term."
An analysis by segment comparing second quarter 2019 to second quarter 2018 is provided below based on operating margin, a non-GAAP financial measure that reflects operating profit before depreciation, amortization and impairment expense and general and administrative (G&A) expense:
Refined products. Refined products operating margin was $224.1 million, an increase of $32.7 million. Transportation and terminals revenue increased $15.2 million due to higher average transportation rates. The current period benefited from the 2018 mid-year tariff adjustment of 4.4% as well as longer haul shipments on the Mid-Continent pipelines, which move at a higher rate. Less short-haul movements on the South Texas pipelines resulted in approximately 1% overall lower shipments, with these supply-driven barrels causing the fluctuations in product mix transported as well. Excluding the South Texas portion of the system, refined products demand was relatively unchanged between periods, with gasoline demand 1% lower and distillate demand 1% higher than the second quarter of 2018.
Operating expenses increased slightly due to higher spending for asset integrity as a result of maintenance work timing and less favorable product overages (which reduce operating expenses).
Product margin (a non-GAAP measure defined as product sales revenue less cost of product sales) increased $23.3 million between periods primarily due to higher sales prices and lower butane costs for the partnership's butane blending activities.
Earnings (losses) of non-controlled entities was unfavorable due to losses on open futures contracts in 2019 for Powder Springs Logistics, LLC.
Crude oil. Crude oil operating margin was $160.3 million, an increase of $8.3 million and a quarterly record for this segment. Transportation and terminals revenue increased $17.6 million due to fees earned from new storage and dock services in conjunction with capacity that Magellan leases from the Seabrook Logistics, LLC export facility and higher transportation volumes on the partnership's Houston distribution system primarily due to the increased activity at Seabrook. Overall, the average crude oil tariff decreased between periods due to significantly more volume on the Houston distribution system, which moves at a much lower rate, and lower average committed rates on the Longhorn pipeline that became effective in the fourth quarter of 2018.
Operating expenses increased $6.0 million due to fees paid to Seabrook for storage and dock services that Magellan utilized to provide services to its customers and higher maintenance costs for the condensate splitter during the current period. Other operating expense was $6.1 million in 2019 primarily resulting from MTM adjustments associated with a new basis derivative agreement with a joint venture co-owner's affiliate that committed intrastate transportation volume to the joint venture pipeline.
Earnings of non-controlled entities increased slightly between periods. The 2019 quarter benefited from higher results from Seabrook due to the initiation of export capabilities at the facility beginning in Aug. 2018 and more earnings from Saddlehorn Pipeline Company, LLC due to recent incentive tariff arrangements that attract incremental volume to Saddlehorn and increased volume from a contractual step-up in committed volumes in Sept. 2018. These favorable items were mostly offset by a lower contribution from BridgeTex Pipeline Company, LLC, which was owned 50% by Magellan through Sept. 2018 and 30% thereafter following Magellan's sale of a portion of its interest in BridgeTex.
Marine storage. Marine storage operating margin was $30.0 million, an increase of $1.7 million. Transportation and terminals revenue increased due to higher storage utilization resulting from the timing of maintenance work, with more tanks available for contract storage in the second quarter of 2019. Operating expenses increased slightly due to higher property taxes.
Other items. Depreciation, amortization and impairment expense increased primarily due to recent expansion capital expenditures and asset impairments recognized in the current period. Gain on disposition of assets in 2019 was related to the sale of an inactive terminal along the partnership's refined products pipeline system. Other expense was unfavorable due to higher pension settlement costs in the second quarter of 2019.
Net interest expense decreased due to lower outstanding borrowings resulting from the early extinguishment of notes earlier this year that were due July 2019 and a slightly lower average interest rate. As of June 30, 2019, the partnership had $4.4 billion of debt outstanding, including $197 million outstanding on its commercial paper program, with $3 million of cash on hand.
Expansion capital projects
Magellan is nearing completion on a number of its significant construction projects to enhance its service offering and benefit its future growth.
The partnership's expanded dock capabilities at its Galena Park, Texas marine terminal are now operational, with 5 docks for a combined capacity of approximately 750,000 barrels per day (bpd) now available at this location. Construction activities are in the final stages of completion and testing for the partnership's East Houston-to-Hearne refined products pipeline in Texas. Magellan remains on-target to begin operations at the end of August for this new pipeline segment.
The second phase of the partnership's Pasadena, Texas joint venture marine terminal is nearing completion as well, with an additional 4 million barrels of storage and supporting dock and pipeline infrastructure still expected to be in-service by the end of 2019.
Additional storage and export capabilities at Seabrook are progressing and expected to be operational in early 2020, and construction is now underway for Magellan's west Texas refined products pipeline expansion and new Midland terminal that are expected to begin service in mid-2020.
Based on the progress of expansion projects underway, the partnership expects to spend approximately $1.1 billion in 2019 and $150 million in 2020 to complete its current slate of construction projects. These spending estimates include Magellan's estimated share to expand the Saddlehorn pipeline by an additional 60,000 bpd to be operational by late 2020. The Saddlehorn pipeline could be further expanded up to a total 100,000 bpd of new capacity if warranted by optional increased volume commitments by shippers that may be exercised in the near future.
Magellan remains focused on identifying additional investment opportunities for future growth, with well in excess of $500 million of potential organic growth projects under consideration, and also continues to evaluate acquisition opportunities, all of which have been excluded from the partnership's spending estimates at this time. These potential projects include expansion opportunities in each of Magellan's business segments, including the proposed Voyager crude oil pipeline for which an open season continues through the end of August.
Financial guidance for 2019
As a result of strong financial performance so far this year and a more favorable overall commodity margin and differential environment, management is increasing its annual DCF guidance by $40 million to $1.22 billion for 2019, or approximately 1.3 times the amount needed to pay projected cash distributions for 2019. Guidance now assumes that the current favorable pricing differential between the Permian Basin and Houston will continue during the third quarter, resulting in spot shipments on the Longhorn and BridgeTex pipelines through Sept. 30.
Management remains committed to its stated goal of increasing annual cash distributions by 5% for 2019 and targeting distribution coverage of at least 1.2 times for the foreseeable future.
Including actual results so far this year, net income per limited partner unit is now estimated to be $4.20 for 2019, with third-quarter guidance of $1.03. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.
Earnings call details
An analyst call with management to discuss second-quarter financial results and outlook for the remainder of 2019 is scheduled today at 1:30 p.m. Eastern. To join the conference call, dial (800) 745-9830 and provide code 21925916. Investors also may listen to the call via the partnership's website at www.magellanlp.com/investors/webcasts.aspx.
Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on Aug. 7. To access the replay, dial (800) 633-8284 and provide code 21925916. The replay also will be available at www.magellanlp.com.
Non-GAAP financial measures
Management believes that investors benefit from having access to the same financial measures utilized by the partnership. As a result, this news release and supporting schedules include the non-GAAP financial measures of operating margin, product margin, adjusted EBITDA, DCF and net income per unit excluding MTM commodity-related pricing adjustments, which are important performance measures used by management.
Operating margin reflects operating profit before depreciation, amortization and impairment expense and G&A expense. This measure forms the basis of the partnership's internal financial reporting and is used by management to evaluate the economic performance of the partnership's operations.
Product margin, which is calculated as product sales revenue less cost of product sales, is used by management to evaluate the profitability of the partnership's commodity-related activities.
Adjusted EBITDA is an important measure utilized by management and the investment community to assess the financial results of an entity.
DCF is important in determining the amount of cash generated from the partnership's operations that is available for distribution to its unitholders. Management uses this performance measure as a basis for recommending to the board of directors the amount of cash distributions to be paid each period and for determining the payouts for the performance-based awards issued under the partnership's equity-based incentive plan.
Reconciliations of operating margin to operating profit and adjusted EBITDA and DCF to net income accompany this news release.
The partnership uses exchange-traded futures contracts to hedge against price changes of petroleum products associated with its commodity-related activities. Most of these futures contracts do not qualify for hedge accounting treatment. However, because these futures contracts are generally effective at hedging price changes, management believes the partnership's profitability should be evaluated excluding the unrealized gains and losses associated with petroleum products that will be sold in future periods. Further, because the financial guidance provided by management excludes future MTM commodity-related pricing adjustments, a reconciliation of actual results to those excluding these adjustments is provided for comparability to previous financial guidance.
Because the non-GAAP measures presented in this news release include adjustments specific to the partnership, they may not be comparable to similarly-titled measures of other companies.
About Magellan Midstream Partners, L.P.
Magellan Midstream Partners, L.P. (NYSE: MMP) is a publicly traded partnership that primarily transports, stores and distributes refined petroleum products and crude oil. The partnership owns the longest refined petroleum products pipeline system in the country, with access to nearly 50% of the nation's refining capacity, and can store more than 100 million barrels of petroleum products such as gasoline, diesel fuel and crude oil. More information is available at www.magellanlp.com.
Forward-Looking Statement Disclaimer
Portions of this document constitute forward-looking statements as defined by federal law. Forward-looking statements can be identified by words such as: projected, outlook, plan, goal, target, guidance, believe, estimate, expect, continue, maintain, commit, foreseeable, future, may, intend, will and similar references to future periods. Although management of Magellan Midstream Partners, L.P. believes such statements are based on reasonable assumptions, actual outcomes may be materially different. Among the key risk factors that may have a direct impact on the partnership's results of operations and financial condition are: (1) its ability to identify growth projects with acceptable expected returns and to complete identified projects on time and at expected costs; (2) price fluctuations and changes in demand for refined petroleum products, crude oil and natural gas liquids, or changes in demand for transportation, storage, blending or processing of those commodities through its existing or planned facilities; (3) changes in the partnership's tariff rates or other terms as required by state or federal regulatory authorities; (4) shut-downs or cutbacks at refineries, of hydrocarbon production or at other businesses that use or supply the partnership's services; (5) changes in the throughput or interruption in service on pipelines or other facilities owned and operated by third parties and connected to the partnership's terminals, pipelines or other facilities; (6) the occurrence of operational hazards or unforeseen interruptions; (7) the treatment of the partnership as a corporation for federal or state income tax purposes or the partnership becoming subject to significant forms of other taxation; (8) an increase in the competition the partnership's operations encounter; (9) disruption in the debt and equity markets that negatively impacts the partnership's ability to finance its capital spending; and (10) failure of customers to meet or continue contractual obligations to the partnership. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission, including the partnership's Annual Report on Form 10-K for the fiscal year ended Dec. 31, 2018 and subsequent reports on Forms 8-K and 10-Q. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, especially under the heading "Risk Factors." Forward-looking statements made by the partnership in this release are based only on information currently known, and the partnership undertakes no obligation to revise its forward-looking statements to reflect events or circumstances learned of or occurring after today's date.
Contact: | Paula Farrell |
(918) 574-7650 | |
MAGELLAN MIDSTREAM PARTNERS, L.P. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per unit amounts) (Unaudited) | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2018 | 2019 | 2018 | 2019 | ||||||||||||
Transportation and terminals revenue | $ | 472,248 | $ | 506,405 | $ | 904,185 | $ | 967,197 | |||||||
Product sales revenue | 166,797 | 189,989 | 408,389 | 352,984 |