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Magellan Reaffirmed Its Distribution Growth for 2017 and 2018

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Magellan Reaffirmed Its Distribution Growth for 2017 and 2018 PART 1 OF 2

Magellan Midstream Partners Reported Flat 3Q17 Earnings

Flat adjusted EBITDA

Magellan Midstream Partners (MMP) reported its 3Q17 results on November 2, 2017. It reported an adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) of $313.3 million—up 0.5% from $311.7 million in 3Q16. Analysts’ adjusted EBITDA rose 7% to $300 million from $281 million in 3Q17. Magellan Midstream Partners missed the consensus EBITDA estimates for the quarter.

Magellan Midstream Partners Reported Flat 3Q17 Earnings

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The above graph compares Magellan Midstream’s EBITDA estimates with its adjusted EBITDA in the last ten quarters.

Magellan Midstream Partners’ 3Q17 DCF (distributable cash flow) was $235.2 million—3.6% lower compared to $243.9 million for 3Q16. Hurricane Harvey impacted the company’s DCF for the quarter by $10 million. Excluding the impact of Hurricane Harvey, Magellan Midstream Partners’ DCF rose marginally compared to 3Q16.

“Magellan generated financial results during the third quarter of 2017 that were consistent with our expectations despite Hurricane Harvey, which negatively impacted the operations of each of our business segments for a period of time,” said Michael Mears, Magellan Midstream Partners’ CEO.

Crude Oil segment 

Magellan Midstream Partners’ Refined Products segment’s operating income fell by $10 million to $173.8 million in 3Q17. The segment’s operating expenses rose by $23 million. The segment’s product margin fell by $8.3 million in 3Q17 compared to 3Q16. The fall was due to the recognition of unrealized losses on open futures contracts for its commodity-related activities. Magellan Midstream Partners’ cash product margin also fell due to higher butane costs that resulted in compressed butane blending margins.

Magellan Midstream’s Crude Oil segment’s operating income rose by $17 million to $115.8 million in 3Q17. Contributions from the condensate splitter in Corpus Christi, that started operations in June 2017, drove the increase. The segment also benefited from higher volumes on its Longhorn pipeline and higher earnings from the BridgeTex and Saddlehorn pipelines.

The Marine Storage segment’s operating income fell by $7.4 million, primarily due to Hurricane Harvey.

Enterprise Products Partners (EPD) and Targa Resources (TRGP) also reported their 3Q17 results on November 2. Read Behind Enterprise Products Partners’ 3Q17 Results and What Drove Targa Resources’ Strong 3Q17 Results? to learn more.

Williams Companies (WMB) and Williams Partners (WPZ) reported their 3Q17 results on November 1.

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