Magellan Midstream Partners (MMP) Tops Q3 EPS by 12c

Magellan Midstream Partners (NYSE: MMP) reported Q3 EPS of $1.09, $0.12 better than the analyst estimate of $0.97. Revenue for the quarter came in at $576.45 million versus the consensus estimate of $631.2 million.

Financial guidance for 2021:

As a result of the higher-than-expected financial performance during third quarter and management's outlook for the remainder of the year, Magellan is increasing its annual DCF guidance by $30 million to $1.1 billion for 2021.

Guidance assumes total refined products shipments will be slightly higher than initial estimates for the year, with an overall increase of 14% expected versus 2020 as incremental volumes associated with expansion projects within the state of Texas continue to overcome the lingering impacts of the pandemic. Based on actual results so far and recent trends, these estimates expect 10% higher gasoline, 17% higher distillate and 40% higher aviation fuel shipments. For reference, total 2021 refined products transportation volumes are expected to increase approximately 4% versus 2019, which is more representative of historical demand, as additional gasoline and distillate volumes from expansion projects are partially offset by lower aviation fuel.

While the partnership awaits receipt of the required regulatory approval for the pending sale, guidance continues to assume Magellan owns its independent terminals throughout 2021.

As previously announced, Magellan recently increased its quarterly cash distribution to $1.0375 per unit. Based on this new distribution amount, the current 213.4 million units outstanding and the higher DCF guidance of $1.1 billion, distribution coverage for 2021 is expected to be 1.22 times the amount necessary to pay cash distributions declared for the year.

FCF is projected to be $1.29 billion for full-year 2021, or $384 million after distributions. Full-year FCF guidance currently does not include the expected $435 million proceeds from the pending sale of the partnership's independent terminals, which is awaiting required regulatory approval and assumed to close in 2022 for guidance purposes.

Based on actual results to date and the current number of common units outstanding, net income per unit is expected to be $4.43 for 2021, which results in fourth-quarter guidance of $1.10 per unit. Guidance excludes future MTM adjustments on the partnership's commodity-related activities as well as the expected gain on the pending independent terminals sale.

Management does not intend to provide financial guidance beyond 2021 at this time but continues to target annual distribution coverage of at least 1.2 times for the foreseeable future. Consistent with its historical approach, Magellan plans to provide guidance specific to 2022 early next year when year-end 2021 financial results are reported.

For earnings history and earnings-related data on Magellan Midstream Partners (MMP) click here.

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