MMP is an MLP in our High Yield Income Portfolio. At today's unit price, current annual dividend yield is over 10%.
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.
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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. < Compares to my forecast of $148.7 million net income for Q2.
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. Per the Company's guidance: Estimates Annual Distributable Cash Flow Range of $1.0 to $1.05 Billion for 2020
"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."
Magellan Midstream Partners (MMP) Q2 Results - July 31
Magellan Midstream Partners (MMP) Q2 Results - July 31
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Magellan Midstream Partners (MMP) Q2 Results - July 31
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:
Refined products pipeline volumes continue to be affected by the pandemic, with average base business volumes, excluding the impact of expansion projects, declining by 6% for gasoline, 12% for distillate and 40% for aviation fuel during the second half of 2020 compared to the same period in 2019. Including the expected contribution from recent expansion projects, total refined products volumes during the second half of the year are expected to be relatively flat with the comparable 2019 period.
Due to recent improvement in commodity prices, the partnership now expects to realize profits from its gas liquids activities during the second half of the year. Based on last week’s price curve, fall blending margins are forecasted to average approximately 30 cents per gallon, with nearly 75% of the expected fall blending activity now hedged.
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.
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:
Refined products pipeline volumes continue to be affected by the pandemic, with average base business volumes, excluding the impact of expansion projects, declining by 6% for gasoline, 12% for distillate and 40% for aviation fuel during the second half of 2020 compared to the same period in 2019. Including the expected contribution from recent expansion projects, total refined products volumes during the second half of the year are expected to be relatively flat with the comparable 2019 period.
Due to recent improvement in commodity prices, the partnership now expects to realize profits from its gas liquids activities during the second half of the year. Based on last week’s price curve, fall blending margins are forecasted to average approximately 30 cents per gallon, with nearly 75% of the expected fall blending activity now hedged.
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.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Magellan Midstream Partners (MMP) Q2 Results - July 31
MMP is trading at $40.30 this morning.
In the last 3 months, 13 ranked analysts set 12-month price targets for MMP. The average price target among the analysts is $50.75.
This morning Stifel rated MMP a BUY with a price target of $51.00.
My updated forecast/valuation spreadsheet has been posted to the EPG website.
In the last 3 months, 13 ranked analysts set 12-month price targets for MMP. The average price target among the analysts is $50.75.
This morning Stifel rated MMP a BUY with a price target of $51.00.
My updated forecast/valuation spreadsheet has been posted to the EPG website.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Magellan Midstream Partners (MMP) Q2 Results - July 31
Note just received from B of A Equity Research Team. Their price target is $50.00.
"We believe MMP remains focused on long-term value creation for unitholders by prioritizing balance sheet strength and financial flexibility. MMP maintained its 2020 capex guidance of $400mn and now forecasts $40mn in 2021 (vs. no committed capital previously). We note MMP’s West Texas Refined Products Pipeline expansion began operations 1 July. Previously, MMP indicated it expects to see growth opportunities more on the refined products side than crude oil over the medium term. In general, we expect MMP to stay capital disciplined and look for projects underwritten by customer commitments. We forecast MMP’ s leverage ratio to be 3.7 x/3.3x/3.2x in 2020/21/22. This compares to MMP’s long-standing leverage limit of 4.0x . MMP previously noted it sees a practical leverage ratio of 3.75x, but would be comfortable going up to 4.0x if faced with an attractive project or acquisition that could bring the ratio down overtime."
"We believe MMP remains focused on long-term value creation for unitholders by prioritizing balance sheet strength and financial flexibility. MMP maintained its 2020 capex guidance of $400mn and now forecasts $40mn in 2021 (vs. no committed capital previously). We note MMP’s West Texas Refined Products Pipeline expansion began operations 1 July. Previously, MMP indicated it expects to see growth opportunities more on the refined products side than crude oil over the medium term. In general, we expect MMP to stay capital disciplined and look for projects underwritten by customer commitments. We forecast MMP’ s leverage ratio to be 3.7 x/3.3x/3.2x in 2020/21/22. This compares to MMP’s long-standing leverage limit of 4.0x . MMP previously noted it sees a practical leverage ratio of 3.75x, but would be comfortable going up to 4.0x if faced with an attractive project or acquisition that could bring the ratio down overtime."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group