Magellan Midstream Partners (MMP) Q1 Results - April 30

Magellan Midstream Partners (MMP) Q1 Results - April 30

Postby dan_s » Fri Apr 30, 2021 11:27 am

MMP is going to benefit from the strong NGL market all year. If you are investing primarily for high dividend yield and safety of principle then MMP is for you.

TULSA, Okla., April 29, 2021 /PRNewswire/ -- Magellan Midstream Partners, L.P. (NYSE: MMP) today reported net income of $221.3 million for first quarter 2021 compared to $287.6 million for first quarter 2020. Diluted net income per common unit was 99 cents in first quarter 2021 and $1.26 in first quarter 2020. < Q1 results beat my forecast.

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 $1.09 for first quarter 2021. These results were higher than the 75-cent guidance provided by management in early February primarily due to higher-than-expected commodity margins from an improved pricing environment, an overall favorable impact from the recent winter storms and other one-time positive items.

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 $276.5 million for first quarter 2021 compared to $306.5 million for first quarter 2020. < DCF coverage is 1.2X.

"Magellan started the year with stronger-than-expected results, underscoring the essential nature of our services and the flexibility of our asset portfolio to respond to changing market dynamics," said Michael Mears, chief executive officer. "Although our nation continues to recover from the pandemic, Magellan's outlook for the full year has improved based on our outperformance during the first quarter and a more favorable commodity pricing environment for our gas liquids blending activities. We remain confident that Magellan's business fundamentals, financial strength and capital allocation approach will enable us to continue delivering significant long-term value for our investors."

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, 2021. The distribution, which equates to $4.11 per unit on an annualized basis, will be paid May 14 to unitholders of record at the close of business on May 7. Based on the unit price at the time of this post ($47.32) the annualized cash yield is 8.685%.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 25564
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Re: Magellan Midstream Partners (MMP) Q1 Results - April 30

Postby dan_s » Fri Apr 30, 2021 12:00 pm

One of the benefits that I get out of covering a lot of the midstream companies is that they are keenly aware of the market for refined products. I find MMP's guidance for 2021 encouraging, especially that they see a significant increase in demand for aviation fuel in 2H 2021.

Per MMP:
Financial guidance for 2021
Management is increasing its annual DCF guidance by $50 million to $1.07 billion for 2021. The higher guidance is a result of Magellan's strong financial performance during the first quarter and a more favorable commodity pricing environment for the partnership's gas liquids blending activities, partially offset by lower distributions from its Pasadena marine terminal joint venture due to the recently-announced sale of nearly half of Magellan's interest in the venture.

Guidance assumes total refined products shipments will be generally in-line with initial estimates for the year, with an overall increase of 13% still expected versus 2020 as incremental volumes associated with recent expansion projects within the state of Texas are expected to more than offset the lingering impact of COVID-19 and still-recovering drilling activity. These estimates now include 13% higher gasoline, 10% higher distillate and 25% higher aviation fuel shipments, based on general trends so far this year and expected continuing recovery in travel, economic and drilling activity throughout the year. For reference, total 2021 refined products shipments are still expected to increase approximately 3% 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.

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 the current number of units outstanding, distribution coverage for 2021 is expected to be 1.17 times the amount necessary to pay cash distributions for the year.

Free cash flow (FCF), a non-GAAP financial measure that represents the amount of cash available for distributions, unit repurchases, debt reduction, additional investments or other partnership uses, is projected to be nearly $1.27 billion for full-year 2021, or $350 million after distributions, including the proceeds from the recent sale of a partial interest in the Pasadena marine terminal joint venture.

Management does not intend to provide specific financial guidance beyond 2021 at this time but expects to target annual distribution coverage of at least 1.2 times once refined products demand returns to more historical levels. [color=#BFFFFF]< Based on my 2022 forecast, I expect MMP to increase distributions next year by ~3%[/color].

Based on actual first-quarter results, the current number of common units outstanding and an approximate $70 million gain estimated for Magellan's recent sale of a partial interest in the Pasadena marine terminal joint venture, net income per common unit is expected to be $4.20 for 2021. Second-quarter guidance of $1.15 per unit includes the full impact of the estimated gain on sale of the joint venture interest. Guidance excludes future MTM adjustments on the partnership's commodity-related activities.

My updated forecast/valuation model for MMP has been posted to the EPG website.
Dan Steffens
Energy Prospectus Group
dan_s
 
Posts: 25564
Joined: Fri Apr 23, 2010 8:22 am


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