Independent liquids terminal and petroleum pipeline operator NuStar Energy L.P. (NS) reported Tuesday a sharp decline in earnings for the third quarter, hurt mainly by lower revenues, as asphalt margins slumped due to the lack of federal stimulus construction work and weak private sector activity. The company also provided guidance for the fourth quarter and announced an increase in distribution for the quarter.
The San Antonio, Texas-based company reported net income applicable to limited partners for the third quarter of $56.1 million or $1.03 per unit, compared to $141.3 million or $2.60 per unit in the year-ago quarter.
On average, thirteen analysts polled by Thomson Reuters expected the company to earn $1.03 per unit for the quarter. Analysts estimates typically exclude special items.
Total revenues for the quarter decreased to $1.25 billion from $1.83 billion in the prior-year quarter. Seven analysts had a revenue consensus of $1.12 billion for the quarter.
Commenting on the results, NuStar Energy's chief executive officer and president, Curt Anastasio said, "While third quarter 2009 earnings were lower than last year's record third quarter primarily due to weaker asphalt margins, they were in line with our guidance and still represented the third best earnings in the partnership's history."
Revenues from Services grew to $190.44 million from $187.10 million. Revenues from Product sales, the asphalt and fuels marketing segment, plunged to $1.06 billion from $1.83 billion last year.
NuStar said asphalt margins per barrel for the quarter fell to $5.03, compared to last year record $16.44 per barrel, as a result of soft demand, primarily due to the lack of federal stimulus construction work and weak private sector activity, and due to the sluggish economy.
The company said that distributable cash flow available to limited partners of $61.5 million, or $1.13 per unit, compared to $156.4 million, or $2.87 per unit, for the third quarter of 2008.
NuStar Energy also said that its board has increased its distribution to $1.065 per unit, which would equate to $4.26 per unit on an annual basis. The distribution per unit for the first three quarters of 2009 is over 5% higher than the distribution for the same period in 2008. The third quarter 2009 distribution will be paid on November 12, 2009, to holders of record as of November 5, 2009.
For the nine-month period, the company's net income applicable to limited partners decreased to $162.87 million or $2.99 per unit from $198.98 million or $3.77 per unit in the similar period last year.
Total revenue for the period fell to $2.87 billion from $3.80 billion in the prior-year period.
Looking ahead, the company expects the partnership's fourth quarter 2009 EBITDA to be in the range of $80 million to $100 million.
Further, in the company's asphalt operations, it expects fourth quarter 2009 earnings to follow the typical seasonal pattern of decline, as sales volumes and margins taper off and the company starts winter-filling for the next asphalt season.
Commenting on the guidance, Anastasio said, "For the fourth quarter of 2009, we continue to expect our fee-based storage and transportation segments to perform well. Higher throughputs as a result of a lighter refinery maintenance schedule should bode well for our transportation segment, while our storage segment will continue to benefit from higher renewal rates and previously completed projects."
NS is currently trading at $53.56, up $0.62 or 1.18%% on the NYSE.
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