Oil and gas transportation company NuStar Energy L.P. (NS), Friday reported an increase in fourth quarter profit helped primarily by improvements in the asphalt and fuel marketing segment, notwithstanding declines in quarterly revenues. Taking cue from stimulus spending and improving economy, the company also expects slight improvements in asphalt demand during 2010 from the 2009 level.
Net income applicable to limited partners increased to $28.80 million or $0.50 per unit from $25.2 million or $0.46 per unit in the same quarter a year ago.
On average, 14 analysts' polled by Thomson Reuters expected earnings of $0.51 per share for the quarter. Analysts' estimate typically excludes one-time items.
Net income of San Antonio, Texas- based company during the quarter was $37.35 million, up from $32.78 million in the year-earlier quarter.
Fourth quarter 2008 results included a $22.7 million net gain resulting primarily from the sale of certain non-strategic pipeline and terminal assets.
Distributable cash flow available to limited partners of $57.0 million or $0.99 per unit were nearly 87% higher than the $28.8 million or $0.53 per unit in the year-earlier quarter.
Results improved by $23.2 million primarily due to a higher margin per barrel in asphalt operations. The margin per barrel was $5.34 during the quarter, compared to $(1.66) last year.
Total revenues decreased to $982.79 million from $1.03 billion in the same quarter a year ago, but still exceeded Street expectations of $851.42 million.
Revenues declined mainly due to declines in product sales. Product sales Services revenue dropped 6.4% to $786.56 million, while revenue from services increased 1.7% to $196.22 million.
Earnings before interest, taxes, depreciation and amortization were $91.9 million, compared to $92.2 million in the same quarter last year.
Curt Anastasio, Chief Executive Officer and President said, "Our asphalt and fuels marketing business generated $80 million of segmental EBITDA in 2009, of which $70 million came from our asphalt operations. While our 2009 asphalt results were lower than what we originally anticipated, primarily due to weaker than expected demand, I am pleased with the cumulative performance of the operations." Total costs and expenses were $936.16 million, down compared from $1.00 billion in the year-ago quarter. Operating income surged to $46.62 million from $29.05 million in the prior-year quarter.
For the year ended December 31, 2009, net income applicable to limited partners was $191.67 million or $3.47 per unit, compared to $224.2 million or $4.22 per unit a year ago. Net income was $224.88 million, compared to $254.02 million in the prior year. Revenues dropped to $3.86 billion from $4.83 billion in the year-earlier quarter. The Street expected earnings of $3.18 per share on revenues of $3.73 billion.
Looking ahead to 2010, the company expects demands for asphalt to increase slightly from the 2009 season, helped by stimulus spending and improving economy.
"We remain optimistic that we will see improved results in our asphalt operations in 2010 compared to 2009 as we expect a higher margin per barrel and increased sales volumes," said Anastasio.
For the first quarter of 2010, the company also expects EBITDA to be similar to the fourth quarter and in the range of $80 to $100 million.
This is reflective of the typical seasonal pattern in the asphalt operations as sales volumes and margins taper off and the company start building inventories for the upcoming season.
NS is currently trading at $56.92, down $0.65 or 1.13%, on the NYSE.
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