Wednesday, Magellan Midstream Partners L.P. (MMP) reported nearly flat fourth quarter profit, as higher costs and expenses offset an increase in revenues. However, earnings per share for the quarter surpassed analysts' estimate by two cents. Looking further, the company issued its first quarter and fiscal 2010 earnings guidance, which stood well above Street's estimate.
The Tulsa, Oklahoma-based company reported net income for the fourth quarter of $81.95 million or $0.77 per limited partner unit, compared to $81.07 million or $0.51 per limited partner unit in the year-ago quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to earn $0.75 per limited partner unit for the quarter. Analysts' estimates typically exclude special items.
The simplification of the partnership's capital structure in September 2009 resulted in an increase in the number of limited partner units outstanding and a change to the allocation of net income for the purpose of calculating net income per limited partner unit.
Total revenues for the quarter increased to $353.26 million from $301.61 million in the prior-year quarter. Eight analysts had a revenue consensus of $284.84 million for the quarter.
Segment wise, Transportation and terminals revenue for the quarter rose to $183.72 million from $166.96 million in the same quarter last year. Product sales revenue rose to $169.35 million from $134.47 million last year. Affiliate management fee revenue rose to $191 thousand from $184 thousand a year earlier.
Don Wellendorf, chief executive officer, said, "Record operating profit and distributable cash flow for the quarter resulted primarily from higher transportation tariffs and product gains on our pipeline system and higher marine storage revenues due to expansion projects and higher rates charged for existing storage,"
Total costs and expenses for the quarter increased to $250.18 million from $206.06 million in the same quarter last year, while operating profit grew to $103.68 million from $96.11 million last year.
For the fiscal year 2009, net income dropped sharply to $226.48 million or $2.22 per limited partner unit from $330.10 million or $2.21 per limited partner unit in the corresponding period last year. Total revenues fell to $1.01 billion from $1.21 billion a year ago.
Analysts were looking for earnings of $2.05 per limited partner unit, on revenues of $947.13 million for fiscal 2009.
The company currently expects 2010 distributable cash flow of around $345 million and is targeting annual distribution growth of 4% during 2010.
Net income per limited partner unit for 2010 is estimated to be $2.66, with first-quarter guidance of $0.65.
Analysts estimate earnings of $2.52 per share for the year 2010 and $0.55 per share for the first quarter of 2010. MMP is currently trading at $43.03, up $0.15 or 0.35%, on a volume of 98,463 shares on the NYSE.
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