This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Magellan Midstream Partners LP Management Discusses Q2 2012 Results - Earnings Call Transcript

We reported second quarter net income per unit of $1.22 this morning. Normalizing for mark-to-market commodity adjustments, which we generally exclude from our guidance, we generated net income per unit of $1.01, per unit. Our quarterly results significantly exceeded the $0.83 guidance we gave back in early May, due to 2 primary factors. First, transportation volumes were higher than expected, with gasoline shipments improving with lower gasoline pricing during the start of the higher-demand summer driving season. Crude oil volumes were also significantly higher, as shippers increased their utilization of our Houston-area distribution network.

The second factor contributing to our improved performance in the quarter was an increase in product sales from our commodity activities. Our quarterly distributable cash flow increased to a record $134 million, resulting in a 1.3x coverage ratio for both the quarter and year-to-date, even with our latest quarterly distribution payout of $0.945 per unit. I know a number of you were pleasantly surprised with the significant increase to our distribution that was announced last week, and I think these very strong coverage ratios clearly demonstrate why our management team believe now is the time for a step change, in Magellan's distribution, to provide additional value back to our investors. Even though we had a strong second quarter, this was not the only reason for the decision to raise the distribution beyond guidance.

At the end of the first quarter, our DCF guidance was $490 million, which would have resulted in excess DCF of approximately $100 million for 2012, assuming a 9% distribution growth for the year. As you recall, we have indicated that we believe around $75 million of excess cash is prudent, based on the current market environment. So our DCF projections for 2012 were already in excess of what we felt was necessary. However, as you may also recall, there were a number of items still being worked out, when we first advertised the 9% distribution growth target for 2012 earlier this year.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs